OnMobile Global Ltd - Stock Idea ::Unicon Research

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Investment Rationale:

• Medium term growth prospects look positive for Indian VAS industry

• Mass appealing VAS products with diversified portfolio has made OMGL a leading MVAS provider

• Investments in emerging markets propelling international business

• Higher adj. EPS going forward is backed by available growth opportunities and increase in EBITDA margins

Valuation:

With higher penetration levels in LatAm and Africa and expected revival on the domestic front we estimate a 3-year revenue and adj. EPS CAGR of 16.2% and 16.3% respectively. Further, divestment of remaining stake in Verse Innovation Pvt. Ltd. is likely to garner a pre-tax profit of INR 700mn during FY12. Coming to stock performance, OMGL had underperformed the whole market and lost over 50% of its share price in the last one year. At CMP of INR 72.4, the share is currently trading at 15x 12-month historical PE (adj. EPS) as against a one-year median PE of 18x. Based on this data, we value OMGL stock at 14.4x (a 20% discount to median PE) our estimated FY13 EPS of INR 6.5, thus giving a target price of INR 93.6 and an upside potential of 29.3% in the next 12-18 months. Thus we recommend our investors to BUY OMGL shares.

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Unicon Research