- Pralhad Rijal
Nepal Doorsanchar Company Limited (NTC), a market leader in the telecom industry of Nepal, on Tuesday topped the charts of highest stocks in terms of turnover in NEPSE, with the total turnover amounting to Rs 9.13 Crore. Investment analysts immediately turned their heads towards this development and have now begun to consider the shares of NTC as scrip with high value proposition and future growth prospects.
Likewise, some analysts opined that the returns of NTC are more favorable when compared to the returns from banks.
Moreover, banks have now started to publish their first quarter financial reports. Those reports hint that long term investors have a chance of securing 10-15 percent cash dividends from banks whose share prices are hovering around Rs 300-400. Moreover, analysts believe that, at this point in time, a window of opportunity is open for investors who want to mitigate the risk arising from a portfolio with more number of shares of banks. To diversify their risky portfolio, Investors might want to consider channeling funds in the stock with high value proposition. Shares of NTC are being considered to be one of such stocks. Here are the reasons why:
NTC shares were last traded at Rs865 as the Market closed on Tuesday, compared with the fundamentals of the company; the scrip is said to be undervalued. Moreover, the dividend payout record of NTC is comparatively stronger than other institutions.
| Fiscal Year |
Dividend % |
| 2072/2073 |
51 |
| 2071/2072 |
50 |
| 2070/2071 |
47 |
| 2069/2070 |
46 |
| 2068/2069 |
48 |
| 2067/2068 |
45 |
Furthermore, the company’s Earning Per Share (EPS) is around Rs 100 and price to earnings ratio (P/E) based on Tuesday’s closing price is 8.7.
“The dividend yield of the stock is comparatively high and the fundamentals are also strong as compared to most of the banks,” said Bishal Kumar, an Investment analyst, “Long term investors with risk minimizing agendas must keep a keen eye and hold these stocks in their portfolio, if they wish to diversify risks.”
As of now, NTC’s paid up capital stands at Rs 15 arba and its reserve and surplus amount to around Rs 78 Arba, making it a financially sound company.
According to Kumar, NTC’s stocks are hovering around a good price range and it seems the right time to invest in these stocks because the company itself is financially strong and growth prospects are in favor of the company.
On top of that, the Company’s Book Value of Equity Per Share (BVPS), is Rs 620.40 and it is a market leader in the telecom industry. The expected dividend from NTC stock is also relatively high than expected dividends from banks.
Analysts also responded to the query: why it seems better to invest in NTC rather than Bank shares whose prices hover around 300-400, with the following example:
Most of the widely traded bank’s scrip trade at Rs 325 and have an expected dividend payout rate of 12 percent, on the other hand NTC shares are trading at an undervalued price range and still paying out more in returns than BFIs.
Thus, the recent hype in NTC scrip shows that there is an impending need to incorporate more industries of the real sector like NTC into the stock market as they prove as risk minimizing scrip with long term value proposition. Moreover, the real sector including agriculture and industries contribute almost 50 percent to the Gross Domestic Product (GDP) and Banking and Financial Institutions contribute around 25-30 percent. However, looking at stock markets of developed nations, the BFIs of Nepal are comparatively overvalued and investors are bound to invest in BFIs. With the inclusion of real sector in NEPSE, two major changes—growth in the market and minimization of investor risk, are likely to happen leading to a more investment friendly environment.
