Micro Technologies - Rs.211.00

Established in 1992, Micro Technologies (India) Ltd. (MTIL) is a global provider of security, safety and life-support solutions and offers a host of software products for the security, messaging and wireless industries. In fact, it has a monopoly in the niche segment that it operates in and uses patented technology, which is difficult to replicate. It has been working on innovative hi tech software solutions for security in banking, Internet, door security, automobiles etc which have tremendous market potential both locally and internationally. For few of its products, the company has received WIPO Switzerland acceptance for its international patent application in 123 countries including the USA.

Being a product focused IT company, MTIL has developed more than 80 products and some of them enjoy a phenomenal demand. For technical assistance, the company has an agreement with global giant Siemens to collaborate on pioneering R&D efforts and identify new partners for development of wireless technologies. Some of its products like Lost Mobile Tracking System, Secure-Bank Black Box for the banking industry, Vehicle Black Box, disaster management system, home security system, access control solution, micro life line etc are doing exceptionally well and have brought a revolution in the industry. Its other inventions like ATM Black box, Intelligent Black Box, Portable Black Box etc have not been fully commercialized but hold immense potential. To fulfill the huge demand, the company is in an aggressive expansion mode to quadruple is production capacity and is on the verge of achieving critical mass. Currently, it has customers spread across South East Asia, Africa and the Middle East and distributes its products through its partners in Dubai, Kuwait, Yemen, Egypt, Japan and Indonesia. It plans to set up offices in UK and USA and increase its presence through JVs in these markets. For the domestic market, MTIL is setting up franchisee outlets under the name of ‘Micro Shoppe’ which will create product & brand awareness in the public at large. It already has 5 outlets and the company intends to take them up to 50 by December’06. It is also setting up Micro Service Centre to provide maintenance and support facilities.

MTIL has an order in hand of around Rs.400 cr. to be executed in the next 3 years and is expected to get another Rs.200 cr., which provides visibility of revenue for coming years. For FY06, its top-line increased by 120% to Rs.59 cr. whereas its PAT zoomed 140% to Rs.17 cr., thereby reporting an EPS of Rs.17 on its current equity of Rs.10 cr. For FY07, sales may cross Rs.100 cr. and net profit may be around Rs.29 cr., which means EPS of Rs.30. Although there is risk of equity dilution, still the share is available fairly cheap and has the potential to double in 12-15 months. Investors are strongly recommended to buy at current levels and hold for 3-4 years as it can turnout a multibagger.