XL Telecom & Energy - Multibagger Stock To Buy

This company has transformed itself from a low margin Telecom company by diversifying substantially into the high margin business of Solar Photo Voltaic Modules (SPV).

Buy XL Telecom & Energy at Current Market Price of Rs 60 for a 24 month target of Rs 1800. It has a order book of around 2.2 billion in Solar Photo Voltaic divisions and has secured orders for the supply of Fuel Ethanol from the oil companies.

For the period 2007-2008 barring unforseen circumstances the company should post a PAT of approximately Rs 45 crores on an equity of Rs 14.5 crores. For 2008-2009 barring unforseen circumstances the company should close with a turnover of Rs 1292 crores and PAT of Rs 155 crores. By then the equity would be Rs 26 crores. Thus the expected EPS would be Rs 60 approximately.

It is expected for 2009-2010 that turnover would be approximately Rs 1645 crores yielding a PAT of Rs 222 crores which will result an EPS of 85.This Share therefore has the potential to touch Rs 1800 within the next 24 months.

This stock recommendation is 3 months old. Business outlook at that time okay if not bad.A lot has changed since then. Stock market has lost much during this period and recession has spread it's wings across the world.

Let's have a look at DECEMBER 2008 quarter results of the company.

SALES turnover has come down from around 257 crores in September quarter to 102 croes in december quarter. Drop of more than 60%. Operating gross profit is down more than 50% for the same period. BUT NET profit has come down from 15 crores to mere 84 lacs. a Drop of 1400% EPS stands at 0.44 paise compared to 8 Rs. in earlier quarter.

With 0.44 EPS for this quarter, say annualized EPS st 2 with this kind of number for next 3 more quarters, current P/E stands at 17.

Look at the 52 week high of 334. EPS at that time was around 25 something. so the P/E ratio of 13.

For even the same P/E, at annualised EPS of Rs. 1.76, price of the stock has to be Rs. around 25.

So whenever stock price comes at mentioned price or near, it could be good opportunity to buy stock and keep for long term. Current market conditions would change in furture and if company could perform past performance again, it could be fetch good investment returns for investors.