Nepal Telecom: A wise investment with good return every year

Nepal Doorsanchar Company Ltd, popularly known as Nepal Telecom(NTC) is state owned telecommunication service provider in Nepal with 85% of the government share. Experts believe that investing in NTC is a safe and profitable investment as NTC has a very strong fundamentals and is government owned.

Nepal Telecom has Rs.15 arba paid up capital and has Rs.52.51 arba in reserve and surplus.

In the first quarter of 2072/73 NTC’s net profit (after tax) stands at Rs.3.31arba.

NTC has been providing good return to its investors every year. Here is the list of dividends NTC has been provided every year.

According to a report published by Nepal Rastra Bank in mid November 2015, the banks provide 2.55% return on savings, 6.27% return on fixed deposit. On an average the banks provide 3.53 % return, whereas investing in the shares of NTC provides 6.91% dividend yield every year.

The weighted average interest rates on deposits for the November of 2013, &2014 stood at 4.80% and 3.81% respectively. The interest rates provided by the banks and financial intitutions are lower than the cash dividend offered by NTC.

So if a investor invests in NTC at this time, the investor would be entitled to dividends from last fiscal year. If they hold the same share for 12 more months they would be entitled to the dividends from current fiscal year. Looking at the dividend history of NTC, it is fair to speculate that the NTC would give dividends of at least 45%.

NTC is also considered a low risk investment as the share price of NTC does not fluctuate like other companies. This is the main reason that the mutual funds and other companies invest in shares of NTC which would act as buffer during crisis.

The share price of NTC scrips only stands at Rs 680 as on January 14, 2015.