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Monday, January 3, 2011

Hot Pick : Geodesic Ltd. Bse Code : 503699

Geodesic Ltd (formerly Geodesic Information Systems Ltd) was incorporated in 1999 by Pankaj Kumar, Kiran Kulkarni, Prashant Mulekar and Mahesh Murthy. A publicly traded company, Geodesic is listed on the Bombay Stock Exchange (BSE), the National Stock Exchange (NSE) and its Foreign Currency Convertible Bonds (FCCB) is on the Singapore Stock Exchange. With twelve offices spread across the globe, four marketing partners and 525 employees, Geodesic earned revenues of US$ 133 million and a net profit of US$ 52 million during FY 2009. Geodesic's first half of 2010 revenues stood at US$ 60 million with a net profit of US$ 24 million.

Geodesic's real time content, communication and collaboration platform, in conjunction with a powerful Customer Alignment and Relationship management (CRM), works seamlessly across the web, desktops and mobile devices. The flexible and scalable platform addresses both the retail and the enterprise segment, and has been well received by the banking and financial services industry, portals and publishers, enterprises including SMEs, mobile device manufacturers, telecom operators and retail mobile users.

In its constant quest to evolve and expand its suite of products and solutions across segments and new geographies, Geodesic acquired

•Picopeta Simputers Pvt Ltd, a Bangalore-based company, engaged in building hand held devices and solutions for the developing world.


•Engage Solutions, a Hong Kong-based software solutions company for its comprehensive Customer Alignment and Relationship Management solution.


•Swedish firm, Clangula IT to address the lucrative North European markets and work closely with handset manufacturers.


•E Dot Solutions, a web 2.0 company engaged in large portal deployments.


•Chandamama India Ltd - the number 1 Indian children's print magazine for the purpose of acquiring content - digitizing and mobilizing it to address the growing retail mobile users.


•Interactive Networks Inc., a Latin America-based software provider of advanced instant messaging and value added solutions. This acquisition expanded Geodesic's product profile and reach beyond India, Europe, Asia and the US into South America and Africa.


A proud recipient of several international awards including Deloitte Touche Tohomatsu Fast 50 and Fast 500 Asia Pacific for five consecutive years, Red Herring 'Top World 100' small cap technology companies in 2005, Geodesic has been featured in Forbes 200 'Best under a Billion-Asia Pacific' for 2008 and 2009.

Geodesic's Mundu IM and Mundu Radio have been adjudged as the one of the top 10 and top 12 mobile products by C|net and PC Magazine respectively, not to mention Mundu IM winning the best mobile internet service at GSM Asia for the year 2009.

Geodesic recently made a buy back offer at a maximum price of Rs.150 per share. It's 52 Week high is 147 plus, and currently trading at a mouth-watering price of just 83, this stock is going to be a Fund Manager's delight in the coming year! The fundamentals of the company are excellent with Half year eps for current financial year at 17.85 already in the bag. The expected eps for full year is likely to be in the Rs.35-40 range, this stock is currently available at a PE of less than 3! PE ratios of peer companies range from 12-25. This tells you how much scope for appreciation is there in this stock. The stock should ideally trade in the Rs. 450-500 range based on current fundamentals. This stock is definitely a potential multi-bagger for 2011. Happy investing & Happy New Year!
Cheers!

Company website: www.geodesic.com

12 comments:

raj said...

Happy new year superstar.

Street Buzz said...

Company Background
The Company is an innovator in software products focused on Information, Communication and Entertainment for mobile phones and desktop computers under the ‘Mundu’ brand name for the retail segment. Geodesic Limited derives a major portion of its revenues in the enterprise segment from the integrated content, Customer Alignment and Relationship Management (CARM), real-time communication and collaboration suite. Geodesic offers a variety of services like Instant Messenger (IM), Internet Radio, and Voice over Internet Protocol (VoIP), remote desktop, etc., on the smart phone. The company has subsidiaries in USA, Hong Kong, Sweden and Singapore in addition to Indian Subsidiary ChandaMama Ltd.

Investment Rationale

•Niche Product Portfolio:- Geodesic has Niche product line and its products Include the following :-
o Retail Segment includes Mundu Range of Products:-

•Mundu IM: – A multi lingual cross platform Instant Messenger.
•Mundu radio: – With over one Lakh Radios station available globally on Cell Phone. The company had tied up with Idea in 2008 to provide this service to Idea subscriber.
•Mundu Speak: – A VOIP based call system. A cell phone user can talk unlimited, globally at minimal charges. A user can converse at a rate that is 10% of the actual call rate. The calls can be made to 200 Countries. Mundu Speak generates average revenue close to Rs 2.5 Lakh per day.
•Remote Desktop: – For remote administrative services.
The company has signed up with several handset manufacturers, including BenQ, Mitac, Medion, etc., to preload Mundu IM and Radio as a part of their shipment. The company gets a pre-bundling fee between Rs.9 to Rs.45 per phone.

Street Buzz said...

o Hardware Business: – The Company manufactures Hand Held Devices called Simputer. These devices were used for e-governance pilot projects in three states. Moreover National Identity card project was done on Amida (Simputer). We expect the company to bag orders from the government once NID and NREG project gets on stream. The company has also come up with Open Learning with Autonomy and Interactivity (OLAI), a web based computing platform. The company is targeting world wide education market with this product. OLAI platform costs around Rs 20000.

•Continuous Top line and Bottom-line growth: – The Company has reported a topline and bottom-line growth of over 95% in the last five years. The topline increased at CAGR of nearly 100% from Rs 40Cr in FY 05 to Rs 642 Cr in FY09. Bottom-line has grown from Rs 19.09 Cr to Rs 282 Cr at a CAGR of 96%. With a niche product line we believe that the company would continue to post a growth in topline in the coming years. The company had acquired 8 new clients in the last quarter. However, due to pricing pressures the sales and bottom-line to remain flat for FY10 but a significant uptick in both topline and bottomline from FY11 onwards is expected as pricing parity is restored.

Street Buzz said...

•Focus on developing economy to yield growth in topline: - India is adding close to 8-10 Million subscribers in the telecom Sector every month. At present, India has close to 1.6 Cr internet enabled cell phone user. Tele density is increasing at a fast pace and so is the mobile device Industry. Similar trend exists in other developing economies such as China, Africa, Latin America and Middle East. Company is actively involved in increasing its presence in these economies. The company in last quarter had bagged clients in Latin America. The company plans to intensify focus on these geographies as it believes that these areas would give company incremental growth in the coming years.
•Technology Convergence between IP, GSM and CDMA channels:- A constraint on spectrum would push GSM and CDMA companies to adopt IP based telephony. More over, to serve the ever increasing subscriber base, particularly in India, Africa and Latin America . VOIP,which is still awaiting approval, would provide the necessary impetus for the company’s growth.
•Constant product Research,Development and Launch: – The Company has been constantly developing new products. The company was the first to come out with IM for I-Phone, the Instant Manager (IM) was well received. The company has constantly upgrading its products and launching new products. The company is launching SPOKN, a completely new branded retail VOIP service in the month of September and this is expected to be a major revenue earner for Geodesic going forward.
•Planned Capex ahead and acquisition in the offing- The Company plans to set up a facility for Simputer and push forward for acquiring new products. The management has stated that it is in talks to acquire a company in Europe for a consideration of USD 15-16 Mn. The targeted company is in the social networking space. The deal is expected to close down by Dec in Q3FY10.
•Inorganic growth from FCCB proceeds worth Rs 500 Cr for Acquisition: - The Company had raised USD 125 Mn through FCCB in Jan 2008 for acquisitions abroad. It had also bought back FCCB worth 8.5 Mn at a discount. The company has USD 113.5 Mn worth of FCCB outstanding conversion in 2013 at a price of Rs 256 per FFCB and a maturity yield of 6.6%. Geodesic has a past track record of acquiring companies, like E-dot, Picopeta and Chandamama, and improving their performance substantially, post-acquisition. Company has utilized some of these funds for investment in Subsidiaries and product marketing. Going forward, we expect the company to scout and acquire companies abroad. This would aid the company in reporting a growth in topline and Bottomline.
•Dividend history: - The management has stated that it proposes to step up the dividend payout to 10% from 5% at present.
•Cash and Bank Balance:-Company has cash and bank balance worth Rs 84 per share. BUY WITH A TARGET OF 450 in one year.

Abhi said...

A very Happy New Year 2011. Dear Superstar I want to know your views on Coal India. Is it a safe investment. Kindly shed some light for all of us.

real value said...

Dear SS
I m holding K Sera @16.10, Southern Ispat @11.20, Cronimet @93 and Geodesic @101. I intend to know that I should continue to hold on these or exit from which u think that can not be performed in 6-9 months period.
Pl reply....

real value said...

Dear sir
I m holding k Sera @16.20, Southern Ispat @11.20, Cronimet @93 and Geodesic @101. Seeking yr advice that should i continue to hold on that or exit from any of them which u thik it will not perform in future. Pl reply , I need yr valuable comments

real value said...

Dear sir
I m holding k Sera @16.20, Southern Ispat @11.20, Cronimet @93 and Geodesic @101. Seeking yr advice that should i continue to hold on that or exit from any of them which u thik it will not perform in future. Pl reply , I need yr valuable comments

Superstar said...

Hi Street Buzz, thanks for the additional info you posted on Geodesic.

Hi Abhi, yes Coal India is a good company and should be a safe bet below 300 levels. It's an investment grade stock.

Hi Real Value, I had recommended K Sera Sera at 11.10 after which it immediately went to around 18.50 levels. You bought it at the higher end of the band. Southern Ispat, Cronimet & Geodesic can all be held for long term, depending upon the overall market conditions. Geodesic has the best management among these three.

Cheers!

shail said...

superstar,y do ur blogs stop wen the market is falling.infact u shud come out n give more comments during this phase.

Superstar said...

Hi Shail,
I write when I want to and when I have time. I am under no obligation to write as per your demands. There is a phrase in Hindi, "Meri Marzi"! ;)

Cheers!

amit golchha said...

dear sir
please give sm recommendations in large cap as it has cm dwn a lot and first run up will be in these stks. a return of 25-30% will b ok for a time short time frame of 1-2months.