Disclaimer : Neither me nor my Family own Shyam Telecom as of yet and till date it has not been recommended to Clients,though some may have invested or be trading in it to take advantage of this smart movement in it’s share price in recent months
Shyam Telecom continues to Fly into a different Orbit ! From Rs 16 in August to Rs 46 upper circuit now !
It clearly derives some Value from the 380307 Equity Shares of FV Rs 10 of the total 766575760 Equity Shares that comprises 24% Equity Stake that the Shyam Group holds in the unlisted Sistema Shyam Teleservices Ltd (SSTL) that runs the MTS Telecom Service in India…the remaining is held largely by Sistema Russia and the Russian Federation….Actually as on March 31,2013 98.24 % of the Equity was held by just 25 shareholders and the remaining 1.76% was held by a scattering of 18034 shareholders !….SSTL remains unlisted
Shyam Telecom thus holds just 0.01% of the Equity of SSTL which is Rs 3200 crs and just 0.05% of the 24% Stake that the Shyam Group holds in SSTL
Shyam Telecom itself had a lack lustre FY 13 with turnover dropping sharply from Rs 800 crs in FY 12 to just Rs 426 crs in FY 13 and consequently Profits dropping from Rs 2.74 crs to just Rs 5 lakhs in FY 13….The reason for this is that Shyam Telecom is the National Distributor of Handsets for SSTL and the Supreme Court Order of 2012 had cancelled many Telecom Operator Licenses (2G Scam) which reduced the Circles of Operation including for SSTL too
Shyam Telecom has an Equity of Rs 11.27 crs (FV Rs 10) and Reserves of Rs 41.03 crs at March 31,2013 that gives it a Networth of Rs 52.3 crs and a Book Value of Rs 46.40……With SSTL Operations positioned to scale up big time in the next few years,it is expected that Shyam Telecom too will benefit from quantum jump in the National Distribution of Handsets for SSTL….The Potential for Profitability to cross FY 12’s Rs 2.74 crs seems on the cards in the next few years….This,and the small stake it holds in SSTL seems to be pumping the Share Price up fast
The Big Question Mark now is is then what is the Value of the unlisted SSTL !?…and here the markets and the pundits are agog with wanton speculation as SSTL continues to make exciting statements that it hopes to achieve Operating Profits by next year 2014 which would be it’s 6th year of Operations in India…It also has bagged the Right to Spectrum in the 800 Mhz auctions and a Unified Access Licence across many Circles