Monday, January 5, 2009

Multibagger: Micro Technologies (india) Ltd.

Micro Technologies (India) Ltd. (Code: 532494) Rs.112.05
Established in 1992 and promoted by Mr. P. Sekhar, Micro Technologies (India) Ltd. (MTIL), an Information Technology Enabled Services (ITES) company is a global developer, manufacturer and marketer of security, safety and life-support electronic equipments & solutions. Over the years, it has developed some high-end security products from mobile security to automobile security & monitoring systems using its leverage over various futuristic technology platforms such as embedded, web-based and client server applications. The high-tech wireless technologies which MTIL caters through its products are the GPS (Global Positioning System), GSM (Global System for Mobile communication), CDMA (Code division multiple access), GPRS (General Packet Radio Service), RFID (Radio-frequency identification) and GIS (Geographic Information System), which is an information system for capturing, storing, analyzing, managing and presenting data. Today, MTIL boasts of hundreds of unique, hi-tech, first-of-its-kind and innovative security products that have a huge demand with tremendous potential worldwide. Considering its performance, it has been accorded with‘Deloitte Technology Fast 500 Asia Pacific Award’ & ‘Deloitte Technology Fast 50 (India) Award’ for two consecutive years in 2007 & 2008. It has even won the Dun & Bradstreet-ECGC Indian Exporters' Excellence Award in June 2008.
During 2007 it was profiled as one of the top IT innovators by NASSCOM. Recently, on 15 August 2008, Dr. A. P. J. Kalam felicitated Dr. P. Sekhar, chairman & managing director, for his significant contribution in the security segment.
Few of MTIL’s blockbuster products & solutions:
Micro VBB - Vehicle Security System Micro HSS - House Security System Micro LMTS - Lost Mobile Tracking System Micro FMS - Fleet Monitoring System Micro OSS - Office Security System Micro SBB - Secure Bank Black Box Micro DMS - Disaster Management System Micro EBB - Energy Black Box Micro VDP - Video Door Phone Micro IBB - Intelligent Black Box Recently launched products/solutions:
Micro BSS - Bike Security System Micro ISS - Intelligent Surveillance System Micro WSS - Wi-fi Security System Micro LNTS - Lost Notebook/Laptop Tracking System Micro BTS - Buddy Tracking System Micro SAMS - Students Attendance Management System
These revolutionary products are the USP for the company. MTIL is one of the first companies to develop security systems using SMS (Short Messaging Services) on a mobile GSM platform. Accordingly, all the products/solutions developed by the company can be fully controlled using normal mobiles & computers. In fact, with over 80 intellectual property rights (IPRs), its technology has been patented in 123 countries giving it exclusive rights in these markets. The company has also got test certifications from national and internationally accredited agencies like ERTL, ARAI, FCC, CE, SYMBIAN etc. for all its premium products. After developing such world-class products, MTIL is now focusing more on marketing and distribution to increase its presence in India and the world. Accordingly, it has appointed more than 2000 dealers/distributors all over India, opened more than 70 Micro Shoppe franchise outlets, increased its participation in exhibitions and has also increased the advertising budget substantially for brand building and product awareness. It has even launched a novell concept of Mobile Micro Shoppe i.e. Shops on Wheels and is also selling its products online through various portals. It has been targeting clients across diverse sectors such as retail, corporate, institutions, PSUs etc and has its products successfully installed at ICICI Bank, Reliance Energy, L&T, NSDL, Siemens, NMMC, FICCI, Girvan Institute, Tata Honeywell, CIDCO, HPCL, BPCL, BARC, MCGM, MSEB, MRVCL, TVS Lucas to name a few. Importantly, it has tied-up with MTNL, BSNL, Idea & Airtel to offer mobile security solutions (Micro LMTS) at a competitive rate to their subscribers. It also has a strategic tie-up with FORD for installation of Micro VBB device in Ford Ikon vehicles. To segregate it business model and work efficiently, MTIL has formed two subsidiaries namely Micro Secure Solutions and Micro Retail, which will concentrate only on the marketing and distribution aspects. Although India in itself is a huge market, MTIL is also betting on the global market to boost its revenue. To increase its global presence, it has entered into marketing tie-ups with several foreign companies like Active Solutions (Nepal), Knowledge Vectar (USA), Easy Fleet Solutions (Turkey), Tokyo Software (Japan), Kreasindo Solusi (Indonesia), Pacific Solution (UK, Africa and Singapore), Status Solutions (UAE), I-System (Srilanka) etc. Of late, it has entered into a strategic agreement with TWI International (South Africa) and Lazer Technology Solutions for distribution of its selected security products in the Middle East and Egypt. Recently, it tied-up with Jicoux Datasystems, a 100% subsidiary of Mitsubishi Corporation, to offer Micro LMTS (Lost Mobile Tracking System) for the Chinese and Japanese markets. Accordingly, it has even introduced the Chinese version of its internationally acclaimed product - Micro LMTS. The company has a strong R&D team working on multiple innovations to ensure that it introduces 5/6 new products in the market every year. At the same time, it is constantly expanding its hardware/equipment manufacturing capacity and improving its infrastructure to meet the rising demand.
Presently, the Indian electronic security market is at a very nascent stage and growing at over 25% per annum. Moreover, it is dominated by the unorganised sector with the organised players enjoying less than 10% market share. With a handful of Indian manufacturers, security equipments are largely imported from China, USA, UK, Germany, Singapore, Italy, Hong Kong, Israel, Japan, Korea, and Taiwan. With India having the largest mobile subscriber base and highest number of two wheeler/four wheelers on the roads, the market potential for its product is very huge. Due to the rising terror incidents across India, corporates, households and governments have understood the need/importance of the security of premises. All this will eventually lead to increased business for the company. Recently, the company reduced the price of its products by up to 30% to cash in on the fear sentiment after the Mumbai terror attacks. As far as its financials are concerned, MTIL is doing exceedingly well as it has reported a CAGR of 85% in the topline and 95% in the bottomline in the last three years. Even for H1FY09, it has posted 60% growth in revenue at Rs.117 cr. and 50% increase in net profit to Rs.34 cr. over H1FY08. It has a strong balance sheet with low debt:equity ratio of 0.35 and huge reserves of Rs.192 cr. on its small equity of Rs.10 cr. leading to a healthy book value of Rs.190. On the margin front, it has been consistently registering an OPM of more than 40% and NPM of 30% for the last three years. For the current year, it may post a total revenue of Rs.275 cr. with PAT of Rs.55 cr., which will lead to an EPS of Rs.50 on its current equity of Rs.11 cr. Considering the CMP, chances of conversion of the balance FCCB and warrants into equity appear bleak. With an EV/EBITDA of less than 2 times and market cap/sales of merely 0.40 times and a having cash EPS of Rs.75, the scrip is trading extremely cheap at the market cap of Rs.115 cr. Investors are strongly recommended to buy at current levels as its share price can triple in 15-18 months.
Source: Internet (Moneytimes)

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