| After cancellation of Urban Land Ceiling Act |
Our Bureau
Mumbai, Nov. 30 Riding high on Thursday’s news of the annulment of the Urban Land Ceiling Act were the stock prices of telecom companies VSNL and MTNL.
The share price of VSNL touched its 52-week high of Rs 642.30 and was up by a whopping 12.14 per cent to end the day at Rs 626.60. MTNL too was up by 6.59 per cent to end the day at Rs 171.45, hitting an intra-day high of Rs 177.60. Both VSNL and MTNL have land, which they can now sell after the cancellation of the Act.
Unlock Value
“MTNL stands to benefit from this as it has a significant amount of surplus land in . The company can now unlock value in the long-term by the sale of this surplus land,” said an analyst with a stock broking firm.
With profits from telecom services plummeting, MTNL is diversifying into developing IT parks. MTNL, which has prime property in Mumbai and Delhi, will build IT parks and lease infrastructure to software, BPO and KPO firms.
The company is now in the process of getting developers to develop its land banks in both Mumbai and Delhi. In its next project, MTNL is likely to develop its 1-lakh sq ft plus property in Mumbai.
VSNL too has a large surplus of land, which they can use to unlock value, say market analysts. VSNL has a huge surplus land bank of 773 acres .
Selling land
The Government is looking to maximise the value of this land and is considering various options. “There were rumours in the market about the company selling its land after the announcement of the revoking of the Urban Land Ceiling Act, due to which the share prices seem to rise up,” said a research analyst with a brokerage.
VSNL has around 773.1 acres of surplus land at premier locations in Delhi, Tamil Nadu, West Bengal and Maharashtra.
“Of the surplus land, the company has 524 acres in Maharashtra,” he added.
Regulatory Issues“Fundamentally there have been no changes in these companies and they have under performing due to regulatory issues. Their share prices are increasing mainly due to the realty factor. As these companies hold a good amount of land and can now garner a lot of benefit due to this,” said an analyst with Kotak Securities.
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