Shares of Nelco Limited, a Tata Group stock, started its trading session today at Rs 565 and currently trade at Rs 603. The scrip is approximately 10 percent up as compared to the previous closing price of Rs 548.95. In the last one month period, the shares have generated returns of around 20 percent for its stakeholders.
One of the probable reasons for the stock to surge is pertaining to the results announced for the March quarter and FY22-23. The results have been discussed and compared later on in the report.
Moreover, the company’s Board recommended a dividend of Rs 2, i.e., 20 percent on the face value of Rs 10. The payment of dividends is subject to the shareholder’s approval.
Nelco Limited provides solutions for the purpose of management of networking services, connectivity, and supply & integration of turnkey communication systems. The company is also engaged in performing sales of security and surveillance products.
The company conducts operations in just a single segment which is the ‘Network systems’ segment which comprises the sales of solutions for the management of the above-mentioned aspects.
Having a look at the financials reported by the company, on a quarterly basis, it has performed well with increasing operating revenues and net profit numbers. Revenues of the company increased from Rs 74 crores in Q3 to Rs 82 crores in Q4 and net profits, during the same period, went up from Rs 5 crores to Rs 5.7 crores approximately.
A yearly comparison of the above-mentioned metrics leads us to observe that the numbers have been on a rise with revenues increasing from Rs 260 crores during FY21-22 to Rs 313 crores in FY22-23. Moreover, the net profits, during the same timeframe, increased from Rs 16 crores to Rs 20 crores.
The profitability metrics of the company have shown good percentages with the basic ones such as the return on equity (ROE) and return on capital employed (ROCE) increasing in recent financial years. The ROE shifted from 17.42 percent in FY20-21 to 19.48 percent in FY21-22. ROCE numbers, during the similar period, went up from 15.82 percent to 21.43 percent.
The debt-to-equity ratio of the company went down, favoring the creditworthiness, over the past 3 financial years with the most recent shift being from 0.88 in FY20-21 to 0.61 in FY21-22.
As per the latest data available for the March quarter, promoters of the company hold a constant 50.09 percent stake. FIIs, on the other hand, have shifted and increased their stake from 2.3 percent in the December quarter to 4.41 percent during the March quarter.
Written by Amit Madnani
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