CARE Equity Research assigns 3/5 on fundamental grade to Optiemus Infracom Limited

CARE Equity Research assigns a fundamental grade of 3/5 to Optiemus. This indicates 'Good Fundamentals'. The grade draws reflects sustained growth in sales achieved by the company which is in line with the growth of Samsung India Electronics Ltd. (Samsung), a subsidiary of the South Korean electronics major Samsung Electronics Co. Ltd., in the handset market in India. The company has established a strong network for distribution of mobile handsets to modern trade (organized retail chains). Optiemus has a pan India presence with 27 offices cum warehouses across India. Though renewal of agreement with Samsung would remain a concern, the presence of the company in allied businesses would help in diversifying the revenue stream and mitigating overall risk.

CARE Equity Research believes that the increasing penetration of smart-phones in India (where Samsung has emerged as one of the leading players) augurs well for the fortunes of the company.

Valuation

CARE Equity Research values Optiemus using Price-Earnings (P/E) multiple based methodology. Optiemus is currently trading at a P/E of 4.2x and 3.6x to the FY13 and FY14 diluted EPS estimates of Rs.4.5 per share and Rs.5.3 per share, respectively. Historically, the company has traded at one year forward rolling multiple of 6x. Given the continued healthy outlook on growth going forward, CARE Equity Research believes that it is fair to value Optiemus at the historical one year forward P/E multiple of 6x, translating into a Current Intrinsic Value (CIV) of Rs.28.3 per share. At the Current Market Price (CMP) of Rs.19 per share the CIV results in a valuation grade of 5/5 indicating the equity shares of Optiemus have 'Considerable Upside Potential'.

Source : Equity Bulls

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