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Growth trajectory continues…
Opto Circuits’ (India) (OCIL) sales rose by 29.6% YoY to | 331.38 crore
on the back of an increase in sales from both invasive (up 62%) and
non-invasive (up 23%). EBITDA margins fell 360 bps YoY to 31.9% due
to higher promotional expenses, addition of employees in the Malaysian
SEZ and consolidation of Unetixs. It booked a loss of | 8.2 crore on
other income due to forex loss. The fall in EBITDA margin and loss on
other income restricted net profit growth to 15.6% at | 77.38 crore.
Going forward, we expect net sales to increase at a CAGR of 19% in
FY10-12E. Considering growth in both the invasive and non-invasive
segments, we have revised our target price to | 343 with BUY rating.
Quarterly highlights
Opto’s subsidiary, Eurocor, has won a tender from Albania’s leading
Hospital - University Hospital of Tirana. It has acquired Unetixs Vascular
Inc for US$9.7 million during the quarter. Unetixs designs, develops and
markets USFDA approved vascular diagnostic systems and accessories.
Unetixs recorded sales of | 9 crore during the quarter.
Valuation
We expect Opto’s sales, EBITDA and PAT to grow at a CAGR of 19%,
17% and 23%, respectively, between FY10 and FY12E. The company
operates in a niche segment, which itself is piggybacking on changing
lifestyles and demographic transition, globally. The global non-invasive
devices segment (which accounts for 75% of the company’s sales) is
slated to grow at a CAGR of ~25-30% between 2010-15 on account of
robust demand for patient monitors and accessories. We also expect
reasonable growth for the invasive devices segment mainly in coronary
stents and catheters on account of advancement in technology. Over the
years, the company has positioned itself at the top of the high growth
trajectory by constantly introducing new products and also by healthy
acquisitions. The stock is currently trading at ~14x FY12E EPS of | 21.4.
We have valued the stock at 16x FY12E EPS and arrived at a price target
of | 343, giving 16% upside. We maintain our BUY rating on the stock.
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