Tata Communications Ltd, NIIT Ltd and Biocon Ltd

Entered in these stocks some times back. in fact i am holding Biocon for a long time at avg of 250/- I'll post detailed study after some time. Now just posting some introduction for these to have basic idea.

Tata Communications: Entered around 400/- . It is the company which provides the data services to internet service providers, voice services to our telecom giants. Contrary to the belief our telecom and internet services are not at all wireless. In fact they are wired…our internet data travels across the globe via huge optical cable network in the seas. Same is true for telecom voice services. Wireless is only from mobile device to mobile tower.

Our telecom giants are not having installed these optical fiber cables across the globe under seas and under land in india, they buy these slots from companies like Tata communications which is having around 210000 KM optical fibre submarine network under sea and operating in around 240 countries across the world. Global submarine cable network is around 12 lac KM. Around half of this network was laid in the dotcom period of 1999-2002, thinking that world would need these for providing services like movie on demand which never materialized at that time. And because of that wholesale prices for data and voice is falling for years. Oversupply has meant prices of bandwidth saw a steep fall - in 2010 they were 20% of what they were in 2003.

But now the emergence of smartphone and huge need of data services for internet and live streaming of videos and movies, most importantly cloud computing which requires huge data capacities are now creating the need and demand for optical fiber network and driving the wholesale data prices.

But this game of fiber network is much more complex. There is excess capacity of fiber network across the globe. But the traffic moves only within the lines, it just can't break this line. For an email to go from Australia to India, it is often first routed to California, and then back across the Pacific to India. There are many cities in Asia which are only linked to each other through the US because of a lack of direct cable links. The US still acts as a major clearing house for internet communications - though that importance will decline as investments in new cable routes are made. But there's also an incentive to build more cable on routes already well served by existing systems.

a couple of years ago , a ship's anchor dragged on a cable and severed it, leaving many in West Asia with weak or no internet connectivity. Indeed, such accidental cable breaks happen quite often. A new cable, between two regions but along a different route, isn't just a luxury, but a necessity. Bandwidth wholesalers like Airtel see the ability to offer customers capacity on multiple routes between key destinations as a competitive advantage. If one route gets taken out, traffic can be switched to an alternative route.

Tata communications’ optical network carries around 10% of the global internet traffic and 19% of the voice traffic. It carries 25% share of indian data traffic.

With voice business loosing stream it is betting big on data business which is going to see huge demand in the future. It is to reap the benefits of broadband storm in india and setting up of 100 smart cities

Tata communications is now focusing on new age business which uses the synergy from its data network like streaming of media content, payment solutions through management of white and brown ATM's across the country, data center services, cloud computing with partnership with global behemoth like Google.

I feel the worst is behind the company and it is having unmatched technical capabilities in this field.

It is in the final stages for selling its stake in its African business Neotel to Vodafone for around 4000 cr, which will reduce its high debt. Need to study the full news.

NIIT Ltd: Entered in NIIT at 39. It is at 650 cr market cap. It is holding 25% of NIIT Technologies which works out at 575 cr and at 30% discount it is at 400 cr. there is around 100 cr cash in the books apart from valuable land...it makes up about 500 cr,which leaves just 150 cr for a business having a turnover of 1200 cr, strong brand name NIIT.

I think brand of NIIT will be around 1000 cr itself. NIIT is one of the best education stock in the market apart from Zee Learn...it is changing its business model to offer more productive courses like E commerce and Finance. 

NIIT is an old horse...they know the running. NIIT is moving into corporate training and more value added contemporary courses on e commerce and finance. Many times it is good to buy a stock guessing the next move of promoters like recently i did for Future retail (that they will either list their logistics arm or do some change in their business model; they did the merger with bharti). in the same way i am taking my call on the promoters of NIIT..they have the brand power, 30 years of history and experience, no debt....so they can change their course of action into something more comprehensive in education sector in the future.

Like the main reason behind the IT coaching falling down was the starting of the same in the schools and colleges, so sensing the opportunity NIIT has entered into school training, teacher training etc. I think earlier we were getting anything in the name of IT coaching, our standards were very poor...our software engineers were just doing coding (writing millions of lines of a program designed and conceptualized in some USA, we are still doing the same). This is the reason; we have not created anything like Oracle, Java, Windows. our infosys and TCS are just low cost contractors. i think it is all about education.

So i am betting my money on this quality education part.

Biocon: Biocon is one of the best research based pharma company. I am a huge fan of  its owner Kiran mazumdar shaw, who started the business with 10000/- in 1978 after banks declined to give her loan because she was a girl. i adore some indian promoters like PRS Oberoi of EIH, Vikas oberoi of Oberoi realty and kiran M shaw of biocon for their business acumen, fairness and passion. She doesn't like the idea of taking debt for acquisition. Biocon was a debt free company, only recently it took a loan, perhaps for its Malaysia plant for making insulin for catering to global market as its present capacity in india is fully utilized.

Biocon is investing around 7-8% of its biotech turnover on R&D which is equal to global MNC as compared to indian standard of just 1%. Biocon has been betting big on oral insulin and it is into 3rd phase trial...if it is a success you can sense the scale it can generate. It is also into final stages of developing the drug for cancer.

It has launched many innovative drugs with its own research. Now it is focusing big on Biosimilars which is a huge business opportunity because patents of many biologics are going to expire upto 2020. Biosimilars are generic version of biologic medicine. Generic drugs are generic version of chemical drugs.

Making of curd and making of liquor is the best examples of workings of biotechnology, when enzymes convert one material into a complete new material. Biotechnology is changing our medicine world with its innovative and side effects free biologics.

Biocon is one research arm Synegene which provides research outsourcing facilities to global clients. Biocon is going to list it in the market around jul-15, it comprises 25% of profit but its valuation last year was 4000 cr (biocon market cap is 9000), so if syngene gets a valuation of 5000 cr then we are getting Biocon at just 4000 cr. CMP around 440.

(Views are personal and should not be taken as a recommendation for buying or selling a stock. Stock markets are inherently risky so kindly do your Due Diligence before investing)