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Poor operating performance...
OnMobile Global’s performance in Q4FY11 was below our estimate with
the company reporting topline growth of 8.5% YoY and de-growth of
10.3% QoQ at | 133.3 crore against our expectation of | 154.6 crore.
Revenue growth was adversely impacted by a change in contractual
scope involving content management responsibilities in one of the
major customers. EBITDA margin for the quarter at 23.0% was up a
healthy 520 bps YoY and 41 bps QoQ. EBITDA grew by an impressive
40.1% YoY while it de grew by 8.7% QoQ to | 30.7 crore. PAT stood at
| 26.9 crore aided by one-time gain of | 23.5 crore on account of sale of
investment in an associate company.
Highlights for the quarter
OnMobile Global’s reported revenue was down by | 16.0 crore due
to a change in content management contract with one of the leading
telecom operators. Content cost was also down by a similar
magnitude, thus aiding margins by about ~200 bps. Revenues were
further adversely impacted by lumpiness in Dilithium performance
and general weakness in the European economy. The company
launched services with Telefonica in Brazil, Argentina and Venezuela
in the last quarter. It has not launched services in any other country
in this quarter and remains live in six countries in Telefonica LatAm,
covering 80% of total subscriber base of the operator.
Valuation
The domestic business seems to be stagnant with no new blockbuster
products launched in the recent past. Also, the success of ad ringback
tones (AdRBT) remains to be seen. Execution in international
businesses seems to be on track but a meaningful financial impact is
expected to take time. At the CMP of | 128, the stock is trading at 15.4x
FY12E EPS of | 8.3 and 12.6x FY13E EPS of | 10.2. Using the DCF
methodology, we value the stock at | 126, implying a downside of 1.5%.
Our target price discounts FY13E EPS by 12.4x. We maintain our HOLD
rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Poor operating performance...
OnMobile Global’s performance in Q4FY11 was below our estimate with
the company reporting topline growth of 8.5% YoY and de-growth of
10.3% QoQ at | 133.3 crore against our expectation of | 154.6 crore.
Revenue growth was adversely impacted by a change in contractual
scope involving content management responsibilities in one of the
major customers. EBITDA margin for the quarter at 23.0% was up a
healthy 520 bps YoY and 41 bps QoQ. EBITDA grew by an impressive
40.1% YoY while it de grew by 8.7% QoQ to | 30.7 crore. PAT stood at
| 26.9 crore aided by one-time gain of | 23.5 crore on account of sale of
investment in an associate company.
Highlights for the quarter
OnMobile Global’s reported revenue was down by | 16.0 crore due
to a change in content management contract with one of the leading
telecom operators. Content cost was also down by a similar
magnitude, thus aiding margins by about ~200 bps. Revenues were
further adversely impacted by lumpiness in Dilithium performance
and general weakness in the European economy. The company
launched services with Telefonica in Brazil, Argentina and Venezuela
in the last quarter. It has not launched services in any other country
in this quarter and remains live in six countries in Telefonica LatAm,
covering 80% of total subscriber base of the operator.
Valuation
The domestic business seems to be stagnant with no new blockbuster
products launched in the recent past. Also, the success of ad ringback
tones (AdRBT) remains to be seen. Execution in international
businesses seems to be on track but a meaningful financial impact is
expected to take time. At the CMP of | 128, the stock is trading at 15.4x
FY12E EPS of | 8.3 and 12.6x FY13E EPS of | 10.2. Using the DCF
methodology, we value the stock at | 126, implying a downside of 1.5%.
Our target price discounts FY13E EPS by 12.4x. We maintain our HOLD
rating on the stock.
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