Smart link has finally reentered into Structured cabling business.
1 Like
Smartlink seems to be completely changing its model. Its transferred all its business to 2 subsidiaries and invested substantial cash in them. Latest results shows steep decline in business. Does anyone have an idea about the company’s strategy?
1 Like
Tracking closely, however don’t like the business growing in subsidiary companies. If so, the holding company value could remain discounted for a long time.
Discl. Not invested yet
the holding company is to be transformed into an NBFC. The board has given
its okay. I am still undecided about this.
disclosure: holding
Looks like the core business lines (networking products & ems) ended up with negative margins (Per the Dec 16 financial statements) due to severe competition (including Chinese dumping) and the company has during this 3rd quarter classified them as discontinued operations, pushing them behind the scene into two 100% owned subsidiaries. My guess is that these businesses will wind down.
With the NBFC license application and most of its assets being good quality current investments and cash, the company can get a head start in its new LOB. At a book value of Rs 138/- (as at 31 March 2016; Approx 148/- now) with most of the reserves being free reserves and in a low Price/BV, the stock looks attractive inspite of negligible/negative earnings this financial year.
Repute Auditors and no increase in contingents between 03/15 & 03/16 adds further confidence.
No investments yet but I plan to enter.
The holding company has classified them as discontinued operations as the business is transferred to subsidiaries. That is how it is presented as it is a discontinued business for holding company. They are pretty much operational. They have re-entered structured cabling business with 3rd subsidiary - Telesmart SCS.
The holding company now will only have income from investments from its cash + investment holding of approx. Rs.280 crores. It is mandatory as per RBI Guidelines to categorize such companies as NBFC and they do not have any intention to enter into NBFC space. So this is clearly not a new LOB they are considering. They are pretty much focused on networking business.
Discl.: Not invested. Tracking
1 Like