DATE:

27.10.2007
www.niftyiews.com
Company Overview:-
Delete box, or
add logo, photo,
or other image
here. • Before we begin the follow on report
do remember hfcl is not a fresh buy
call. It was a buy call when we had
first published the report on 8th
8th of
July 2007. It’s a follow on report to
our initial recommendation of a BUY
call. The stock is definitely a hold and
KEY STATS: is like a lottery ticket. (Either you win
• BSE: 500183 | booty or you loose it.)
• NSE: HIMACHLFUT |
• Current Price 29.
• Target Price 32,40 • We will be pointing out the changed
(SHORT TERM Dynamics of the business and also of
TARGETS). the company. We will also try and
• (Target 1 achieved in
September) figure out what will work for and
• Revised Target price: against our previous recommendation.
39,58 At the end we will attach the previous
report dated 8th of July 2007 when we
had covered the stock.

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INVESTMENT RATIONALES
• The company holds 62% in the bse
listed hfcl infotel. Hfcl infotel is a
subsidiary of the company and is
giving landline services and
broadband services in the state of
Punjab.The company has launched
recently
recently cdma mobile services by the
name of PING.The company has
already paid the license fee of 151 cr
for gsm service in the state of Punjab.
• The valuation of hfcl infotel at cmp of
rs 35 comes to around 1900 crore.The
company at current valuations is at a
discount to regional operators like
spice tele and ttml. Although the latter
cant be strictly compared with hfcl
infotel as it has prestigious name like
TATA attached with it.
• Hfcl holds 32.57 crore shares in hfcl
infotel which is valued at 1150 crore.
The interest shown by fiis in hfcl
infotel shows that the best in price is
yet to come.
• Hfcl current share capital is 442 cr
divided into
• 44.20 crore shares of Rs 10 each.
Value per share in hfcl is rs 26.No
holding co.. discount will be given
given as
hfcl infotel will be either sold off if
hfcl doesn’t get a pan India license or
merged with hfcl if it gets one.Upside
to valuations possible if the stock
continues to hit upper circuits.
circuits.
• Hfcl has applied for the pan India
telecom license and we strongly
believe that the company stands a god
chance to win the same based on two
reasons.
• It is the 5th
5th company in the waiting
list of the telecom applicants thus
being ahead in the first come first
serve list. Moreover the company also
stands a better chance as the
government has
• conveyed that companies present, as
an operator in one circle will get a
priority to expand.
• Once the disputes over the spectrum
issue are cleared a rerating of the
the
stock is possible. We strongly believe
that hfcl stands a good chance to win
the ALL INDIA TELECOM LICENSE.
• Hfcl also has received around 310 cr
from a land deal in chennai. This
works to around Rs.7 per share.
• Hfcl also has a telecom infrastructure
business,
business, which is the only basis of its
present valuation. In an interaction
with the management after the dismal
performance in last quarter we were
said that the delay in bsnl multi billion
order to nokia and ericcson the sub
contracts to hfcl got delayed and
hence the stock price fell to 17 levels.
The management has also hinted
strongly that the September quarter
results will also be below xpectations.
Now with entry of new companies
including hfcl itself we believe that
order book crunch will be a thing of
the past. The companies’ telecom
infrastructure has been always valued
poorly by the market. We have given a
valuation of rs 21 based on 7.5 times
its Fy09E earnings. Sum of parts
valuations shows that the market price
Can easily cross 50 in coming days.
But do remember its not a buy call
and the ecision of the TDSAT AND
TRAI can bring major upside and
limited downside( till 18 levels) to the
stock.
 EXCLUSIVE TRIGGERS:-

Ace investor C.Sivasankaran has taken a 1% stake in july in the

stock. We see hfcl as the best takeover target for any mnc to
enter the Indian telecom arena and its valued cheap as compared
to its subsidiary hfcl infotel.C sivasankaran is the chairman of the
sterling group and is the person who made billions in buying aircel
and selling it later to maxis of Malaysia. Moreover the stock is
seeing high volumes and most fiis have pared there holding of
fccbs to stronger hands. We will recommend a hold with the
revised target price of rs 39 and 58 for the stock.Key movement
will happen post the announcement of the D.O.T on all INDIA
TELECOM LICENSE. The second Major trigger should be a bad
quarterly result which will give an opportunity
opportunity to buy.

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This document is for information only and is meant for the use of the Recipient & not
for circulation. The information contained in this document has been taken from
publicly available information trade and statistical services & other sources. While the
information contained herein is from sources believed to be reliable, we do not hold
ourselves responsible for its Completeness and
accuracy. All opinions and estimates included in this report constitute our judgment
as of this date and are Subject to change without notice. Investors are expected to use
the information contained in this report at their own risk. This report is not and
should not be construed as an offer or the Solicitation of an offer to buy or sell any
securities. TEAM STOCKRESEARCHERS and its affiliates may act as market maker
or have assumed an underwriting position in the securities of companies discussed
herein and may sell them to or buy them from
customers on a principal basis..