Company Report | Q1FY12 Result Update

LONG TERM INVESTMENT CALL

28 July 2011 Industry CMP (INR) Target (INR) 52 week High/Low (INR) Market Cap (INR BN) 3M Avg. Daily Volumes (000) P/E (FY12e) Healthcare 285 330 328/225 53.2 437.9 11.5

Accumulate

Opto Circuits posted a good set of numbers for Q1FY12. Result was almost inline with our expectation, except the revenue that showed a growth of 78.4% (verses our estimate of 85% growth) form the same period last year. However there was a concern over its EBITDA margin that contracted by around 2425 bps. Overall the company delivered a good volume growth which helped it net profit grow by 40%. Q1FY12 Result Highlights

Shareholding Pattern (%) Opto Circuits reported a top line growth of 78.4% YoY with the total revenue coming in at INR 5208 mn. The growth in the revenue was backed by the significant upside in the revenues contributed by International healthcare segment. Around 98% of the total revenue comes from its international business which showed an upside of 80% YoY. However, despite the significant growth in the revenue, there was a huge contraction of 2425 bps in the EBITDA margin that came in at 27.5%. Employee cost and other expenses almost doubled as compared to the same period last year taking a toll on the margins. EBITDA stood at INR 1432 mn and showed a growth of 47.5% YoY which was mainly in line with our expectation.Net profit was well in line with our estimate and came in at INR 1164 mn with the upside of 40%. Going Forward Opto earned large contracts during the quarter across the various product categories in Columbia, Spain, US and India. This is expected to give a ramp up to the revenue of the company in the coming quarters of FY12. It launched a new web based ishop for online shopping of all Cardiac Science products which would give a boost to the revenue generation from the segment. Performance (%) 1 Month Opto 1.6 Circuits Nifty 0.4 Outlook and Valuation After restructuring of its Cardiac Science business we see there has been a significant jump in the revenue. Launch of products like Taxcor Plus, Dior, Freeway and Magical have given a boost to the healthcare business of the company. Thus going forward we see a high value growth coming in from these products and expect the company to register 25-30% revenue upside in next 2-3 yrs. Currently, the stock is trading at 11.5x its FY12E earnings and we expect it to continue its current growth trend in the coming quarters. Thus we maintain our ACCUMULATE rating on the stock with price target of INR 330

Stock Performance

3 Months -1.0 -4.9

1 Year 11.2 2.1

* Source: Bloomberg, Unicon Research

Wealth Research, Unicon Financial Intermediaries Pvt Ltd. Email: wealthresearch@unicon.in

Q1FY12 Results
(INR in mn)

Revenue Break up
(INR in mn)

Particulars Total Income from Operations Raw Materials % of sales Employee Expense % of sales Other Expenses % of sales Total expenditure Operating Profit OPM % Other Income Forex (gain)/loss Interest Depreciation Exceptional Items PBT Tax Tax Incidence PAT Minority Interest PAT after MI PATM % EPS
Source: Company, Unicon Research *Consolidated

Q1 FY12 5208.2 2757.3 52.9 445.0 8.5 573.8 11.0 3776.1 1432.0 27.5 49.2 109.3 149.7 0.1 1222.1 57.5 4.7 1164.6 0.7 1163.9 22.3 6.24

Q1 FY11 2919.8 1642.0 56.2 122.1 4.2 184.9 6.3 1949.0 970.8 33.3 93.7 51.9 90.5 -3.6 925.7 92.1 10.0 833.6 2.6 831.0 28.5 4.53

% Growth 78.4 67.9 264.4 210.3

Particulars Healthcare IT Others Intersegment Revenue Total International revenue % of total Revenue Healthcare

Q1 FY12 5122.3 0.0 37.7 0.0 5160.0 98.1 37.8 48.0 11.4 0.0 97.3 1.9 5257.3

Q1 FY11 2780.8 0.0 92.6 -0.1 2873.4 95.3 87.5 52.3 1.1 -0.7 140.2 4.7 3013.5

% Growth 84.2 -59.3 79.6

-56.8 -8.1 942.0 -30.6 74.5

93.7 47.5 -47.6 110.7 65.3 -103.9 32.0 -37.6 39.7 -73.9 40.1

IT Others Intersegment Revenue Total Domestic revenue % of total Revenue Total Revenue

Wealth Research, Unicon Financial Intermediaries Pvt Ltd. Email: wealthresearch@unicon.in

Unicon Investment Ranking Methodology

Rating Return Range Buy >= 20% Accumulate 10% to 20% Hold -10% to 10% Reduce -10% to -20% Sell <= -20%

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