Micro Technologies India Ltd - Rs 98.00

Established in 1992 and promoted by Mr. P Sekhar, Micro Technologies (India) Ltd. (MTIL), an IT based company is a global developer, manufacturer and marketer of security, safety and life-support electronic equipments & solutions. Over the years, MTIL has developed some of the high-end security products, which address areas of concern right from mobile security to automobile security & monitoring systems using its leverage over various futuristic technology platforms such as embedded, web-based and client server applications. The high-tech wireless technologies which MTIL cater through its products are the GPS(Global Positioning System), GSM(Global System for Mobile communication), CDMA(Code division multiple access), GPRS(General Packet Radio Service), RFID(Radio-frequency identification) & GIS(Geographic Information System) which is an information system for capturing, storing, analyzing, managing and presenting data. Today, MTIL boasts of having hundreds of unique, hi-tech, first of its kind and innovative security products which have huge demand & tremendous potential world wide. Considering its performance MTIL has been accorded with “Deloitte Technology Fast 500 Asia Pacific Award” & “Deloitte Technology Fast 50 (India) Award” for two consecutive years – 2007 & 2008. It has even won the Dun & Bradstreet-ECGC Indian Exporters' Excellence Award in June 2008. During 2007 it was profiled as one of the top IT innovators by NASSCOM. Recently, on 15th August 2008 Dr. A P J Kalam felicitated Dr. P Sekhar – CMD of Micro Technology (124.00), for his significant contribution in the security segment.

Few of its Blockbuster Product/Solutions
Micro VBB - Vehicle Security System
Micro HSS - House Security System
Micro LMTS - Lost Mobile Tracking System
Micro FMS - Fleet Monitoring System
Micro OSS - Office Security System
Micro SBB - Secure Bank Black Box
Micro DMS - Disaster Management System
Micro EBB - Electric Black Box
Micro VDP - Video Door Phone
Micro IBB - Intelligent Black Box

Recently launched products / solutions

Micro BSS - Bike Security System
Micro ISS - Intelligent Surveillance System
Micro WSS - Wi-fi Security Sytem
Micro LNTS - Lost Laptop Tracking System
Micro BTS - Buddy Tracking System
Micro SAMS - Students Attendance Management System

So it’s very clear from the above that these revolutionary products are the USP for the company. Infact, MTIL is one of the first company to develop security systems using SMS (Short Messaging Services) on a mobile GSM platform. Accordingly, all the products/solutions developed by the company can be fully controlled using normal mobile & computers. Infact with over 80 IPR’s, its technology has been patented in 123 countries, giving it exclusive rights in these markets. Therefore company has also got test certifications from national and internationally accredited agencies like ERTL, ARAI, FCC, CE, SYMBIAN etc for all its premium grade products. Hence after developing and having world class products in its kitty, MTIL is now focusing more on marketing and distribution to increase its presence in India as well across the world. Accordingly it has appointed more than 2000 dealers/distributors all over India, opened more than 70 Micro Shoppe franchise outlets, increased participation in exhibition and has also increased the advertisement budget substantially for brand building and product awareness. It has even launched a novell concept of Mobile Micro Shoppe i.e. Shops on Wheels and is also selling its products online thru various portals. It has been targeting to cater to a range of clients across diverse sectors such as retail, corporate, institutions, PSUs etc and has its products successfully installed at ICICI Bank, Reliance Energy, L&T, NSDL, Siemens, NMMC, FICCI, Girvan Institute, Tata Honeywell, CIDCO, HPCL, BPCL, BARC, MCGM, MSEB, MRVCL, TVS Lucas to name a few. Importantly, it has tied up with MTNL, BSNL, IDEA & AIRTEL to offer mobile security solution (Micro LMTS) at competitive rate to their subscribers. It also has a strategic tie up with FORD for installation of Micro VBB device in Ford Ikon vehicles. To segregate is business model and work efficiently MTIL has formed two subsidiaries namely Micro Secure Solutions & Micro Retail which will concentrate only on marketing and distribution aspect.

Although, India in itself is a huge market, still MTIL is also betting on international market to boost up its revenue. To increase its global presence, it has entered into marketing tie-ups with several foreign companies like Active Solutions(Nepal), Knowledge Vectar(USA), Easy Fleet Solutions(Turkey), Tokyo Software(Japan), Kreasindo Solusi(Indonesia), Pacific Solution(UK, Africa and Singapore), Status Solutions(UAE), I-System(Srilanka) etc. Of late it has entered into a strategic agreement with TWI International(South Africa) & Lazer Technology Solutions for distribution of its selected security products in Middle East and Egypt. Recently is tied up with Jicoux Datasystems, a 100% subsidiary of Mitsubishi Corporation to offer Micro LMTS (Lost Mobile Tracking System) for Chinese and Japanese market. Accordingly it has even introduced the Chinese version of its internationally acclaimed product - Micro LMTS.

Meanwhile, company continues to have a strong R&D team working on multiple innovations to ensure that company introduces five to six new products in the market every year. At the same time it is constantly expanding its hardware/equipment manufacturing capacity and improving its infrastructure to meet the rising demand. Presently, Indian electronic security market is at a very nascent stage and growing at rate of more than 25% per annum. Moreover it is dominated by unorganized sector with organized players enjoying less than 10% market share. With handful of Indian manufacturers, the security equipments are largely imported from China, USA, UK, Germany, Singapore, Italy, Hong Kong, Israel, Japan, Korea, and Taiwan. With India having the largest mobile subscriber base and highest number of two wheeler / four wheelers on road, the potential market for company’s product is very huge. Due to rising terror incidence across India, corporates, households & govt have understood the need/importance of premise security. These all factors are eventually leading to increased business for the company. Recently, company reduced the price of its products by up to 30% to cash on the fear sentiment post Mumbai terror attack.

As far as financial are concerned, MTIL is doing exceedingly well as it has reported a CAGR of 85% in top line and 95% in bottom line in last three years. Even for H1FY09 it has posted 60% growth in revenue to Rs 117 cr and 50% increase in net profit to Rs 34 cr. It has a strong balance sheet with low debt equity ratio of 0.35x and huge reserves of Rs 192 cr on small equity of Rs 10 cr leading a healthy book value of Rs 190. On the margin front it has been consistently registering an OPM of more than 40% and NPM of 30% for last three years. For current year, it may record total revenue of Rs 275 cr & PAT of Rs 55 cr which leads to an EPS of Rs 50 on current equity of Rs 11 cr. Considering the CMP, chances of conversion of balance FCCB & warrants into equity seems bleak. With an EV/EBITDA of less than 2x times, Market Cap/Sales of merely 0.40x times and having Cash EPS of Rs 75, scrip is trading extremely cheap at a market cap of Rs 115 cr. Investors are strongly recommended to buy at current levels as share price can triple in 15~18 months.

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