Scribd
Upload
8 views1 page

Elnet Technologies: Financial Overview & Valuation

Elnet Technologies operates an IT park in Chennai with a 92% occupancy rate and a client base primarily of small to mid-sized companies. As of March 2023, the company has gross rental receipts of around 20 Cr, total assets valued at 266 Cr, and shares trading significantly below their asset value. The low payout ratio and cash hoarding are potential reasons for the undervaluation, with suggestions for improving shareholder value through cash distribution and higher payouts.

Uploaded by

soumyadwip samanta
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
8 views1 page

Elnet Technologies: Financial Overview & Valuation

Elnet Technologies operates an IT park in Chennai with a 92% occupancy rate and a client base primarily of small to mid-sized companies. As of March 2023, the company has gross rental receipts of around 20 Cr, total assets valued at 266 Cr, and shares trading significantly below their asset value. The low payout ratio and cash hoarding are potential reasons for the undervaluation, with suggestions for improving shareholder value through cash distribution and higher payouts.

Uploaded by

soumyadwip samanta
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

ELNET TECHNOLOGIES LTD

Elnet Technologies owns and operates an IT park consisting of 2 towers in Taramani, Old
Mahabalipuram Road, Chennai. The total leasable space is around 2.3 lakh sq ft. of which
the occupancy rate is ~ 92% as of December 2022. The client base is mostly small and
mid-sized players. Major tenants include Sterling Software, Quintessence Business
Solutions and Services Pvt Ltd, Crayon Data India Pvt Ltd, Mahindra First Choice, Karur
Vysya Bank, Information Dynamics India, etc. The company continues to enjoy
consistent revenue stream with long association from tenants. The lease agreements are
generally for a period of 3-5 years with a lock-in period of 1-5 years with in-built
escalation clause of lease rent hike of 5% every year / 15% for every three years.

Now coming to the financials, as of 31st March 2023 gross rental receipts is around 20 Cr.
Cash & Equivalents 35 Cr. Bank Deposits of maturity more than 12 months 66 Cr. Total
Liabilities is 21 Cr (of which debt of 4 Cr is from promoter entity STPL with no
immediate repayment obligation). It also has contingent liabilities of 14 Cr. Assuming
office rental yield of 10%, value of the property will be 20⁄10% = 200 Cr. Thus the net

asset value of the company will be 266 Cr (200Cr + 35Cr + 66Cr – 21Cr – 14Cr). The
total no. of shares outstanding is 40 Lakh, so the asset value per share is Rs. 665. As of
5th July 2023 the share price is around Rs 220. Couple of months back it was as low as Rs
160. So the shares are still trading at 1⁄3rd of asset value.

The company was promoted by Electronics Corporation of Tamil Nadu (ELCOT) & Stur
Technologies Pvt Ltd. (STPL). 52.85% of shares are owned by promoters while public
holds the rest. One of the possible reasons for undervaluation is the low payout ratio of
around 5% - 7% and the hoarding of significant amounts of cash without any deployment
ideas in sight. Currently there are no catalysts present, but if someone can built a large
enough position and push for a onetime cash distribution and hiking the payout ratio to
~ 90% then definitely the entire value can be unlocked.

You might also like