This Tata group company's shares have zoomed 77% in four weeks

Nelco shares hit a multi-year high of Rs 377.90 after rallying 16 per cent on the BSE in intra-day deal on the back of heavy volumes in an otherwise subdued market. Nelco is a Tata Group Company in which the group company Tata Power Company holds 48.64 per cent stake, as on March 31, 2021.

The stock was trading at its highest level since 1992. It hit a record high of Rs 1,700 on March 24, 1992, the BSE data shows. In the past four weeks, the stock has zoomed 77 per cent, as compared to 1.28 per cent rise in the S&P BSE Sensex.

At 11:21 am, Nelco was trading 14 per cent higher at Rs 371, against 0.24 per cent decline in the benchmark index. The trading volumes on the counter jumped over five-fold with a combined 4.2 million equity shares changing hands on the NSE and BSE.

Nelco, on June 10, 2021, announced that the Company has received on June 9, 2021, the requisite approval from Department of Telecommunications (DoT) for transfer of the Internet Service Provider license and VSAT license from the amalgamating company i.e. Tatanet Services to the amalgamated company i.e. Nelco under the Scheme.

Accordingly, the Scheme involving the internal restructuring of the various businesses of the Company and its two wholly owned subsidiaries viz. Tatanet Services Limited (TNSL) and Nelco Network Products Limited (NNPL), has become effective on June 9, 2021. National Company Law Tribunal, Mumbai Bench (“NCLT) had already sanctioned the Scheme in November 2018.

Nelco said the primary benefits of this restructuring are likely to be the listed entity on stand-alone basis will hold the VSAT license and will have the more sustainable services revenue which is recurring in nature. The Company will also be able to apply for additional licenses for new business opportunities around Satellite Communication. The enhanced net worth of the Company post amalgamation will improve its ability to bid for larger projects which require the bidder to own the VSAT license, the company said.

Nelco operates in only one reportable segment which is Network Systems consisting of SatCom Services (including equipment sale, maintenance and other allied services). The company has two wholly owned subsidiaries viz. Tatanet Services Ltd. (TNSL) for delivering SatCom services and Nelco Network Products Ltd. (NNPL) which has commenced its business operations in the last quarter of FY2020-21 by providing Inflight and Maritime Connectivity services.

“Many new business models and collaborations are emerging, which provide new opportunities for the SatCom industry. Some of the next-gen technologies are also likely to move into the mainstream,” Nelco said in financial year 2020-21 annual report.

The fundamentals of most of the end user sectors seem to be intact. The Company believes that the SatCom deployment in ATMs and bank branches will see a spurt in FY22 due to pent-up demand from FY21, as the expansion of banking infrastructure resumes. Many rural education projects which are in the pipeline, are likely to be rolled out during FY22. The outlook for some of the other enterprise segments like renewable energy and eCommerce looks positive due to an increasing need for reliable pan-India data communication, the company said.

Nelco further said that in-line with the global trend, the availability of HTS in the country is also likely to give a boost to the growth of the SatCom industry by increasing its ability to address newer markets and applications.