1. At a Glance
NELCO Ltd, a Tata Group company and satellite comms player, is beaming signals and bleeding profits. At ₹905 per share, it trades at a galactic P/E of 305 and is still 40% down from its ₹1,503 peak. Market cap? ₹2,065 Cr. Profit? A humble ₹7 Cr TTM. Houston, we have… a valuation problem.
2. Introduction with Hook
Imagine a telecom tower… floating in space, run by a Tata subsidiary, and priced like it’s got Starlink-level ambitions. That’s NELCO.
Founded in 1940 and reborn as Tata’s satellite arm, it’s now operating in the niche (and quiet) corner of the telecom industry—VSAT (Very Small Aperture Terminal) services. It connects oil rigs, defence zones, and remote offices.
- TTM Sales: ₹306 Cr
- TTM PAT: ₹7 Cr
- TTM OPM: 12%
But despite 83 years in orbit, revenue refuses to leave the launchpad.
3. Business Model (WTF Do They Even Do?)
NELCO operates in a B2B niche of satellite communication services, mainly for:
- VSAT Connectivity: High-reliability comms for businesses, banks, oil rigs, and remote sites.
- Satcom Projects: Turnkey solutions and system integration for private and government clients.
- Security and Surveillance: Integrated systems for defence and critical infra.
- Hybrid Networks: Managed services combining satellite + terrestrial networks.
It serves sectors where JioFiber doesn’t dare go. Think oil rigs, defence borders, remote control rooms—and very few competitors.
4. Financials Overview
| FY | Revenue (₹ Cr) | OPM (%) | EBITDA (₹ Cr) | Net Profit (₹ Cr) |
|---|---|---|---|---|
| FY21 | 226 | 20% | 45 | 12 |
| FY22 | 260 | 19% | 51 | 16 |
| FY23 | 313 | 20% | 62 | 20 |
| FY24 | 320 | 19% | 60 | 24 |
| FY25(TTM) | 306 | 12% | 37 | 7 |
Growth is flatter than a cold dosa. OPM and PAT margins are shrinking. The problem? Saturated niche and rising opex.
5. Valuation
Let’s channel some sanity:
- P/E: 305 — that’s not a typo, just investor imagination gone interstellar.
- EV/EBITDA (TTM): ~53x
- Fair Value Range (based on reasonable 25–40x P/E):
₹300 – ₹500 per share
Because unless they land an ISRO contract, 305 P/E is pure space dust.
6. What’s Cooking – News, Triggers, Drama
- Q1 FY26 Result: PAT ₹1.8 Cr (down from ₹4.56 Cr YoY)
- Declining EBITDA Margins: Now down to 10.3%
- Promoter Stability: Tata Power holds a steady 50.09%
- Govt Push for Satcom: Potential policy tailwinds
- Low Visibility: Literally and figuratively—zero buzz, no con calls
Near-term triggers? Tata might consolidate its satellite ambitions. Or… not.
7. Balance Sheet
| Item | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Equity Capital | 23 | 23 | 23 | 23 | 23 |
| Reserves | 53 | 66 | 82 | 101 | 105 |
| Total Borrowings | 90 | 81 | 63 | 57 | 53 |
| Total Liabilities | 238 | 263 | 262 | 282 | 287 |
| Total Assets | 238 | 263 | 262 | 282 | 287 |
Key Points:
- Steady equity base
- Low debt, low growth
- Healthy reserves but stagnant expansion
8. Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | CFI (₹ Cr) | CFF (₹ Cr) | Net Cash (₹ Cr) |
|---|---|---|---|---|
| FY21 | +54 | -8 | -47 | -1 |
| FY22 | +51 | -18 | -19 | +14 |
| FY23 | +58 | -25 | -33 | +1 |
| FY24 | +45 | -19 | -20 | +6 |
| FY25 | +20 | -17 | -11 | -8 |
Cash from ops halved in FY25. That’s a red flag waving from a satellite dish.
9. Ratios – Sexy or Stressy?
| Metric | FY23 | FY24 | FY25(TTM) |
|---|---|---|---|
| ROCE (%) | 22% | 23% | 14% |
| ROE (%) | 8.7% | 10.3% | 7.63% |
| OPM (%) | 20% | 19% | 12% |
| D/E Ratio | 0.6x | 0.5x | 0.4x |
| Working Cap Days | 37 | 32 | 55 |
Margins fading, returns dropping. Financial discipline is there, but topline growth is vacationing in Ladakh.
10. P&L Breakdown – Show Me the Money
| FY | Revenue | EBITDA | Net Profit | EPS (₹) |
|---|---|---|---|---|
| FY22 | 260 Cr | 51 Cr | 16 Cr | 7.05 |
| FY23 | 313 Cr | 62 Cr | 20 Cr | 8.70 |
| FY24 | 320 Cr | 60 Cr | 24 Cr | 10.37 |
| FY25 | 306 Cr | 37 Cr | 7 Cr | 2.97 |
TTM earnings have cratered—EPS down 71% from FY24.
11. Peer Comparison
| Company | Revenue (₹ Cr) | PAT (₹ Cr) | ROE (%) | P/E | Market Cap (₹ Cr) |
|---|---|---|---|---|---|
| Moschip Tech | 467 | 33 | 11.2% | 99 | 3,314 |
| Rashi Peripheral | 13,772 | 206 | 12.5% | 9.5 | 1,962 |
| Control Print | 425 | 100 | 26.9% | 14.4 | 1,449 |
| NELCO | 306 | 7 | 7.6% | 305 | 2,065 |
NELCO has the lowest profit and highest P/E. Investor optimism here is clearly powered by solar flares.
12. Miscellaneous – Shareholding, Promoters
| Shareholder | Jun 2025 |
|---|---|
| Promoters (Tata) | 50.09% |
| FIIs | 4.64% |
| DIIs | 0.12% |
| Public | 44.91% |
- Stable promoter backing
- Tiny institutional interest
- Retail-heavy stock
Dividend yield? 0.11%. Better off with your savings account.
13. EduInvesting Verdict™
NELCO is like an old satellite—functional, reliable, but drifting without clear thrust. The Tata brand gives it credibility, but financials give us boredom. It lacks growth, buzz, and margin expansion—but trades like it’s launching the next SpaceX. At 305x earnings, we’re staring at a valuation bubble floating gently in zero gravity.
Unless there’s a sector-wide boom or mega government contract, this is more of a “watch list curiosity” than a compounding legend.
And that’s the transmission.
Metadata
– Written by EduBot | 14 July 2025
– Tags: NELCO, Tata Power, Satellite Services, VSAT, Telecom Infrastructure, Smallcap IT, SpaceTech
