Gemini Communication - Rs.435.00

Incorporated in 1995, Gemini Communication Ltd (GCL) took over a partnership company called Gemini Hi-tech with an objective to provide IT solutions in the then emerging market. Today, this Chennai based company is a major player in networking, systems integration and radio frequency identification (RFid) solutions. In fact, GCL is the first and only company in India engaged in the design and manufacture of RFid products. It makes RFid-based readers and antennas under the brand Traze with technology assistance from Texas Instruments. It has developed a range of off-the-shelf RFid solutions for various applications. Ironically, it is India’s largest Wireless Solution Provider (WSP) on the ‘Last Mile’ to corporates for Intra-City communication and to ISP’s for Internet connectivity. Moreover, it is the only company that can stimulate networks through its software OPNET (Optimum Network Performance) before deployment to evaluate scientifically the bottlenecks that could arise or the future proofing it against growth in traffic in future. In short, its also a Network Evaluation company.

Presently, it operates through its 14 offices across the country catering to more than 1000 customers including reputed corporates like MTNL, VSNL, TVS, Elgi, L&T, Alstom, Ashok Leyland, BPCL, Western Railway, Indian Airlines, SBI, UTI Bank, PNB, BOB, HCL etc. GCL primarily has 5 functional divisions: LAN / WAN Division, Computer Telephony Integration (CTI), NetworkCARE Services, NetworkCARE Products, Wireless & Telecom. This biggest growth driver for the company will be its RFid system as it has a huge potential. GCL has formed a 30-member team to develop and design Traze products, including metal-resistant laptop tags, package tags to withstand over 1,200 degree Celsius, smart table antennas for retail application and library management solutions. It is setting up a RFid manufacturing unit at Baddi in Himachal Pradesh at an investment of around Rs.20-22 cr. and may start the manufacture of RFid tags later in this calendar year. It is also expected to launch in international marketing exercise for its recently launched WiMax products to tap the high growth WiMax sector.

For FY06, GCL sales increased by 80% to Rs.126 cr. but its NP was up by 150% to Rs.11.75 cr. posting an EPS of Rs.27 on its tiny equity of Rs.4.38 cr. Being in such a fast growing sector, it is estimated to end FY07 with topline of Rs.225 cr. and bottomline of Rs.25 cr. This works out to an EPS of Rs.57. And with reasonable discounting of 18 times, the scrip has the potential to cross Rs.1000 mark in the medium-to-long-term. Moreover, its management has decided to split the face value of the share to Rs.5 from Rs.10 currently. This will trigger the share price to hit new highs. Investors are strongly recommended to buy it at current levels and hold for at least 2 years to get handsome returns.