Opto Circuits reported 29.6%YoY growth in revenue: Motilal Oswal

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Opto Circuits (OPTC IN; Mkt Cap USD1.3b, CMP Rs307, Buy)

-          Opto Circuits reported 29.6%YoY growth in revenue to Rs3.31b (vs est. of Rs3.23b), 16.5%YoY growth in EBITDA to Rs1.06b.

 Adjusted PAT grew by 12.3%YoY to Rs774m (vs est. of Rs827m) impacted by Rs82m forex loss during the quarter.

-          Topline growth was led by 62% YoY growth in invasive segment to Rs768m (23% of revenue) on the back of aggressive marketing and promotional activities.

-          Reported EBITDA grew 16% YoY to Rs1.06b (vs est. of Rs1.01b) while EBITDA margins contracted by 360bp to 31.9%.

 EBITDA growth was muted driven by: 1) Adverse product mix, 2) 70% YoY increase in other expenditure due to higher promotional activities.   

-          Opto has delivered strong revenue and earnings growth over the last few years. We estimate FY11 EPS at Rs18.3 (up 36.8%) and FY12 EPS at Rs22.5 (up 22.6%) leading to EPS CAGR of 30% over FY10-12. At current price, the stock trades at 16.7x FY11E and 13.7x FY12E earnings. Maintain Buy. Our estimates do not factor the proposed CSC acquisition.