Opto Circuits India

Oct 20, 2013 No Comments by

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Name – Opto Circuits

Sector – Medical Equipments

Market Cap – Rs 600 Cr

Sales Turnover in June 2013– Rs 404 Cr

Profit in Jan-Mar 2013 – Rs 49.29 Cr

Company Profile

Opto Circuits  is a vertically integrated multinational medical technology Group that specializes in primary, acute and critical care products for the global markets. Group companies such as Cardiac Science, Criticare, Eurocor, Mediaid, AMDL and Unetixs Vascularare leaders in cardiac and vital signs monitors, emergency cardiac care equipment, vascular treatments and sensing technologies. The Company’s USFDA listed and CE marked products are marketed in more than 150 countries and sold through direct and indirect sales channels across many emerging and developing economies.

Challenges

The net turnover for June 13 was reported as Rs 405 Cr down from Rs 715 Cr YoY. The net profit was Rs 51 Cr which was also down from Rs 138 Cr YoY. A major contribution was from the other income which came at Rs 21.37 Cr up from Rs 2.05 crore YoY. So, the core business is showing weakness.

The company has kept expanding its business but the acquired businesses are still not profitable. There is no near term information as when these businesses will become profitable.

The company has been involved in corporate governance issues. On 23rd August 2012, it’s shares plunged 14% on concerns that the company is facing corporate governance issues. The credit rating agency ICRA suspended rating on Rs 5.38 billion fund based facilities of OCIL due to absence of the requisite information from the company.

On January 22,2013, it’s shares plunged more than 8% to a 44-month low on  after the company informed BSE on Friday about the resignation of its company secretary, more than two months after his departure, renewing concerns over issues of corporate governance and financial management.

So, these type of corporate government issues are occurring frequently which decrease the credibility of the management.

In a recent interview, Vinod Ramani, Founder and CMD of Opto Circuits, himself has said that it will take atleast 3 to 4 quarters to solve the company’s problems. This can be assumed to be the minimum time to solve the issues. However, if things don’t go as planned by the management then the time period is bound to increase.

The management has not revealed any major plans to reduce debt and increase sales. It has said that it wants to leverage on it’s subsidiary companies but it has not laid down any solid plans.

 

Positives

There are not alot of positives for company. The core business is looking stressed.

Recently, it made an announcement that one of it’s group company has entered into a licensing agreement with Biosensors for its drug eluting balloon range used for treatment of peripheral arterial disease.

 

Unetixs Vascular Inc., one of its group companys, and a leader in non-invasive vascular technology, announced the release of the next-generation MultiLab vascular system. This one-touch, fully functional vascular system incorporates a 19-inch touch-screen monitor on a multi-axis mount for ergonomically correct usage while sitting or standing. Moreover, the vascular system is among the first in the vascular industry to adhere to Infectious Disease Control (IDC) practices.

 

The monetary impact of these two events is not disclosed by the management. So, one can’t see a very big impact on the financials.

Seeing the charts the stock is in a big down trend. In the past 1 year it has fallen relentlessly breaking all it’s lows. The worst part is that the stock has made no attempt to recover. It has fallen from Rs 200 levels to Rs 30 levels. All the brokerage houses at each low point had revised their targets for this stock but all went in vain.

At present also the stock is showing no signs of bottoming out. The charts as well as the fundamentals of the company show that one should stay away from this stock.

Recommendation : Negative

 

 

 

logo_2.png                            Research Report on Opto Circuits

Name – Opto Circuits

Sector – Medical Equipments

Market Cap – Rs 707 Cr

Sales Turnover in Jan-Mar 2013– Rs 456.76 Cr

Profit in Jan-Mar 2013 – Rs 11.22 Cr

Company Profile

Opto Circuits  is a vertically integrated multinational medical technology Group that specializes in primary, acute and critical care products for the global markets. Group companies such as Cardiac Science, Criticare, Eurocor, Mediaid, AMDL and Unetixs Vascularare leaders in cardiac and vital signs monitors, emergency cardiac care equipment, vascular treatments and sensing technologies. The Company’s USFDA listed and CE marked products are marketed in more than 150 countries and sold through direct and indirect sales channels across many emerging and developing economies.

Challenges

The company posted a very disappointing result for the Jan-March quarter of 2013. The Company consolidated net sales weredown by 31% YoY in Q4′FY 13 to Rs 456.76 crore. Also, margins went down by whopping 1110 bps YoY to 13.1% and after this Operating profit went down sharp 64% YoY to Rs 59.58 crore. The other income came as a surprise at Rs 9.9 crore as compared to Rs 0.64 crore year on year. Still this could not save the net profit falling by 95% year on year to Rs 11.22 crore. The net sales has decreased which shows weakness in the core business of the company.

 

There was a steep rise in staff cost (230 bps year on year) and other expenses ( 1340 bps year on year). There was also a sharp rise in the interest cost, up by 105% year on year to Rs 36.14 crore. The net debt of the company has increased to Rs 1400 crore from Rs 998 crore last year.

 

The company has kept expanding it’s business but the acquired businesses are still not profitable. There is no near term information as when these businesses will become profitable.

The company has been involved in corporate governance issues. On 23rd August 2012, it’s shares plunged 14% on concerns that the company is facing corporate governance issues. The credit rating agency ICRA suspended rating on Rs 5.38 billion fund based facilities of OCIL due to absence of the requisite information from the company.

 

On January 22,2013, it’s shares plunged more than 8% to a 44-month low on  after the company informed BSE on Friday about the resignation of its company secretary, more than two months after his departure, renewing concerns over issues of corporate governance and financial management.

So, these type of corporate government issues are occurring frequently which decrease the credibility of the management.

In a recent interview, Vinod Ramani, Founder and CMD of Opto Circuits, himself has said that it will take atleast 3 to 4 quarters to solve the company’s problems. This can be assumed to be the minimum time to solve the issues. However, if things don’t go as planned by the management then the time period is bound to increase.

The management has not revealed any major plans to reduce debt and increase sales. It has said that it wants to leverage on it’s subsidiary companies but it has not laid down any solid plans.

 

Positives

There are not alot of positives for company. The core business is looking stressed.

Recently, it made an announcement that one of it’s group company has entered into a licensing agreement with Biosensors for its drug eluting balloon range used for treatment of peripheral arterial disease.

 

Unetixs Vascular Inc., one of its group companys, and a leader in non-invasive vascular technology, announced the release of the next-generation MultiLab vascular system. This one-touch, fully functional vascular system incorporates a 19-inch touch-screen monitor on a multi-axis mount for ergonomically correct usage while sitting or standing. Moreover, the vascular system is among the first in the vascular industry to adhere to Infectious Disease Control (IDC) practices.

 

The monetary impact of these two events is not disclosed by the management. So, one can’t see a very big impact on the financials.

Seeing the charts the stock is in a big down trend. In the past 1 year it has fallen relentlessly breaking all it’s lows. The worst part is that the stock has made no attempt to recover. It has fallen from Rs 200 levels to Rs 30 levels. All the brokerage houses at each low point had revised their targets for this stock but all went in vain.

At present also the stock is showing no signs of bottoming out. The charts as well as the fundamentals of the company show that one should stay away from this stock.

Recommendation : Negative

 

 

 

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