MARCH 7: Sandesh Limited, the only newspaper company which is listed on bourses, is reasonably fancied among the trading as well investing community. In fact, in the last four-month period, the stock has appreciated by more than 300 per cent, moving up from Rs 98 to Rs 385. It also hit an all-time high Rs 519. While price may have shown an improvement of around 300 per cent, the market discounting for the stock has doubled from last year's level of around 5.Nothing but improved financials could be responsible for this impressive rise. The company has managed to produce good results in the recent past. For the third quarter (October-December 1999), sales stood at Rs 30.08 crore - an improvement of 10.79 per cent over corresponding period's figure of Rs 27.15 crore. OPM stood at 36 per cent during this quarter. The OPM figure during the corresponding period last year was at 33.92 per cent. At the same time, net profit improved from Rs 6.66 crore to Rs 8.81 crore.
Overall, for the first nine months in 1999-2000, sales grew by 15.52 per cent to Rs 85.63 crore. Besides showing an impressive growth in revenue, the company also managed to maintain its profit margins at 31.75 per cent. Net profit, at the same time, grew by 29.46 per cent to Rs 21 crore, netting an EPS (annualised) of Rs 36.79.
While the performance has been impressive, the outlook appears positive. The company has well established brand - Sandesh and has a loyal readership. Being in the newspaper industry, improving corporate scenario, and an uptrend in primary market is good news for the company. This can give a major push to the company's revenue, and it will not have any problem, at least, in maintaining the growth in sales as well as profits.
As for the market point of view, the stock gets a price multiple of around 10 which is fair for the stock, and is likely to improve steadily along with the improvement in bottomline.
As far as the technical position of the stock is concerned, the stock has posted a lower top, which is not a healthy sign. After touching a peak of Rs 519 during the third week of February this year, the stock has formed a lower top at Rs 468. The immediate support for the stock lies at Rs 380. The base thereafter exits at Rs 320. While extremely short-term players can use Rs 380 as an exit point, for medium-term players, the level of Rs 320 makes more sense.
While these two levels can be used as reference point for an exit, on the upper side, if the stock crosses Rs 470, the outlook will improve drastically, and the stock may even touch a new peak.
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