VSNL: An early diwali for shareholders? - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

VSNL: An early diwali for shareholders?

Aug 26, 2000

VSNL has just declared 2:1 bonus in its board meeting yeaterday. This will take the share capital to Rs 2.85 bn

(Rs m)FY00 1QFY01
Sales 70,241 16,958
Other Income 2,481 1,553
Expenditure 52,111 12,596
Operating Profit (EBDIT) 18,130 4,362
Operating Profit Margin (%)25.8%25.7%
Interest - -
Depreciation 1,123 265
Profit before Tax19,4885,650
Tax 6,369 1,821
Profit after Tax/(Loss) 13,119 3,829
Net profit margin (%)18.7%22.6%
No. of Shares (eoy) 95 95
Current earnings per share*138.1161.2
Diluted earnings per share* 46 54
Current P/E multiple6.05.2

With the capital expanding by two times, the earnings will get diluted to a third of the pre-bonus level. Consequently, if we keep the P/E multiple constant at 6x, the price ex-bonus should reduce by a third to Rs 322

If one look's at 1QFY01 annualised earnings the FDEPS is showing a growth of 17%. Does it deserve a valuation of 6x earnings. Ex bonus, the price will become more affordable, this should increase the liquidity in the stock and enhance pricing eficiency. If we look at market comparables AT&T and British Telecom trade over 15x earnings.

Equitymaster requests your view! Post a comment on "VSNL: An early diwali for shareholders?". Click here!


More Views on News

TATA COMM Announces Quarterly Results (2QFY22); Net Profit Up 10.3% (Quarterly Result Update)

Oct 26, 2021 | Updated on Oct 26, 2021

For the quarter ended September 2021, TATA COMM has posted a net profit of Rs 4 bn (up 10.3% YoY). Sales on the other hand came in at Rs 42 bn (down 5.2% YoY). Read on for a complete analysis of TATA COMM's quarterly results.

TATA COMM 2020-21 Annual Report Analysis (Annual Result Update)

Oct 22, 2021 | Updated on Oct 22, 2021

Here's an analysis of the annual report of TATA COMM for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of TATA COMM. Also includes updates on the valuation of TATA COMM.

6 Stocks With High Financial Leverage (Views On News)

Aug 23, 2021

Interestingly, two Adani group companies top the list while a Tata group company also makes the cut.

Top Stocks Riding the 5G Wave in India (Views On News)

Dec 3, 2021

The 5G revolution is unfolding at a faster rate than you would expect. Here's how you can hop on to this ride.

1,300% in One Year - Are You Kidding Me? (Views On News)

Nov 29, 2021

An amount of Rs 1 lakh invested in the midcap stock a year ago would have turned into Rs 15 lakh today.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

Nov 30, 2021

These 5 companies dominate their sectors with a huge piece of the pie.

The Biggest Winners and Losers in India's Transition to Electric Vehicles (Profit Hunter)

Nov 26, 2021

How India's EV transition could be a major headwind for the incumbents.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Dec 7, 2021 02:59 PM


  • Track your investment in TATA COMM with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks