E2E Networks Reverses Losing Streaks to Lock in UC

Spread the love

E2E Networks Locks in UC after Steep Correction in 2-week

By S Jha

New Delhi, November 18: Shares of E2E Networks on Monday closed in an upper circuit of five per cent. The IT Services company had come down crashing from the life-time high of ₹5400 a few days ago.

Extending the losses, shares of E2E Networks were locked in the lower circuit at ₹4187.65. Within a few days, the shares of the company lost almost 30 per cent.

The shares of E2E Networks had been netting streaks of upper circuits, day after day. The newsbreak of the Larsen and Toubro acquiring ₹1000 crore worth of stakes in the company brought frenzied investors into the stock.

Also Read: India Leaps to 6th Position in Global Patent Filing

Some of the investors even bought into the company at the level of ₹5390. They were locked in steep losses as traders dumped the stock to lock profit. This led to steep fall in the share prices of the company.

But at 12.25 PM on Monday, the fortunes of the shares of E2E Networks changed with a strong set of buyers emerging on the street. Within 20 minutes, the shares of E2E Networks were locked in an upper circuit at ₹4628.42 a share.

The company had reported marginal growth in key parameters in the September quarter recently. E2E Networks caught fancy of the investors as getting the tag of an Indian Amazon in the making.

E2E Networks provides CPU and GPU-based cloud computing platforms. Amazon is widely known to be the world leader in cloud hosting business.

Also Read: Frenzy of IPOs Remains Chief Risk to Equity Market: CLSA

Larsen and Toubro will complete the acquisition of the stake in E2E Networks by December 31. Market participants claim that L&T boarding the E2E will bring scale of the business to the company.

L&T already has a sizable presence in the IT sector. LT Mindtree and LTTES are two mid-size IT companies. It’s not immediately known if L&T will tap into its own subsidiary for partnership with E2E Networks.

The face value of E2E Networks is ₹10. The two key parameters, ROCE (Return on Capital Employed) and ROE (Return on Equity), of E2E Networks are 25 and 36.5 respectively.

Shares of E2E Networks are trading at PE valuation of 249. The company reported marginal improvement in earning per share in the September quarter of ₹7.20 against ₹7 in the June quarter.

Also Read: Ex-Rail GM Calls India’s Plan for Hydrogen Train ‘Biggest Blunder’

The foreign institutional investors enhanced their stakes in E2E Networks by almost three times in the September quarter. The FIIs hold 3.39 per cent stakes in E2E Networks while their domestic counterparts have stakes of 4.11 per cent. The market capitalisation of E2E Networks is ₹7815 crores. In six months, shares of E2E Networks gave return of 350 per cent.

Disclaimer: This article makes no recommendation for buy or sell of shares of any company.

Join the WhatsApp Channel of The Raisina Hills