SAR Televenture Limited
Company
| Website 🔗 |  |
| Business Activity | Service |
| Division | Infrastructure (Tele-Communications) |
| Sub-class | Tower Installation and Fiber Optic Network Deployment |
| Location | Gurugram, Haryana Noida, Uttar Pradesh |
| Establishment Year | 2019 |
Management
| Managing Director | Rahul Sahdev |
| Educational Qualifications | MBA in Marketing Management from Australian International College of Business Advance Diploma in Business Management from National Business Management College, Australia |
| Experience | 18 years of experience in marketing Prior experience at Connect.com.au Pty Ltd. and ADA Cellworks Sdn. Bhd. |
| Annual Salary | ₹ 6 Lakhs |
| Total Number of Employees | 38 |
About
SAR Televenture Limited is a telecommunications infrastructure provider primarily focused on the installation and commissioning of telecom towers. It also offers support services like project management for duct and optic fibre cable laying, construction of basic transmission and telecom utilities, dark fibre leasing, optical fibre network construction, and maintenance services to various telecom network operators, broadband service operators, and ISPs.
Products and Services:
- Installation and commissioning of telecom towers
- Project management for duct and optic fibre cable laying
- Construction of basic transmission and telecom utilities
- Dark fibre leasing
- Optical fibre network construction and maintenance
- Fiber-to-the-Home FTTH network solutions
Clients:
- Major telecom service providers in India
- Broadband service operators
- ISPs
Raw Materials:
- Galvanized poles
- Electrical equipment (earth strips, power cables, switches, fuse boxes)
- Batteries
- Rectifiers and inverters
- Fiber optic cables
- Other construction materials
Other Key Aspects:
As of May 31, 2024, the company has successfully installed a total of 413 towers, which are leased out to telecom service providers. The company holds an IP-I license from the Department of Telecommunications (DoT), enabling it to lease build sites.
Expansion into FTTH
In addition to its core tower installation business, SAR Televenture is strategically expanding into the Fiber-to-the-Home (FTTH) sector.
The majority of the company’s revenue in Fiscal Year 2024 was generated from its subsidiary’s operations, specifically fibre cable laying and installation, and trading of network equipment. Tower installation, the company’s primary business initially, contributed a relatively smaller portion of the overall revenue.
Revenue – Category
Revenue – Region
Audit and Legal
Auditor’s Remarks:
The auditors found the company’s financial information to be fairly presented and free from any material misstatements.
Related Party Transactions:
In Fiscal Year 2024, related party transactions amounted to ₹179 Crores, representing 144.57% of the total revenue of ₹124.1 Crores. The substantial percentage is primarily due to significant loans taken from the holding company.
Non-Compliances and Other Issues:
SAR Televenture Limited has no outstanding penalties or regulatory actions against it until the period ending FY 2024
History of Delays in Statutory Payments:
The company has a history of delays in paying statutory dues like GST and EPF, although these have been rectified with late fees.
Contingent Liabilities:
As per the Restated Consolidated Financial Statements as of March 31, 2024, SAR Televenture Limited does not have any contingent liabilities.
Legal Cases:
As of the end of FY 2024, there are no outstanding litigation proceedings, material developments, or legal cases involving SAR Televenture Limited, its promoters, directors, subsidiaries, or group companies.
SWOT Analysis
Strengths
| Established Client Base: SAR Televenture has secured contracts with three major telecom service providers in India, indicating a strong market presence and the ability to meet the needs of significant clients. |
| Growth Potential: The company operates in a rapidly growing telecommunications sector, with increasing demand for telecom infrastructure, particularly in underserved rural areas. This presents a significant opportunity for expansion and increased revenue. |
| Geographic Expansion: SAR Televenture has successfully expanded its operations across multiple states and union territories in India, demonstrating its ability to navigate diverse markets and regulatory environments. |
Weaknesses
| Limited Operating History: As a relatively new company, SAR Televenture has a limited track record, making it challenging to assess its long-term performance and stability compared to more established competitors. |
| Dependence on a Few Customers: The company’s revenue is concentrated among a small number of major telecom service providers, making it vulnerable to any adverse developments or loss of business from these key clients. |
| Dependence on Subsidiary: A significant portion of SAR Televenture’s revenue is generated through its subsidiary, exposing the company to risks associated with the subsidiary’s performance and the regulatory environment in its operating location. |
| Trademark Licensing: SAR Televenture currently operates under a licensed trademark, which could create brand image risks and potential costs if the licensing agreement is terminated or the licensor faces difficulties. |
Opportunities
| 5G and 6G Technology Rollout: The rapid deployment of 5G and the anticipated development of 6G technology in India will create substantial demand for telecom infrastructure, providing SAR Televenture with opportunities to expand its tower installation and fibre optic services. |
| Untapped Rural Market: The significant gap in tele-density between urban and rural areas in India offers a vast market for telecom infrastructure expansion, allowing SAR Televenture to capitalize on the growing demand for connectivity in underserved regions. |
| Infrastructure Sharing: The increasing trend of infrastructure sharing among telecom operators presents opportunities for SAR Televenture to leverage its existing tower infrastructure and fiber optic network to generate additional revenue through co-location and leasing arrangements. |
| Expansion into FTTH: The growing demand for high-speed broadband internet and the government’s focus on fibre optic connectivity create a favourable market for SAR Televenture’s expansion into Fiber-to-the-Home (FTTH) services. |
Threats
| Intense Competition: The telecom infrastructure sector in India is highly competitive, with established players and potential new entrants vying for market share. SAR Televenture will need to maintain its competitive edge through cost-effective solutions and efficient project execution. |
| Technological Advancements: Rapid technological changes in the telecom industry could render existing infrastructure obsolete or less desirable, requiring SAR Televenture to adapt and invest in new technologies to remain relevant and competitive. |
| Regulatory Changes: The telecom sector is subject to evolving regulations and policies, which could impact SAR Televenture’s operations, licensing requirements, and cost structures. The company needs to stay abreast of regulatory developments and ensure compliance to avoid disruptions. |
Porter’s Five Forces1
| Threat of New Entrants | MODERATE |
| The telecom infrastructure sector in India has high barriers to entry due to significant capital requirements, the need for regulatory approvals, and established players. The evolving nature of the industry with the advent of 5G and 6G technologies might create opportunities for new entrants with innovative solutions. |
| Bargaining Power of Suppliers | LOW – MODERATE |
| While the company relies on various suppliers for equipment and materials, it operates on a purchase order basis without long-term contracts, suggesting some flexibility in switching suppliers. |
| Bargaining Power of Buyers | HIGH |
| The industry is dominated by three major private players (Reliance Jio, Bharti Airtel, and Vodafone Idea), giving them significant leverage in negotiating prices and terms with infrastructure providers like SAR Televenture. |
| Threat of Substitute Products or Services | LOW – MODERATE |
| While technological advancements like traffic offloading and alternate access technologies could potentially reduce the demand for traditional tower infrastructure, the continued growth of mobile data usage and the rollout of 5G networks are expected to sustain the demand for towers in the foreseeable future. The expansion into FTTH also diversifies the company’s offerings and reduces its reliance on a single product. |
| Rivalry Among Existing Competitors | HIGH |
| The telecom tower industry in India is competitive, with established players like Indus Towers and GTL Infrastructure holding significant market shares. |
Peer Comparison
The company’s performance on various financial and operational metrics compared to its peers is as follows:
| Key Performance Indicators FY 2024 | SAR Televenture Limited | Suyog Telematics Limited | Kore Digital Limited |
| Revenue from Operations (₹ in Crores) | 124.1 | 166.6 | 103.5 |
| EBITDA Margin (%) | 14.19% | 70.43% | 14.98% |
| PAT Margin (%) | 12.61% | 36.33% | 10.94% |
| ROE (%) | 21.81% | 21.22% | 15.37% |
| ROCE (%) | 6.63% | 21.89% | 42.64% |
| Debt-Equity Ratio | 2.48 | 0.29 | 0.01 |
Higher Leverage:
The company’s Debt-Equity ratio is considerably higher than its peers, suggesting a higher level of financial risk and potential vulnerability to economic downturns or changes in interest rates.
Lower Profitability and Efficiency:
Compared to its peers, SAR Televenture’s profitability and operational efficiency metrics are lower. This suggests that the company needs to improve its cost management and operational efficiency to enhance its financial performance.
Green Box
IPO Funds:
Funding the setup of Fiber-to-the-Home (FTTH) network solutions for 300,000 Home Passes:
This involves expanding the company’s services into providing high-speed broadband internet directly to households using fibre optic cables. The estimated cost for this endeavour is ₹273 Crores.
Funding the setup of an additional 1,000 4G/5G telecom towers:
This aims to enhance the company’s core business of providing telecom tower infrastructure, catering to the increasing demand for mobile data services and network capacity. The estimated cost for this is ₹42.5 Crores.
High Growth Potential:
The company has demonstrated a remarkable revenue growth rate of 282.35% from FY 2023 to FY 2024, indicating its ability to capitalize on market opportunities and expand its business rapidly.
Strategic Expansion into FTTH:
Venturing into the Fiber-to-the-Home (FTTH) segment positions SAR Televenture to tap into the increasing demand for high-speed internet and diversify its revenue streams.
Geographical Presence in Underserved Markets:
SAR Televenture’s focus on B-category and C-category telecom circles, which include less developed regions, provides a unique advantage to tap into the underserved rural market with significant growth potential.
International Presence:
Through its subsidiary in the United Arab Emirates, SAR Televentures F.Z.E, the company has an international presence, which could open doors for further expansion and diversification in the future. Its competitors, as per the document, operate solely within India.
Industry Outlook:
Rural Connectivity Initiatives:
Government initiatives like BharatNet and the Universal Service Obligation Fund (USOF) are focused on expanding telecom infrastructure in rural and underserved areas. This push for rural connectivity is expected to drive the demand for telecom towers and fiber optic networks, opening up new markets for infrastructure providers.
Telecom Tower Sector:
The tower installation sector is projected to grow at a CAGR of 40% by the end of March 2025, according to the National Broadband Mission.
Telecommunications Sector:
The overall telecommunications sector is expected to grow at a CAGR of 8% to 9% in the next three years.
Amber Box
Lower Profitability and Efficiency:
Compared to its peers, SAR Televenture’s PAT margin and ROCE are lower, indicating that it’s currently less efficient in converting revenue into profit and utilizing its capital.
Limited Operating History:
Being a relatively new company, SAR Televenture has a limited operating history compared to its more established peers. This might make it challenging for investors to assess its long-term sustainability and growth prospects fully.
Right of Way (RoW) Regulations:
Acquiring and maintaining RoW permissions for laying fiber optic cables and installing towers can be challenging and time-consuming. Any changes in RoW regulations or difficulties in obtaining permissions could delay projects and increase costs.
Red Box
Regulatory and Operational Risks:
The company operates in a highly regulated industry and faces various regulatory risks, including changes in laws, spectrum allocation policies, and EMF radiation norms. Additionally, operational risks like natural disasters, power outages, and supply chain disruptions could impact its business.
Negative Cash Flow from Operating Activities:
The company experienced negative cash flow from operating activities in Fiscal Year 2024 and 2023.
Dependence on a Single Customer and Subsidiary: The company’s tower installation business is currently concentrated with a single customer, and a significant portion of its revenue comes from its subsidiary.
Debt Structure:
Debt-Equity Ratio: 2.48
SAR Televenture’s debt structure is characterized by high leverage and a reliance on unsecured borrowings, including loans from related parties. While this approach can enable faster growth, it also carries higher financial risk.
Images
- The force value of “LOW” is considered good Click Porter’s Five Forces article for more information. ↩︎
Disclaimer: The above information/document is based on publicly available sources and has been issued solely for educational and informational purposes and should not be considered as investment advice or as a Buy/Sell recommendation, or as a research report. Although due diligence has been done to ensure the accuracy of the data presented, the website or authors are not responsible for any decision arising out of an inadvertent mistake or error in the data presented on the website. The authors may also have equity shares in the companies mentioned in this report adhering to provisions of regulation 16 of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. The investor is advised to consult his/her investment advisor and undertake further due diligence before making any investment decision in the companies mentioned. Authors are not liable for any financial gains or losses due to investments made as per the information provided on this website (StocKernel.com).
I enjoyed reading this. It’s clear and well-written.