Onmobile Global jumps 57 per cent in three sessions

MUMBAI: Shares of Onmobile Global, provider of data and value added services (VAS) for mobile and landline, have surged 57% in the past three trading sessions as investors rushed to buy the stock on hopes of a turnaround in the company following narrowing down of net losses.

On Wednesday, Citigroup Global Markets bought 6.25 lakh shares, or just over half a percent of stake in the company. Shares of Onmobile rose fromRs 32.80 to Rs 51.45 in the past three trading sessions.

The Bangalore-based company posted better-than-expected results last week, with net losses narrowing to Rs 1.2 crore from Rs 23.9 crore on a quarter-on-quarter basis following sale of its French subsidiary Voxmobili SA for Rs 6.7 crore. Cash and cash equivalents in the quarter surged to Rs 289.8 crore from Rs 146.3 crore a year-ago.

The change in leadership may help the company to turn in a better performance and its stock is also likely to outperform, say analysts.

“This is the story of an operational turnaround with major organisational restructuring along with top management rejig,” said Daljeet S Kohli, head of research, IndiaNivesh Securities. “We do not expect any major negative financial surprises from here on.”

“Although innovation remains at the centre of Onmobile’s success, failure of new products with significant investments could erode margins and performance of the company,” he added.

In May this year, Onmobile appointed Rajiv Pancholy as its CEO, after its co-founder Mouli Raman resigned following a huge loss of Rs 139.20 crore in the fourth quarter ended March on account of writing down of goodwill associated with the acquisition of Telisma from the balance sheet.

The largest shareholder and chairman HH Haight had resigned and initiated a management reorganisation at the top.

While FIIs increased their stake marginally from 5.21% as on March 2014 to 6.05% in the quarter ended September 2014, domestic mutual funds almost exited entirely form the company.

OnMobile was spun out of Infosys in 2000, with Infosys holding a significant stake in the company.

Infosys has since exited the company, and US venture capital firm Argo Global is its biggest shareholder now. It is a pioneer in the mobile value-added services space.