Recommendations From Internet Software And Telecom Sector

The scrips in this column have been recommended with a 15-day investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations.

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8K MILES

CMP - Rs.541 BSE CODE 512161
Volume 161,194 Face Value Rs.5

The company is into the business of cloud experience solutions with prominence on cloud security, compliance and automation. The company has fetched revenue from cloud transformation (43%), managed services (30%), security solutions (12%) and consulting (1%) in FY17. The company has posted exuberant growth of 96.5% and 163% in revenue and PAT, respectively, in FY17. Moreover, it has been posting consistent quarterly topline and bottomline growth since September 2014 and had reported 17.3% and 11.2% revenue and PAT growth, respectively, in Q2FY18. The company is eyeing revenue of over USD 200 million over the next two-year period with cloud industry growing at a faster pace than traditional IT and with higher opportunities from the healthcare sector. We, therefore, recommend a BUY in the scrip for a target of Rs.620 and with a stop loss of Rs.504.

TATA COMMUNICATIONS

CMP - Rs.701 BSE CODE 500483
Volume 45,018 Face Value Rs.10

A company owned together by the Government of India, Tata Sons and Tata Power, it provides telecom services, inclusive of voice solutions (38.4% of FY17 revenue) and data and management services (58.7%). During FY17, the company closed its divestment in Neotel Pty and Tata Communications Data Centres and simultaneously acquired 35% of Teleena Holding B.V., Netherlands. The company is also in talks to buy Tata Teleservices' enterprise business to strengthen its leadership position in the segment. The company fetches less than 10% from security division, which is growing at a pace of more than 50% in terms of revenue. Hence, recently, the company has planned investment of USD 50 million in cyber security services so as to sell its cyber protection and data theft solutions to enterprises and is expected to hire 400 more people. With a view to monetising its surplus land, while the government is also planning to sell its stake in the company. We thereby, recommend a BUY in the scrip for a target of Rs.794 and with a stop loss of Rs.668.