Nelco, Tata Group Company, mainly engaged in VSAT business had reported robust net profit growth in past two consecutive quarters. The company’s consolidated net profit in March quarter (Q4FY19) had jumped by nearly four-fold to Rs 38.4 million against Rs 9.8 million in previous year quarter.
A strong financial performance has seen, the market price of Nelco zoomed 213% in past six months from Rs 108 on February 6, 2018. In comparison, the S&P BSE Sensex had gained 10% during the same period.
Nelco has divested some of the loss-making business undertakings and tapered off the others to reduce the losses. The Company is continuously evaluating its business lines and is now focusing in building its strong position in the profitable businesses like the VSAT Services (contributes for more than 98% of the total revenue) using Satellite communication and will pursue further synergistic opportunities in related areas.
The Company believes that the VSAT industry in India will grow multi-fold in the next 4 – 5 years’ time once the licenses for offering the mobility services are issued.
“With more improved and additional services in multiple segments and geographies which are in the pipeline and the number of initiatives/actions underway, the Company expects to significantly step up its operating and financial performance in the next few quarters and in the coming financial years,” Nelco said in an annual report.
The government’s mandate to automate and connect oil retail outlets by March 2019 is creating large volume opportunities for VSATs. The potential for VSATs in the government sector is large due to thrust on panchayat connectivity, education, healthcare, public distribution system and water management. Though the overall potential is more than 100,000 VSATs, the time frames for implementation are however uncertain, it added.
As of June 30, 2018, Tata Power Company held 50.09% stake in Nelco, shareholding pattern data showed.