by khalid on 07/09/2011 · 1 comment

Founded in 1995 in Mumbai, Spanco Limited in essentially involved in provision of IT and IT enabled services to mainly the public sector wherein they do both installation and maintenance work. This constitutes about 40% of the total revenues of the company. Apart from this, they also specialize in providing services of system integration to telecom companies and this contributes to about 47% of the total revenue as per latest data. A small portion of the revenues also come from BPO Operations of the company in both domestic as well as International markets.

The rewards associated with the company are huge demand from the public sector from where revenue receipt is almost sure. They have an impressive order book of about Rs.21.6 billion and the activities pertaining to the same order book are well diversified. We also anticipate huge rise in the earnings potential of the company because of the increase in the planned expenditure of the government towards IT infrastructure development.

The Nagpur Power DF’s successful implementation can provide the project IRR more than 20%. Such bids continue for Spanco in the near future. Additionally another positive news doing the rounds is the bid winning of the company of a 5 year contract for providing BPO services worth USD200 million with Bharti.

The primary risk associated with Spanco is the large scale successful implementation of the government orders and like Nagpur DF remain doubtful.

Bell the Bull says: that the present valuation of Rs 130-140 is highly undervalued and the price should reach the mark of Rs.280-300 in very near future.

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