Monday, May 3, 2010

Stock Idea; Smartlink Network Systems Ltd

Smartlink Network Systems Ltd (Rs 45) (Rs 2 Paid Up)
(BSE Code- 532419 NSE Code- SMARTLINK)
(P/E- 6.5, BV per share - Rs50, Equity - Rs6 cr, Market Cap - Rs135 cr)
Smartlink Network Systems Ltd (formerly known as D-Link (India) Limited): The Group's principal activities are to manufacture and market networking and communication products. The products include Interface cards, switches, modems, transceivers, print servers, internet servers and routers. Its broadband products include cable modem, wireless products/security products and networking storage products. The Group operates only in India. This Goa based company is engaged in production and marketing of equipments for Telecom industry. The company has restructured its operations. Its trading turnover has dipped sharply and income from manufacturing operations is rising, enabling much better bottom line.
For the nine months ended Dec. 2009, the company has posted net profit of Rs 14.06 cr.(up 330%) on net sales of Rs 122 cr. (almost flat). The EPS on a Rs 2 paid up share for nine months stands at Rs 4.7 on a equity of 6 cr.(Promoter’s stake-62.37%). The company is likely to achieve EPS of Rs 6.5-Rs 7 for FY10. Book Value is Rs 50 as company has reserves of about Rs 140 cr. At the current market price of Rs 45, the stock trades at 6.9 times expected FY10E earnings(Rs 6.5- Rs 7) and at 5.2 times its FY11E earning(Rs 8- Rs 9). Investors can start accumulating the stock at current levels and add more on declines for decent returns of 45%-50% over the next 6-8 months.
Source: Internet (Valuenotes by Sanjay Chhabria)

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