MTNL Analysis

Assuming the bottom for this stock is around 50 levels, The trigger going forward for this stock seems to be the merger with BSNL once the new govt comes into power..The ultimate eventuality has to be the merger of these two companiesto beat competition as both are bleeding from the loss of market share. As can be seen already, MTNL is already showing degrowth in its bottomline. Being a navratna, the govt will not allow it to become loss making.

Secondly the real estate and tower business may be demerged into separate companies to bring in cash into MTNL as the management is very clear that they do want to maintain their debt free status.So even if MERGER WITH bsnl takes time due to employee union issues, This demerger is definitely going to happen

MTNL also holds significant stake in ITI ltd and there are plans to sell some stake in that loss making company to alcatel lucent. That may be a near term trigger for the stock

Ultimately u cant have this company restricted to just mumbai and delhi in the long run , it will have to scale up to sustain its growth and profitability or else competition will end up squeezing it. The govt has two options, allow it to merge with BSNL or vice versa and create a telecom behemoth or atleats allow MTNL to expand its international operations even further. Right now MTNL has a presence in Mauritius.

Even on pure liquidation value with net current assets close to 4000 crore (leaving out its investment, real estate and other fixed assets), MTNL`s value comes to Rs.63.

Strategies for the govt are :

Delist MTNL, merge wit BSNL and list it again

Reverse merger of BSNL with MTNL and follow on IPO. The valuations will be totally at a different level for this combined entity(one can only imagine) and MTNL shareholders will already be at an advantage as they would get additional shares in the merged company before the IPO.

If none of the above happens, the govt may atleast allow MTNL to demerge its real estate and tower business whilst the same allowing the company to expand internationally

The company already has reserves close to 11000 crore and as long as it keeps adding to its reserve every year and as long as dividends are maintained at 40% or so, the investors should not worry abt this stock given the attractive dividend yield

Maybe if one has a 5 yr outlook and immense patience, u may definitely be sitting on a goldmine