NELCO - NELCO

📊 NSE: NELCO 🏢 Telecommunications - Service Provider 📅 Last Updated: 12/14/2025 10:27

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue for FY25 was INR 306 Cr, a 4.7% decline from INR 321 Cr in FY24. Standalone revenue for FY25 was INR 205 Cr, down 8% from INR 223 Cr. Revenue for H1 FY26 stood at INR 149 Cr. The business is split into VSAT hardware sales (20-25% of revenue) and recurring bandwidth/service usage (75-80% of revenue).

Geographic Revenue Split

Not disclosed in available documents; however, the company provides domestic satellite services across India with specific focus on remote locations.

Profitability Margins

Operating margins are expected to remain stable due to the recurring nature of 75-80% of revenue. Networth stood at INR 128.55 Cr as of September 30, 2025, compared to INR 127.90 Cr in March 2025.

EBITDA Margin

Operating profitability is supported by a low churn rate of 3-5% and long-term contracts (1-3 years). Consolidated operating income was INR 306 Cr in FY25 vs INR 321 Cr in FY24, reflecting a slowdown in the government and maritime segments.

Capital Expenditure

Planned annual capex of INR 20-30 Cr for FY26 and FY27, funded through internal accruals and external debt. Previous FY25 plans included a higher capex of INR 90-100 Cr with a 70:30 debt-equity mix.

Credit Rating & Borrowing

CRISIL A/Stable (Long-term) and CRISIL A1 (Short-term). The outlook was revised from 'Positive' to 'Stable' in November 2025 due to slower-than-expected revenue growth. Total bank loan facilities rated are INR 218.3 Cr.

⚙️ Operational Drivers

Raw Materials

Satellite bandwidth (major cost component), VSAT hardware (antennas, modems), and proprietary technology licenses from global vendors.

Import Sources

Global markets for satellite capacity and specialized hardware components.

Key Suppliers

VT iDirect and Gilat Satellite Networks for proprietary VSAT hardware; Panasonic Avionics Corporation and Intelsat for technology and bandwidth partnerships.

Capacity Expansion

Maintains a stable installation base of 65,000 to 75,000 VSAT terminals. Expansion is focused on the Inflight and Maritime Communication (IFMC) space and cellular backhaul.

Raw Material Costs

Bandwidth fees are a significant recurring cost; however, technological evolution is expected to reduce these fees over time, improving competitiveness against terrestrial providers.

Manufacturing Efficiency

Focus on shifting from automation and controls (discontinued in 2017) to high-margin VSAT services has improved the operational profile.

📈 Strategic Growth

Expected Growth Rate

15%

Growth Strategy

Growth will be driven by the New Space Policy 2023 de-regularization, expansion in the IFMC (Inflight Maritime Communication) sector which grew 11% in FY24, and increasing adoption of VSAT for cellular backhaul and rural education.

Products & Services

VSAT connectivity services, satellite bandwidth, Inflight and Maritime Communication (IFMC) services, and VSAT hardware installations.

Brand Portfolio

Nelco, Tata Power (Parent Group).

New Products/Services

Expansion into the LEO (Low Earth Orbit) and MEO (Medium Earth Orbit) satellite space to offer lower latency and higher bandwidth services.

Market Expansion

Targeting the mobility space (Aero and Maritime) which is expected to substantially expand industry size in the medium term.

Market Share & Ranking

Holds ~26% market share in the INR 1,000 Cr niche VSAT industry.

Strategic Alliances

Partnerships with Panasonic Avionics Corporation and Intelsat to provide global roaming and high-speed connectivity for mobility segments.

🌍 External Factors

Industry Trends

The industry is shifting toward de-regularization under the New Space Policy 2023, which is expected to lower entry barriers and reduce regulatory risks while increasing competition.

Competitive Landscape

Faces competition from terrestrial telecom operators and emerging satellite technologies like Starlink or OneWeb.

Competitive Moat

Moat is built on being part of the Tata Group (financial flexibility), high switching costs for satellite hardware, and a 75-80% recurring revenue model with a low 3-5% churn rate.

Macro Economic Sensitivity

Sensitive to government spending on rural connectivity and digital infrastructure projects.

Consumer Behavior

Increasing demand for 'always-on' connectivity in maritime and aviation sectors is driving shift toward IFMC services.

Geopolitical Risks

Dependency on international satellite providers makes the company sensitive to global space regulations and trade relations.

⚖️ Regulatory & Governance

Industry Regulations

VSAT services are strictly regulated by the Department of Telecommunications (DoT). Any policy change regarding spectrum allocation or licensing fees directly impacts margins.