company
XL Telecom & Energy Limited (XLTL) incorporated in 1985 as a private company head quartered in Hyderabad. Its primary focus was telecom products – CDMA mobile phones, SMPS, Fusion splicers, cable jointing kits etc. In 1990 it became a public limited company and subsequently hit the primary markets in December, 2006 through an IPO.
XLTL’s focus has moved from being primarily a telecom products company to being an energy firm when they first entered the solar energy market. They are into the production of the solar photo voltaic cells. Subsequently the energy subsidiary’s contributions have grown and contributes nearly 80-90% of its revenue these days.
COMPANY DATA
Share Data
| Market Cap (Rs) | 66.98 crores |
| Issued Shares | 20774950 |
| 52 wk High/Low (Rs) | 61.8/27.25 |
Valuation Ratios
| To 31 Mar | FY09 (Dec 2009) | FY11 |
| Gross Sales (Rs in Cr) | 425.71 | 525.25 |
| EPS (Rs) | -142.4 | -108.2 |
| +/- % | - | 24 |
| P/E (x)
| -0.23 | -0.29 |
| P/B V (x) | 2.47 | - |
Shareholding Pattern (%) (Quarter ending June,2010)
| Promoters | 21.78 |
| FIIs | 10.95 |
| Others | 26.16 |
| Public | 41.11 |
positives
1. XLTL has already bagged export orders worth Rs.65.7 crores this fiscal year.
2. It aims for a Rs.500 crores export revenues through its solar division this year
3. Jawaharlal Nehru National Solar Mission, an initiative of the GOI to tap green energy as a part of the India’s energy needs is a big opportunity for XLTL. Phase-1 of this mission aims to commission 1000MW of grid connected solar power projet by 2013. For Phase 1 projects, NVVN proposed for 50:50 allocations towards Solar PV and Solar thermal. Initial guidelines for the solar mission mandated cells and modules for solar PV projects to be manufactured in India. That accounts to over 60% of total system costs. This is a huge opportunity for XLTL and according to executive director K Vasudeva Rao, it’s a $5billion opportunity and he expects a 20% market share in the next two years for XLTL.
concerns
Apart from the general economic recession concerns, the following are the specific concerns:
1. The promoters holding in XLTL is very low at 21.78% and a good part of the holding is also pledged.
2. The management has decided to refer XLTL to the Sick Industrial act, 1985 since its market value has eroded by more than 50% in 4 years. This could be a dampener in the short run, but could prove beneficial in the long run.
3. It has a strong competition with deep pockets like Moser-Baer, Tata BP solar..
valuations
XLTL is a risky investment. If you focus only on one thing – The National Solar Mission, then XLTL is well positioned to march forward. The management has a task in hand to take XLTL to the next level and capture significant market share locally. Consider XLTL for shorter gains of upto 20-25% from here on. But a health check of the company has to be made after FY11, when a long term positions can be considered.
disclaimer
I am a newbie into equity research. This blog is to start posting my research reports on various stocks. The information and views presented in this report are prepared by me. The information is based on my analysis and on sources available on the public domain. Investors are requested to use this report as guidance and the final decision to be made by the investors themselves. I will not be responsible for any loss incurred by the investor based on this report.
Peer Comparison
