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Opto Circuits (India) Ltd
Overweight
OPTO.BO, OPTC IN
4QFY11: Cardiac Science turnaround bodes well,
FY12E guidance pared
Opto reported Q4/FY11 numbers better than street expectations. Cardiac
Science reported profit for first time indicating strong turnaround. We cut
estimates on lower than expected guidance for FY12, higher interest and
depreciation costs. Remain OW with a revised PT of Rs385.
• Cardiac Science turnaround. Management attributed signifcant cost
savings to overall reduction of employee headcount, alignment of various
functions with Criticare and Untexis’ US operations and moving of backend
R&D to India. CSC reported a PAT margin of 9% (for 4 month period)
indicating strong turnaround. For FY12, Management guided to flat
revenues and EBITDA margin of 10%-12% for CSC.
• Concerns on working capital: Opto’s inventory days worsened to 100
days in FY11 from 75 days in FY10. Management indicated that the rise in
inventory in primarily due to stocking up of supplies at new plants of
Malaysia and Vizag. Inventory is expected to come down over the next
couple of quarters as production ramps up at new plants.
• FY11 results highlights. Revenues were up 27% YoY (excl. CSC) with
Invasive up 27% YoY and Non-Invasive up 27% YoY. EBITDA margin
came in at 28% (-600bps YoY) mainly on account of higher staff expenses
(from CSC acquisition) and higher overheads (CSC acquisition/increased
trade shows particpation). PAT was up 39% YoY with tax rates at 6% (vs.
10% in FY10). Management guided to revenue growth of 15%-20% for
Non-Invasive and 35%-40% for Invasive products in FY12.
• Estimates and Price target changes: We cut our FY12/13 estimates by
3%/11% on back of lower than expected revenue guidance for FY12 and
higher depreciation and interest costs. We roll forward our PT to Mar-12
(Sep-11 earlier), now at Rs385 based on 15x Sep-12E P/E, in-line with
global peer group. Key risks include potential large ticket acquisitions,
increase in working capital intensity, failure to get accreditation for products
in new markets and adverse foreign currency.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Opto Circuits (India) Ltd
Overweight
OPTO.BO, OPTC IN
4QFY11: Cardiac Science turnaround bodes well,
FY12E guidance pared
Opto reported Q4/FY11 numbers better than street expectations. Cardiac
Science reported profit for first time indicating strong turnaround. We cut
estimates on lower than expected guidance for FY12, higher interest and
depreciation costs. Remain OW with a revised PT of Rs385.
• Cardiac Science turnaround. Management attributed signifcant cost
savings to overall reduction of employee headcount, alignment of various
functions with Criticare and Untexis’ US operations and moving of backend
R&D to India. CSC reported a PAT margin of 9% (for 4 month period)
indicating strong turnaround. For FY12, Management guided to flat
revenues and EBITDA margin of 10%-12% for CSC.
• Concerns on working capital: Opto’s inventory days worsened to 100
days in FY11 from 75 days in FY10. Management indicated that the rise in
inventory in primarily due to stocking up of supplies at new plants of
Malaysia and Vizag. Inventory is expected to come down over the next
couple of quarters as production ramps up at new plants.
• FY11 results highlights. Revenues were up 27% YoY (excl. CSC) with
Invasive up 27% YoY and Non-Invasive up 27% YoY. EBITDA margin
came in at 28% (-600bps YoY) mainly on account of higher staff expenses
(from CSC acquisition) and higher overheads (CSC acquisition/increased
trade shows particpation). PAT was up 39% YoY with tax rates at 6% (vs.
10% in FY10). Management guided to revenue growth of 15%-20% for
Non-Invasive and 35%-40% for Invasive products in FY12.
• Estimates and Price target changes: We cut our FY12/13 estimates by
3%/11% on back of lower than expected revenue guidance for FY12 and
higher depreciation and interest costs. We roll forward our PT to Mar-12
(Sep-11 earlier), now at Rs385 based on 15x Sep-12E P/E, in-line with
global peer group. Key risks include potential large ticket acquisitions,
increase in working capital intensity, failure to get accreditation for products
in new markets and adverse foreign currency.
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