Micro Technologies India Ltd. - Management meet note by MF Global

IT Software & Security

Micro Technologies

We recently met the management of Micro Technologies (India)Ltd., an IT company that is a leading global developer and marketer of security solutions across the globe with 350 products. It provides and integrates products that are necessary security devices, lifestyle and support systems. The company has a history of leading edge security products and it continues its tradition through focus on innovation and advanced technology making the life of its clients safe, secure and manageable in terms of security, time and money. Today, Micro Technologies is present in over 25 countries across the globe in almost all time zones. Owing to this steady overseas expansion, MTIL has become a multinational company and a global force to reckon with.In Sept '11 it was awarded by ELCINA-EFY award for 2010-2011 for excellence in R &D also, in 2009 it had received the NASSCOMS 'Innovative Products award '2009' for Wi-Fi Security System.

Financials:

For FY12 MTIL reported a 44% growth in top-line at Rs 8,619mn from Rs 5,998mn in FY11. Even though at Rs 2,670mn the EBIDTA margins stood at 31%, a rise of 28% when compared to FY11, the net profit of the company showed a 67% growth at Rs. 1299.42mn from Rs. 776mn in FY11. At CMP of Rs 147, the stock is trading at 1.6x of its FY12 earnings of Rs.90. Further company has an outstanding FCCB of $15 mn at a conversion price of Rs.240 per share due for repayment by July 2012. We believe that in view of the current market price if the management is unable to refinance the FCCB there could be increase in debt on the books currently @0.6x. The company is working on stretched w/c cycle of 243 days that has also led to increase in its overall debt during FY12. Though it trades cheap but in the current market conditions, the balance sheet quality does not instill confidence.

The Micro Technologies stock was trading at Rs.147.80, down by Rs.1 or 0.67%. The stock hit an intraday high of Rs.148.95 and low of Rs.146.10.

The total traded quantity was 0.24 lakhs compared to 2 week average of 0.30 lakhs.

Source : Equity Bulls

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