Kore Digital Limited: A Comprehensive Overview

Company Background

Kore Digital Limited, established in 2009, has become a significant player in the telecommunication and infrastructure sectors. Licensed by the Department of Telecommunications, the company focuses on enhancing connectivity in Maharashtra through the deployment of cell sites and the establishment of robust optic fiber networks and cable infrastructure.

Key Collaborations and Projects

• Collaborates with major clients like Vodafone, Bharti, Reliance, Tata Teleservices, and BSNL

• Partnered with OSR Teleservices for a 15-year concession (extendable by 10 years) to lay optic fiber cable ducts along the Mumbai-Nagpur Samruddhi Highway
  

• Project commencement: June 2024

• Expected completion: May 2025

• Estimated capital cost: Rs. 800-900 crores

• Kore Digital's stake: 33% (Rs. 500 crores)

Business Model and Operations

1. Construction Division (70% of revenue): Building telecom networks based on telecom companies' needs

2. Leasing Segment (30% of revenue): Leasing infrastructure to telecom companies

• No order book system; focuses on shared infrastructure to reduce costs

• Payment terms: 30% for every 100 km completed, full payment upon segment handover

• Revenue projection benchmark: MSRDC rates (currently 12.1+ per month, per meter, with 10% annual increase)

Growth Strategy

• Increase company size and capacity

• Expand vendor network

• Invest in advanced machinery

• Participate in larger tenders and projects

• Focus on enhancing connectivity through fiber optics along expressways and communication corridors

Future Prospects

• Booming data center industry presents significant revenue growth opportunities

• Defense sector project in development (announcement expected in 6-7 months)

• Projected growth:
  

• FY24-25: Projects totaling 400 crores

• 2026: Estimated 1,000 crores from similar ventures

• Additional 400-500 km of optical fiber to be laid by March 2025

Leadership and Management

Key Personnel

1. Mr. Ravindra Navinchandra Doshi (Managing Director)

2. Age: 61

3. Education: M.Sc., PG Diploma in Management

4. Experience: 32+ years in the industry

5. Mrs. Kashmira Ravindra Doshi (Executive Director & CFO)

6. Age: 57

7. Education: B.Com

8. Experience: 30+ years in the industry

9. Mr. Chaitanya Ravindra Doshi (Executive Director & CEO)

10. Age: 26

11. Education: B.Tech in Biotech

12. Mr. Ajeet Krishna Kadam (Non-Executive Independent Director)

13. Age: 45

14. Education: Diploma from Sasmira's Institute of Design and Textile, Mumbai

15. Experience: 23+ years in the manufacturing sector

16. Ms. Hiral Jainesh Shah (Non-Executive Independent Director)

17. Age: 30

18. Education: Post Graduate degree, Qualified Company Secretary

19. Ms. Ruchi Ramesh Gupta (Non-Executive Independent Director)
    

20. Age: 37

21. Education: Graduate from Delhi University, Chartered Accountant

22. Experience: 13+ years at big four firms and major corporates

Business Evolution and Current Focus

1. Started with computer sales and networking solutions

2. Transitioned to internet solutions using Cat5 cables

3. Shifted focus to optic fiber networks for greater distance and reliability

4. Current core business: Building and leasing optic fiber networks to telecom companies and major service operators (MSOs)

Key Projects and Financial Projections

1. Mumbai-Nagpur Samruddhi Highway Project

2. 1400 kilometers of optic fiber network

3. Expected revenue: 100 crores (current financial year), 500 crores (next year)

4. Mumbai-Pune Network

5. Urban Networks in Thane, Dombivli, Kalyan, and Navi Mumbai

6. Total projected revenue: Approximately 300 crores by the end of the current financial year

Diversification

• Expanded into road construction, utilizing existing machinery and manpower for excavation and refill work

Operational Insights

1. Focus on operational costs rather than capital expenditures

2. Right of Way (RoW) challenges: Less complicated for telecom networks compared to road construction

3. Competitive edge in the market against companies like Indus Tower and Suyog Telematics

4. Potential involvement in the Integrated Traffic Management System (ITMS) for the Samruddhi Highway (project value: 1600 crores)

5. Long-term contracts unaffected by political changes

6. Concession model: 15-year permission to lay optic fiber networks, extendable to 25 years

7. Revenue generation tied to tender fees with 5% escalation after the third year

Future Outlook

• Focus on projects within Maharashtra and Gujarat

• Potential expansion to Karnataka and Goa

• Emphasis on high-value and strategically significant projects

• Expected significant impact on revenue and profitability from future projects, particularly those related to Samruddhi Highway and ITMS
  

Expected Share value of KDL

Fiscal Year	Projected Revenue (Crores)	Operating Profit Margin (%)	Projected PBT (Crores)	Projected PAT (Crores)	Fair Market Cap (Crores)	Fair Value per Share (Rs)
FY 24-25	350	15	52.5	36.75	1102.5	2756.25
FY 25-26	1000	15	150	105	3150	7875

• In this table: This table format provides a clear and concise summary of the financial projections and fair values for KDL shares for FY 24-25 and FY 25-26

• Projected PBT (Profit Before Tax) is calculated as Projected Revenue multiplied by Operating Margin.

• Projected PAT (Profit After Tax) is calculated by applying a 30% tax deduction on Projected PBT.

• Fair Market Cap is derived using a Price-to-Earnings (PE) ratio of 30 multiplied by Projected PAT.
  

Summary

If the market gives fair value to KDL shares, the share price could reach:

• 1.75x in one year

• 5x in two years

The company was identified as a multibagger when the share price was at Rs.226. Details were shared in this Medium link.

Even at the current price, the stock has potential to be a multibagger. Follow the page and subscribe to the newsletter to get updates on any multibagger stocks in the future. Further study should be conducted after results to ensure the company is performing as expected.