Look at the analysis of major fundamental indicators of Nepal Doorsanchar Company Limited; what can investors expect from NTC in the coming months?

SYMBOL: NTC

SECTOR: OTHERS

TOTAL LISTED SHARES: 150,000,000

INTRODUCTION:

Nepal Doorsanchar Company Ltd, popularly known as Nepal Telecom, is state owned telecommunication service provider in Nepal with 91.49% of the government share. Nepal Doorsanchar Company Limited is a company registered under the Company Act 2053. However, the company is known to the general public by the brand name "Nepal Telecom" as its register trademark. The vision of the company is to remain a dominant player in telecommunication sector in the Country while also extending reliable and cost effective services to all. Registered users of the services of the company stand at 19.98 million at FY 2074/75.

BOARD OF DIRECTORS

MANAGING DIRECTOR

Mr. Dilliram Adhikari

Mr Dilliram Adhikari joined Nepal Telecom on 2059 Falgun 22 as a Telecom Engineer. Before appointed for MD, he was working as a Manager in MD’s office. Mr. Adhikari was promoted to Manager’s post on Baishak 16, 2075. He had worked in several departments like Access networks, Transmission networks, Wireless broadband, International business, Backbone transmission.

FINANCIAL INDICATORS

Source: Annual and Quarterly Reports, (*Profit Ratio, EPS, ROA, ROE are annualized)

OTHER INDICATORS

(Source: SS Pro)

FACTS AND FIGURES

Note: Reserves, Sales and Profit plotted in the figures above for the last period 2075/76 include only 9 months data (up to Chaitra of 2075), due to which stats seems to be lowered compared to other years. Based on the third quartile profit, the annualized profit would be Rs. 13,311,900,343.

PRICE HISTORY OF NTC SINCE JULY 2014

Highest Trading Price: Rs 952

Lowest Trading Price: Rs 541

Highest Closing Price: Rs 940

Lowest Closing Price: Rs 554

52 Week High: Rs 810

52 Week Low: Rs 670

DIVIDEND HISTORY

MONTHLY STOCK OUTLOOK

(Source: SS Pro)

Based on its stock performance since 2011, (NTC) Nepal Doorsanchar Company Limited has closed higher in 100 % of July months. In terms of price change, it has gained the most (3.69 % on average) in October month.

MEASUREMENT OF INVESTMENT RISK (VaR)

SYSTEMATIC RISK (β)

(Source: SS Pro)

Considering NTC's earnings per share, dividend pay and net-worth, the existing share price seems to be largely undermined in the Nepalese stock market. Also depicted by low Graham number of around 8 (< 22.5 suggests undervaluation), the current market price looks underpriced. However, given the single digit growth rate of the company, PEG ratio (1.8) suggests that the current price is overvalued. Thus, it depends on investor whether s/he weighs fundamental value or growth more to consider NTC shares under or overvalued.

The number of customers has increased over the years of evaluation, although, the sales revenue has declined from year 73/74 and is expected to decline further in the year 75/76.  Given the data trend in quarterly reports, it is also likely that the profit of the company plunges down in the year 75/76. As the profit is expected to fall by almost 24%, there is high chance that the dividend payout also reduces.

As the new players are entering into the telecommunication industry, it will be interesting to see how that impacts NTC's growth rate and its already declining customer revenue in the days to come.