Buy D-Link India - ICICIdirect

- Strong lineage: The company boasts of a strong lineage from its parent D-Link Corporation Taiwan, which has global recognition with a presence in 67 countries with a wide range of products catering to various sectors including telecom, retail, health care, education, enterprise, government, etc. The parent is a global leader in terms of port shipments of networking products and by its virtue D-Link India does not face technology obsolescence risk.

- Management performance: Post appointment of Tushar Sighat as CEO in 2011, the company moved from flattish growth seen in FY09-11 to a high growth trajectory. On the back of aggressive marketing and customer servicing measures, the company posted a topline growth of 73% in FY12 and 68% in 9MFY13.

- Strong distribution network: D-Link distributes its products through two national distributors viz. Redington and Ingram Micro. The company boasts of a strong distribution network with 17 branch offices in India, 22 RMA centres, 85 business distributors and over 200 SI partners.

- Topline to grow at 32% CAGR (FY12-15E): The growth potential of the internet industry, a strong product portfolio and distributor network and recently demonstrated ability to expand its market share augur well for D-Link. We expect the company to post revenue CAGR of 32.1% in FY12-15E.

- The EPS has grown at 56.8% CAGR in FY11-13 (annualised 9MFY13 EPS). We expect D-Link to continue posting robust growth at EPS CAGR of 41.6% over FY12-15E. The stock is trading at an attractive valuation of 4.0x FY15E EPS. Riding on the imminent broadband boom and strong product offerings, the stock holds immense upside potential. We have valued the stock at 6x FY15E EPS to arrive at a fair value of Rs.40.

Source : Equity Bulls

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