OnMobile, Share BuyBack Positive for Company: IndiaNivesh

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Technicals- TRF, Indian Bank, Ingersoll Rand, OnMobile, MCX, BGR Energy Systems :: Business Line

Enters US… OnMobile Global ::ICICI Direct

Enters US…
OnMobile Global has announced the acquisition of Livewire Mobile,
which is a US based company providing end-to-end managed mobile
entertainment solutions for network operators and consumer device
manufacturers. The resultant entity would be a wholly-owned subsidiary
of OnMobile – OnMobile Live Inc. OnMobile would pay $17.8 million for
the deal. The purchase will also include purchase of stock of Fonestarz
Media Ltd, the managed services arm of Livewire in the UK.
Liverwire provides an integrated suite of solutions including full track
music, ringback tones, ringtones and infotainment services. With this
acquisition, OnMobile would get an entry into the US markets to
strengthen its current presence in Latin America, Europe and Asia.
OnMobile had a net cash of | 151.8 crore on its books at the end of FY13,
which we believe would be used for funding this acquisition. We maintain
BUY on OnMobile with a target price of | 45

52-WEEK FLOP: ONMOBILE GLOBAL :: Business Line

OnMobile Global Ltd.: ICICI Sec PDF link

OnMobile Global Ltd. Update

Query Corner: Adani Enterprises, Great Offshore, OnMobile, SREI infra, Sterlite Technologies, Ion Exchange, Jayshree Tea ::Business Line

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Please let me know the technical prospects of Adani Enterprises bought at Rs 374.

A. Pradeep Kumar

Adani Enterprises (Rs 288.3): Adani Enterprises went into tailspin between July 2011 and January 2012. The stock dropped from Rs 765 to Rs 261 in this period. The recovery in January from this trough could not get past the first medium-term resistance at Rs 456 and the stock is pinning out of control again.

Immediate support is at the recent trough at Rs 261. This also coincides with the trough formed in March 2008. If this low is breached, next halt can be at Rs 220. Further fall will drag it to the March 2009 trough at Rs 120.

Investors should, therefore, hold the stock only as long as it trades above Rs 261. Resistances for the months ahead would be at Rs 456, Rs 515 or Rs 574. Long-term view will turn positive only on a move above Rs 574. Investors with a smaller investment horizon should, therefore, divest their holdings if the stock struggles to get past these resistances.

Technical: IDFC, Power Finance corp, OnMobile, Blue Star, UFLEX, Punjab Sind bank, Corporation Bank ::Business Line

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Please share the long- and short-term prospects of IDFC and Power Finance Corporation.

Jose K. Mathai

IDFC (Rs 140.6):IDFC threatened to go in to a tailspin when it declined below Rs 100 towards the end of last year. But the decline was stemmed at Rs 90 and the stock is powering ahead again. The recent trough can act as the stop for investors and they can also buy on declines with stop at Rs 85.

The medium-term resistance will be at Rs 170. If it gets past this level, it can move on to the long-term ceiling at Rs 220. The stock has already formed a double-top at this level and can struggle to move above it just yet. If it manages to do so, then next target will be Rs 264.

Long-term support below Rs 90 is Rs 44.

PFC (Rs 191.5): The scary plunge in PFC from the peak at Rs 383 halted above the long-term trough formed in October 2008. Investors can draw some comfort at this higher bottom recorded at the recent trough at Rs 131. The stock is also in a strong short-term uptrend from this trough.

Hold OnMobile Global; Target : Rs 80 ::ICICI Securities

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I n t e r n a t i o n a  l   b u s i n e  s s  t o   t h e   r e s c u e   a g a i n…
OnMobile Global reported its consolidated numbers, which were better
than our estimates on all fronts. The company reported a topline of
| 168.8 crore against our expectation of | 142.6 crore, growing 8.8% QoQ
and 13.6% YoY. International revenues formed 42% of the total topline to
stand at ~ | 81.0 crore. EBITDA for the quarter stood at | 39.1 crore
against our expectation of | 26.3 crore growing by 20.5% QoQ and 16.4%
YoY. EBITDA margin for the quarter stood at 23.2%, improving by 226
bps QoQ. PAT stood at | 17.8 crore vs. our expectation of | 10.2 crore
due to higher than expected topline and better operational performance.
Highlights of the quarter
OnMobile Global’s revenues stood at | 168.8 crore against our
expectation of | 142.6 crore. The revenue growth mainly came from
international operations, which formed 42% of the total topline in the
quarter. The management indicated that international revenues had
formed 50% of the topline in the exit month of December. EBITDA
margins improved 226 bps QoQ and 55 bps YoY to 23.2% due to healthy
topline growth. The PAT stood at | 17.8 crore against our expectation of
| 10.8 crore in spite of higher depreciation in this quarter pertaining to
marketing development fees paid to Telephonica.
V a l u a t i o n
The company reported numbers that were better than our expectations
primarily due to good traction in the international business. We expect it
to continue. Based on that, we have revised our EPS estimates for FY12
from | 6.9 to | 8.0 and for FY13 from | 6.0 to | 6.7. At the CMP of | 74, the
stock is trading at 9.3x FY12E EPS of | 8.0 and 11.0x FY13E EPS of | 6.7.
Using the DCF methodology, assuming a revenue CAGR of 16.6% over
FY11 to FY20 and 3.0% thereon, we have arrived at a target price of | 80
implying an upside of 8%. Our target price discounts the FY13E EPS by
11.9x. We continue to rate the stock as HOLD.

OnMobile Global (Rs 77.1): BUY :: Business Line

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We recommend a buy in the stock of OnMobile Global from a short-term perspective. It is evident from the charts of the stock that after registering an all-time low at Rs 54 in August 2011, it started to move sideways. The stock formed a strong base between Rs 54 and Rs 57, and began to trend upwards in November 2011. Since then, the stock has been on a nascent medium-term uptrend, forming higher peaks and troughs.

On January 9, the stock jumped almost 10 per cent with good volumes, breaking through the resistance at Rs 70. The stock is trading well above its 21- and 50-day moving averages. Further, reinforcing the bullish momentum, the stock gained five per cent with above average volumes on Wednesday. The daily moving average convergence divergence indicator is trending higher in line with the stock price and is hovering in the positive territory.

The daily relative strength index is featuring in the bullish zone and weekly RSI is inching higher in the neutral region towards the bullish zone. We are bullish on the stock from a short-term perspective. We anticipate its upward momentum to prolong and reach our price target of Rs 79.5 or Rs 82 in the approaching trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 75.

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.

--

Thanks and Regards

Unicon Research

OnMobile Global Ltd. ::India’s Future Large Caps :: Morgan Stanley

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We believe that the market is focusing only on a
possible slowdown in domestic revenues and
ignoring the growth from the international business.
Valuations are close to all-time lows at 15x F2012E P/E
and 0.9x price to book.
Key Catalysts: Growth in investment revenues as the
Telefonica rollout is completed. Potential listing on the US
bourses. Announcement of recommendations on VAS by
TRAI. New acquisitions to enhance geographical presence or
service offerings and announcement of new deals with
telecom operator/s.
Key Investor Debate: We believe that the market is pricing in
the worst. The F1Q12 results were disappointing largely due
to the 5% QoQ decline in revenues from the domestic
business, reflecting an overall slowdown in the VAS space.
However, in F2Q12 international revenue growth has picked
up growing 51% QoQ and now account for close to 50% of the
total revenues. Domestic revenues continued to decline,
albeit at a slower pace (-3.5% QoQ). Management F2012
guidance of revenue growth of 20% and stable EBITDA
margins now appear more realistic, in our view.
Risks to our Call: Pressure on domestic business due to
regulatory changes; non-materializing of international
revenues to the extent as expected; loss of a major customer
and execution risk with global deals


See full list -click link below:

India’s Future Large Caps :: Morgan Stanley

OnMobile Global Services: Buy :: Business Line

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Investors with a two-year horizon can buy the shares of OnMobile Global Services, given its expanding presence in high-growth international markets such as Latin America and Africa, in the mobile value-added services space.

Ongoing execution of large deals for top global customers such as Telefonica and Vodafone which enjoy higher revenues per user in international markets should translate into lucrative realisations for OnMobile.

At Rs 67.2, the share trades at seven times its likely per share earnings for FY12, which is much lower than the historic valuations that it has enjoyed. With the international pie of its revenue-mix increasing rapidly, margins too may expand significantly, giving scope for further upside.

In the first half of this fiscal, OnMobile's revenues grew by 14.2 percent over the same period last year to Rs 291.6 crore, while net profits rose 46 per cent to Rs 60.5 crore. After a difficult couple of years, due to slowing domestic telecom market and heavy costs incurred on rollout in new geographies, the company's turnaround seems to have gained pace from the second half of FY11 and in the current fiscal. In fact, on a trailing-four-quarters basis, revenues as well as operating and net profits have grown at a faster pace compared to the previous period.

EMERGING MARKETS DELIVER

OnMobile has multi-year rollout deals with players such as Telefonica and Vodafone, and substantial investments in Latin America and Africa over the past 12-18 months are beginning to pay off. Implementation has been done in around 13 key Latin American countries. OnMobile now claims to have a reach of 94 per cent of addressable subscriber base in that region. Within months of launching value-added services, there has reportedly been a substantial increase in subscribers for these mobile operators, indicating OnMobile's sound execution capabilities. Telefonica's subscribers in countries such as Brazil, Uruguay, Mexico, Chile, Argentina and Venezuela, its key markets, generate high ARPU of $10-25, which is substantially higher than the $3-4 levels that the Indian market generates.

Financial reports of Telefonica in the current fiscal suggest that the company is witnessing rapid growth in Latin American countries, with expanding ARPUs, rising margins and increasing value-added services offtake. OnMobile would stand to take a lucrative share of those revenues. With its forays in Latin America, Africa and in Europe, the company derived over 37 per cent of its revenues from overseas geographies and appears on course to achieve its target of deriving half its revenues from international operations. In fact international revenues have grown at 87.5 per cent in the first half of this fiscal.

DOMESTIC MARKETS STAGNATE

While still accounting for a major share of OnMobile's revenues, the domestic share of the pie is decreasing steadily for the company. In the first half, domestic revenues fell 8 percent. The tariff wars which resulted with the entry of new operators resulted in lower share of revenues from value-added services. Also, regulatory issues such as restricting the number of SMS' played their part. In recent times, though the ceiling on the number of SMS' has been doubled and tariff wars have largely abated, ARPUs continue to decline for domestic operators. Launch of 3G services has also not seen significant traction until now. Over the next 12-18 months, as operators take tariff increases, have viable 3G roaming arrangements and see newer services launched, the growth curve may return. Till such time, there may not be significant expansion domestically.

RISKS

OnMobile has indicated that it has positive operating cash flows already in its Latin American operations in the first year of operations on a five-year contract. The danger, however, with increasing international revenues, including from geographies such as Europe is that if greater onsite deployment of manpower happens, the cost structure could increase significantly.

OnMobile Global (ONMO.BO) Value and Some Volume   Citi research

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OnMobile Global (ONMO.BO)
Value and Some Volume
 Why still a Buy — The stock has had a bad run, with the domestic slowdown hitting
EPS. However, we believe it is still a Buy and offers 50% upside from current levels on
the back of ramp-up in the international segment. With the international execution on
track, OnMobile should increasingly be de-risked and offer good growth. EBITDA is cut
20%-28% over FY12-14E on the domestic slowdown. The EPS cut is sharper due to a
small base. The new TP is based on 13x FY13E P/E (prev. 20x Mar-12E) and is now
broadly in line with the market multiple (premium earlier). Multiple is cut primarily to factor
in deceleration in earnings growth & some uncertainty surrounding domestic business.
 Overseas operations supporting growth — After two slow quarters, revs in the Sep-
11 quarter rebounded, growing 18%yoy to Rs1.6bn (Rs1.5bn exp) as tepid domestic
segment was more than offset by ramp-up in the international segment. Margins stayed
flat vs. expectation of an increase on salary hikes and product-mix changes led to a
rise in content costs. Despite this, EBITDA grew a healthy Rs325m (20%qoq; 17%yoy).
Reported PAT was significantly ahead, boosted by Rs466m gains on investment sales.
Adjusting for this, PAT was below estimates on a higher amortization charge.
 International business growing in leaps and bounds — The international segment
posted a strong growth rate of 51%yoy and accounted for 42% of the revenues. The
execution of Telefonica LatAm deployment remains on track, and is now cash positive.
The company’s operations in Africa and developed markets too are doing well. The
rising contribution of international revenues bodes well for earnings because of: (a)
higher and stable contracted revenue share and (b) op leverage – software has been
expensed, high incremental contribution margin.
 Domestic market should remain challenging — The Indian VAS market is likely to
remain anemic due to: (a) TRAI regulations still in the works have increased
uncertainty; (b) The “true addressable” mkt is already quite well penetrated.
Incremental subs do not have the ability to pay for VAS; and (c) Operators are focused
on 3G rollouts. As a result, we expect a meaningful slowdown in domestic revenues.

Hold OnMobile Global; Target :Rs 70 ::ICICI Securities

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C a t s   a t   h o m e ,   l i o n s   a w a y …
OnMobile Global reported its consolidated numbers that were better than
our estimates on the topline front. The company reported a topline of |
155.2 crore vs. our expectation of | 140.1 crore, growing 13.8% QoQ and
18.0% YoY. EBITDA for the quarter stood at | 32.5 crore vs. our
expectation of | 26.8 crore growing 20.4% QoQ and 16.5% YoY. EBITDA
margin for the quarter stood at 20.9%, improving by 115 bps YoY. PAT
stood at | 47.4 crore against our expectation of | 11.4 crore due to higher
other income of | 51.1 crore, which  included | 46.6 crore earned by
selling a significant amount of stake sale in Ver Se Innovation Pvt Ltd.
Highlights of the quarter
OnMobile Global’s revenue stood at | 155.2  crore as against our
expectation of | 140.1 crore. The  growth in revenues came from
international operations in both the core and investment business mainly
contributed by Latin American and  African operations. EBITDA margins
improved 115 bps QoQ but declined by 26 bps YoY due to an increase in
content cost and employee cost. The employee cost went up as a result
of salary revisions effective Q2FY12  onwards. The bottomline, however,
benefited by | 46.6 crore earned form a stake sale of ~10% of Ver Se
Innovation Pvt Ltd. The company continues to hold ~ 5% of the Ver Se
which it intends to sell in the near future.
V a l u a t i o n
The company reported a topline that was slightly better than our
expectations due to higher-than-expected growth in international
revenues. The domestic business, however, de-grew, which remains a
concern. At the CMP of | 66, the stock is trading at 9.5x FY12E EPS of |
6.9 and 10.9x FY13E EPS of | 6.0. Using the DCF methodology, assuming
a revenue CAGR of 11.4% over FY11 to FY20 and 3.0% thereon, we have
arrived at the target price of | 70 implying an upside of 7%. Our target
price discounts the FY13E EPS by 11.7x. We maintain our target price but
due to recent run up in the stock, we downgrade it from BUY to HOLD.

OnMobile Global Ltd. (ONMO.BO) Research Tactical Idea ::Morgan Stanley Research,

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OnMobile Global Ltd. (ONMO.BO)
Research Tactical Idea
We believe the share price will rise in absolute terms over the next 60 days.
This is because the stock has traded off recently, making short term valuation much more compelling. The stock has
reached close to its all-time low, making valuation attractive at 14x F2012E P/E. The announcement of a share buyback of
up to 4mn shares (3% of shares outstanding) at a maximum price of Rs85 per share will also be positive factor for the
stock, we believe.
We estimate that there is about an 80%+ or "highly likely" probability for the scenario.
Estimated probabilities are illustrative and assigned subjectively based on our assessment of the likelihood of the
scenario.
Stock Rating: Overweight
Industry View: Attractive

Buy OnMobile Global; Target : Rs 83 ::ICICI Securities,

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D i s m a l   t o p l i n e . . .
OnMobile Global reported its consolidated numbers which were below
our estimates. The company reported a topline of | 136.4 crore against
our expectation of | 144.8 crore,  growing 2.3% QoQ and 10.2% YoY.
EBITDA for the quarter stood at | 27.0 crore against our expectation of |
32.7 crore, de growing by 12.1% QoQ and 4.9% YoY due to higher cost
of sales. EBITDA margin for the quarter stood at 19.8%, falling by 326
bps QoQ and 315 bps YoY. PAT stood at | 13.9 crore, de growing by
48.1% QoQ and 25.0% YoY.
ƒ Highlights for the quarter
OnMobile Global’s revenue stood at | 136.4 crore as against our
expectation of | 144.8 crore. EBITDA margins took a tumble in this
quarter and stood at 19.8% falling 326 bps QoQ on the back of a
higher cost of sales and services inclusive of content cost. Dilithium
also did not have any significant impact on the revenues. The
telephonica services went live in 7 countries covering 85% of the
total subscriber base of LatAm. The active user base has grown by
~50% from Q4FY11 to 4.6 million users in Q1FY12. The company
also completed the deployment of their sports pack ‘Futbol’ in all 12
countries ahead of the big event, COPA America in July.
V a l u a t i o n
The company’s reported a topline that was below our expectations and
even on the EBITDA margin front the company disappointed. Recent
TRAI guidelines regarding activation of VAS may be a dampener.
Execution in international businesses seems to be on track; however
slowdown in core business is a cause of concern for OnMobile. At the
CMP of | 71, the stock is trading at 10.8x FY13E EPS of | 6.6. Using the
DCF methodology, we value the stock at | 83, implying an upside
16.9%. Our target price discounts FY13E EPS by 12.7x. We maintain our
BUY rating on the stock

OnMobile Global - Growth Looks Pushed Out a Year, but We're Still Positive:: Morgan Stanley Research,

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OnMobile Global Ltd.
Growth Looks Pushed Out a
Year, but We're Still Positive
What's Changed
Price Target  Rs175.50 to Rs149.00
EPS F2012E, F2013E  -24%, -34%
We reiterate our Overweight rating on OnMobile
because we think disappointing earnings are in the
price, and we remain convinced of the company’s
growth potential, led by its international business.
Earnings seem to be running one year behind our
prior estimate… Recent results disappointed due to a
slowdown in domestic demand and cyclicality in the
European business. We remain constructive on the
international business, but our industry checks also
suggest that the domestic Value Added Services (VAS)
segment is likely to grow more slowly: 10-12% p.a.
during F2011-13E (earlier we expected 15-20% p.a.).
…but we believe this is in the price: The stock has
underperformed the Sensex by 27% over the last 12
months, 11% of which has come after the disappointing
F4Q11 results. The stock now trades at 16x F2012E
EPS, 20% below its average over the last 12 months.
We remain convinced of OnMobile’s growth
potential thanks to its international business… The
company has launched services in most of the
Telefonica countries, including Spain, which was added
later. We expect OnMobile to achieve penetration levels
of 8% with ~18-20mn subs by F2014 in Telefonica
Latam and expect international EBITDA contribution to
grow from -9% in F2011 to 33% by F2014E.
…despite lowering our F12 and F13 earnings
estimates by 24% and 34%: This reflects lower than
expected growth in domestic business, longer gestation
time from its investments, and higher depreciation. Our
cash profit cut is half our overall profit cut at 10-13%.
Even now, though, we expect normalized profits to grow
at an impressive CAGR of 23% during F2011-F2014.

Onmobile Global (ONMO.BO;\:: Takeaways from Citi India Investor Conference – Day 2

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Onmobile Global (ONMO.BO; Rs112.55; 1M)
 Takeaways from Mumbai – OnMobile presented at the Citi India Investor
Conference in Mumbai. Below are the key takeaways.

 Pressure in the domestic segment – The slowdown in the domestic segment
looks to be structural with a relatively high CRBT penetration at 20-25% (@ Rs25
ARPU) in context of the poor quality of incremental subscribers. The next leg of
growth will be contingent upon the telcos cutting VAS prices (have remained broadly
stable in the last 2-3 years). However, the company expects to achieve a 10-15%
growth in the medium term. Near term, the domestic segment is likely to be under
pressure as operators have currently shifted their focus towards encouraging 3G
data services, though this should normalize over the next few quarters.
 International revenues ramp-up on track – The company has launched services
across all the 13 countries as part of the Telefonica deal (bigger countries were
launched in Dec10-Feb11) and the ramp-up is likely to take 1-1.5 years. The
company disclosed that the Telefonica deal has a fixed revenue share, which is
locked in for the period of the contract. The company doesn’t expect to sign another
large contract like the Telefonica deal in the next 1-2 yrs. Meanwhile it disclosed that
A-PAC and Europe contributed 9% (each) to the total revenues in FY11.
 Financials update – The company believes that the EBITDA margins can go back
to 30% over the next 12-15 months (23% in 4QFY11) as the Telefonica revenues
ramp up. Meanwhile the company plans to incur capex of ~Rs800m (similar to
FY11E) for FY12E.
 Other updates – 1) Ad-RBT currently has ~700k subscribers; largest worldwide, 2)
reverse RBT too is witnessing healthy growth (launched by DoCoMo) and 3)
Vodafone Romania and Egypt have done well though South Africa ramp-up is
behind schedule due to regulatory issues (not got approval for press * to copy for
RBT).

Deutsche Bank:: OnMobile:: Latam scale-up is the key to stock performance; Buy; target Rs 290

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OnMobile
Reuters: ONMO.BO Bloomberg: ONMB IN Exchange: BSE Ticker: ONMO
Latam scale-up is the key to stock performance; Buy


Stabilising domestic market, Latam revenue scale-up in sight
Our cut in estimates reflects lower-than-forecast growth in the domestic market
and impact of pre-launch expenses to roll out services in Telefonica’s Latam
operations, not included in previous ests. The domestic market is stabilising and
we expect a return to revenue growth. Further, OnMobile has gone live in key
Latam mkts. These factors should lead to revenue momentum and margin
improvement. It has been some time since we have written on this stock, during
which time the stock price has followed market conditions. Buy, new TP of Rs290.

Morgan Stanley : Buy OnMobile: International Business Drives Growth: Target Rs 400

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OnMobile Global Ltd.
International Business Drives Growth 

OnMobile reported better than expected operational
F3Q11 results, driven by the international business:
Revenues were up 13% QoQ and 29% YoY at Rs1.5bn.
EBITDA margins expanded 144bps sequentially to
22.6%, leading to EBITDA growth of 21% QoQ and 46%
YoY to Rs336mn. Profits were down 8% QoQ due to
extraordinary income in the previous quarter. However,
on a YoY basis profits grew 59% to Rs209mn.
Revenues, EBITDA and profits were 5%, 13% and 32%
higher than our expectations, respectively. The positive
surprise came from international revenues ,which were
up 53% QoQ vs. our expectations of 10% QoQ growth.
What we liked: 1) International revenues grew 53%
QoQ and 37% YoY, driven by both core and new
investments like Telefonica and Vodafone launches.