Ashish Chugh, Investment Advisor Report Dated: May 19, 2008
What do British Airways, Siddhi Vinayak Temple, RBI, Star TV, Reliance, Tetrapak, Taj Hotels, Haji Ali Dargah, Mumbai Traffic Police, Prince of Wales Museum, NTPC and BARC have in common – well, they all use Zicom’s Electronic Surveillance.
Zicom has created a niche for itself in the Electronic Security market space with offerings for both the Home and Institutional segment. The company today is the leading electronic security solutions provider in the country, with offices in over 50 cities and towns. The company offers a wide range of products including Access Control Systems, CCTV surveillance, Fire alarm systems, Smart cards, Biometrics, Remote video surveillance, Perimeter protection system, law enforcement products, etc. The company has also integrated all this multiple security applications into one coordinated hardware and software package. The company has got strong software capabilities relating to the security business.
The company has a tie-up with Future Media which allows it to have exclusive retail outlets at over 100 outlets of Future Groups select retail formats including Big Bazaar, Brand Factory, E-Zone, Electronics Bazaar etc. Besides, the company has an ambitious rollout plan of exclusive Zicom Retail stores and has targeted 300 stores by 2009.
Zicom services the diverse and demanding security needs of private and public sectors. Its customers include several large Indian and multinational companies in the field of infotech, telecom, media, banking, finance, industrial, etc. as well as various public sector units.
Zicom has created a niche for itself in the Electronic Security market space with offerings for both the Home and Institutional segment. The company today is the leading electronic security solutions provider in the country, with offices in over 50 cities and towns. The company offers a wide range of products including Access Control Systems, CCTV surveillance, Fire alarm systems, Smart cards, Biometrics, Remote video surveillance, Perimeter protection system, law enforcement products, etc. The company has also integrated all this multiple security applications into one coordinated hardware and software package. The company has got strong software capabilities relating to the security business.
The company has a tie-up with Future Media which allows it to have exclusive retail outlets at over 100 outlets of Future Groups select retail formats including Big Bazaar, Brand Factory, E-Zone, Electronics Bazaar etc. Besides, the company has an ambitious rollout plan of exclusive Zicom Retail stores and has targeted 300 stores by 2009.
Zicom services the diverse and demanding security needs of private and public sectors. Its customers include several large Indian and multinational companies in the field of infotech, telecom, media, banking, finance, industrial, etc. as well as various public sector units.
| Past Multi Baggers Recommendations | ||||||||||
| Stock | Reco Price | Peak after reco | %Gain | |||||||
| Balasore Alloys | 6 | 78 | 1203 | |||||||
| Reliance Infra | 330 | 3202 | 870 | |||||||
| TRF | 240 | 2100 | 775 | |||||||
| Opto Circuits | 119 | 581 | 390 | |||||||
| Usha Martin | 32 | 154 | 380 | |||||||
| Genus Power | 246 | 1050 | 328 | |||||||
| IDFC | 55 | 235 | 327 | |||||||
| Indo Tech Trans | 200 | 808 | 304 | |||||||
| Hind Zinc | 288 | 1119 | 289 | |||||||
| Thermax | 255 | 968 | 280 | |||||||
Investments/ Joint Ventures:-
The company has made several Investments in subsidiaries:
1) The company has acquired 49% stake in Unisafe Fire Protection Specialists L.L.C, Dubai in UAE. With this acquisition, the company aims to gain a foothold in the infrastructure growth in the Middle East and West Asian markets.
2) The company has set up a subsidiary in Hong Kong for taking up manufacturing activities in China and to promote international sale of Zicom branded products.
3) The company has entered into a Joint Venture with Singapore based CNA Group to offer high end intelligent building management solutions and green buildings. Zicom will hold 51% and CNA Group 49% in the JV company Zicom CNA Automation Ltd.
Financials:-
Financials:-
The latest financials of the company are given as under:-
Source:- Capitaline
Conclusion:
Security is a business which has got an enormous potential in India – be it Commercial Buildings, Offices, Homes, Malls, Supermarkets, City roads, Airports, Railway stations, - Electronic Security surveillance would become essential in the coming times.. Zicom having established itself and created infrastructure and competencies to handle such projects would enjoy EARLY MOVER ADVANTAGE. The company’s business model allows it not just one time Sales Revenues but recurring Service Revenues year on year.
The concept of Electronic Security is still in its infancy as far as India is concerned – the growth of middle class, improving lifestyles, concern for Home Security with rising crime graph coupled with falling hardware prices makes a perfect case for demand explosion in the sector. Of late, we are witnessing the old favourite DING-DONG Bell in our homes getting replaced by Video Door Phones. Moreover, the ongoing real estate boom has put the company in a sweet spot with increased order flow being witnessed. The company has already received contracts from various builders for its home security products like Burglar Alarm, Electronic Gas Leak sensor and Video Door Phones.
The Indian security Market is dominated by companies like Zicom, Honeywell, Tyco, Johnsons Control and Godrej, while the Home and Retail segments are dominated largely by unorganized regional players where the focus is standalone products and not solutions - Zicom probably being the only organized national player. The company is scouting for buys in US and UK which will enable it to have a global footprint in the Electronic Security market.
Our major concern however is low promoter’s holding in the company (17.63% as on March 31, 2008) – this may however act as a double edged sword. On one hand, low promoters holding leaves excessive float in the market, on the other hand, makes the company susceptible to being preyed upon by potential raiders.
Inspite of the concern, we believe that space in which the company operates, THE POTENTIAL IS SIMPLY MINDBOGGLING. Long Term Investors with a 1.5 -2 year perspective can accumulate the stock on at the current price and on declines.
Ashish Chugh is an equity analyst and investment consultant based at New Delhi, INDIA. At the time of writing this article, he, his firm and dependent family members have a position in the stocks mentioned above. The author, his firm or any of his dependent family members may make purchases or sale of the securities mentioned in the report while the report is in circulation. author invites readers to send him email and welcomes comments, feedback & queries at .
1) The company has acquired 49% stake in Unisafe Fire Protection Specialists L.L.C, Dubai in UAE. With this acquisition, the company aims to gain a foothold in the infrastructure growth in the Middle East and West Asian markets.
2) The company has set up a subsidiary in Hong Kong for taking up manufacturing activities in China and to promote international sale of Zicom branded products.
3) The company has entered into a Joint Venture with Singapore based CNA Group to offer high end intelligent building management solutions and green buildings. Zicom will hold 51% and CNA Group 49% in the JV company Zicom CNA Automation Ltd.
Financials:-
Financials:-
The latest financials of the company are given as under:-
| Particulars | Quarter Ended | Quarter Ended | Quarter Ended | YTD / Latest Half | YTD / Latest Half | YTD / Latest Half | Year Ended | Year Ended | Year Ended |
| |
| (Dec 07) | (Dec 06) | (% Var) | (Dec 07) | (Dec 06) | (% Var) | (Mar 07) (12) | (Mar 06) (12) | (%Var) | |
| Sales | 42.07 | 40.64 | 3.5 | 115.19 | 108.92 | 5.8 | 154.58 | 75.09 | 105.9 |
| Other Income | 0.04 | 0.21 | -81 | 0.28 | 0.66 | -57.6 | 1.08 | 0.71 | 52.1 |
| PBIDT | 6.74 | 4.99 | 35.1 | 15.84 | 14.1 | 12.3 | 17.03 | 10.79 | 57.8 |
| Interest | 0.92 | 0.46 | 100 | 2.9 | 0.88 | 229.5 | 1.11 | 1.3 | -14.6 |
| PBDT | 5.82 | 4.53 | 28.5 | 12.94 | 13.22 | -2.1 | 15.92 | 9.49 | 67.8 |
| Depreciation | 0.16 | 0.91 | -82.4 | 1.43 | 2.42 | -40.9 | 3.57 | 1.82 | 96.2 |
| PBT | 5.66 | 3.62 | 56.4 | 11.51 | 10.8 | 6.6 | 12.35 | 7.67 | 61 |
| Tax | 1.79 | 0.97 | 84.5 | 3.86 | 2.61 | 47.9 | 2.52 | 1.4 | 80 |
| Deferred Tax | 0.14 | 0.41 | -65.9 | 0.04 | 1.17 | -96.6 | 1.89 | 0.75 | 152 |
| PAT | 3.73 | 2.24 | 66.5 | 7.61 | 7.02 | 8.4 | 7.94 | 5.52 | 43.8 |
| Latest Data As On 16/05/2008 | |
| Latest Equity(Subscribed) | 12.7 |
| Latest Reserve | 97.74 |
| Latest Bookvalue -Unit Curr. | 86.96 |
| Latest EPS -Unit Curr. | 7.87 |
| Latest Market Price -Unit Curr. | 145.85 |
| Latest P/E Ratio | 18.53 |
| 52 Week High -Unit Curr. | 270.2 |
| 52 Week High-Date | 39455 |
| 52 Week Low -Unit Curr. | 111 |
| 52 Week Low-Date | 39532 |
| Market Capitalisation | 185.23 |
| Stock Exchange | BSE |
| Dividend Yield -% | 0.96 |
Conclusion:
Security is a business which has got an enormous potential in India – be it Commercial Buildings, Offices, Homes, Malls, Supermarkets, City roads, Airports, Railway stations, - Electronic Security surveillance would become essential in the coming times.. Zicom having established itself and created infrastructure and competencies to handle such projects would enjoy EARLY MOVER ADVANTAGE. The company’s business model allows it not just one time Sales Revenues but recurring Service Revenues year on year.
The concept of Electronic Security is still in its infancy as far as India is concerned – the growth of middle class, improving lifestyles, concern for Home Security with rising crime graph coupled with falling hardware prices makes a perfect case for demand explosion in the sector. Of late, we are witnessing the old favourite DING-DONG Bell in our homes getting replaced by Video Door Phones. Moreover, the ongoing real estate boom has put the company in a sweet spot with increased order flow being witnessed. The company has already received contracts from various builders for its home security products like Burglar Alarm, Electronic Gas Leak sensor and Video Door Phones.
The Indian security Market is dominated by companies like Zicom, Honeywell, Tyco, Johnsons Control and Godrej, while the Home and Retail segments are dominated largely by unorganized regional players where the focus is standalone products and not solutions - Zicom probably being the only organized national player. The company is scouting for buys in US and UK which will enable it to have a global footprint in the Electronic Security market.
Our major concern however is low promoter’s holding in the company (17.63% as on March 31, 2008) – this may however act as a double edged sword. On one hand, low promoters holding leaves excessive float in the market, on the other hand, makes the company susceptible to being preyed upon by potential raiders.
Inspite of the concern, we believe that space in which the company operates, THE POTENTIAL IS SIMPLY MINDBOGGLING. Long Term Investors with a 1.5 -2 year perspective can accumulate the stock on at the current price and on declines.
Ashish Chugh is an equity analyst and investment consultant based at New Delhi, INDIA. At the time of writing this article, he, his firm and dependent family members have a position in the stocks mentioned above. The author, his firm or any of his dependent family members may make purchases or sale of the securities mentioned in the report while the report is in circulation. author invites readers to send him email and welcomes comments, feedback & queries at .
