Punjab Communication - Good Potential

No. of equity shares – 1,20,23,565

Face Value - Rs. 10
Promoter holding – 71.25%
General Public holding – 24.41%

Book Value – Rs. 86
Reserves – Rs. 92 Crore
Total Debt / equity – 0.01
52 week high/low – Rs. 35/Rs. 12

Punjab communication is India's premier Telecom and IT equipment and solution provider company having successfully supplied and implemented a host of state-of-the-art Telecom, Software and integrated turnkey solutions across the country.

It is ISO 9001:2000 and provide technologically superior high quality equipments and services and since inception in 1981 has developed a strong brand image amongst a vast clientele including bulk telecom users ,corporates, service providers, railways, power sector, government and security agencies. The diverse product range covers Switching and networking equipments, Broadband, Wireless, STM1/4/16, PLCC, Power plants, Security products etc. manufactured at its state-of-the-art manufacturing facility in Mohali, near Chandigarh.

Broadly its activities cover the following areas:
*Telecom equipment manufacturing
*IT and Software Solutions
*Turnkey Projects
*Repair and Maintenance

The present market cap of the company is about Rs 30 crore with equity at Rs 12 crore and market price at about Rs 24, but the company has Rs 90 crore as cash in their books of which 80 crore plus is into the banks fixed deposit on which they receive an interest of about Rs 8 crore every year.

Presently, they have declared their Q1 results for June 2009 in which they have posted an earning per share (EPS) of Re 1.70, but the entire profit has come largely from the interest on fixed deposit and the operational performance has not posted any profits though they have shown a turnover of close to Rs 65 crore by this quarter.

They have about 2 lakh square feet of area of assembly line plus they have about 350 employees, out of which 150 are the engineers. They will move profitably because there has been shortage of this servicing organization or the company and if they move their focus from production of products to servicing of the product, which may give them a good income. Even if they are able to clock up a bottom-line of close to Rs 3-4 crore from that operation and plus Rs 8 crore from the interest from the bank fixed deposit, they should be able to post an EPS of Rs 6-7 and already Rs 75 per share of cash is lying in the books while the share is ruling at Rs 24.

A much awaited breakthrough has been achieved by PunCom through competitive aggressive bidding, in the DWDM tender of BSNL in which PunCom has successfully competed and received orders for DWDM-transponders worth approx 22 Crore. So, investors with high risk appetite can buy some shares with the long term view.