OnMobile Global - Set for second innings - AXIS DIRECT

- CMP of Rs 36 (PE of 6x FY15E EPS) reflects excessive pessimism for a company having 25% earnings CAGR over FY13-15E and 40% of CMP as cash

- We pitch 'Truth as we see' against 'Market perception' to give investors a clear picture on OnMobile and establish why we believe the stock should nearly double in a year (TP of Rs 71)

- With concerns over corporate governance (new management in place) and funds misappropriation (clean chit from independent audit firms) receding investor focus should and will return to fundamentals and growth prospects of the company

- International operations continue their robust momentum, led by increasing RBT penetration in Latam/ Africa and data-based products in developed countries

- Domestic operations are set for a rebound from Q2FY14, as the company would have already absorbed the impact of TRAI regulations on VAS

- RoE and RoCE to improve to 7 and 10% in FY15E from ~5% each currently

- Strong likelihood of high dividend and/or share buyback

- Comviva deal implies value of Rs 74/sh for OnMobile

Source : Equity Bulls

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