The attractive discount to the market price and a compelling price earning multiple of 5.1 times the 1999 earnings, make VSNL's `offer for sale' a good bet. Besides, being a divestment by the government, earnings will not get diluted. On the other hand, even at conservative estimates, VSNL's projected EPS for the current fiscal is higher at Rs 148-150. Also, with a market lot of10 shares, the minimum investment works out to an affordable Rs 7500.

Moreover, post-issue, liquidity at the counter will improve marginally and, that by itself, should lead to a better discounting by the market.

One reason why the downside risk in VSNL is limited is the revenue sharing agreement it has with the Department of Telecommunications. At present, VSNL derives a substantial portion of its revenue from global telephony. Although international tariff rates have fallen, the revenue sharing agreement with DoT provides a hedge. In addition to international telephony (VSNL's bread and butter), the company has diversified into the high-margin value-added services, which will stand VSNL in good stead in the long-run.

Also, gearing up to face competition, once it loses its monopoly status in 2004, VSNL through its subsidiary, VSNL Seamless, is seeking joint ventures with global players for Internet and E-commerce. It proposes to offer web hosting services and serve as a hub for electronic commerce andInternet data centre. In addition, the venture with PowerGrid Corporation will enable the company to enter the lucrative domestic long distance telecom market estimated at Rs 8000 crore, once it is opened up in the year 2000.

The only problem is the lack of liquidity in the VSNL counter. At present, only 500-700 shares are traded every day. The offer for sale will only marginally improve the floating stock as the government will continue to hold over 50 per cent stake. So, for those seeking short-term gains, exit will not be very easy.