Buy OnMobile Global; target of Rs 83: ICICIdirect.com

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Buy OnMobile Global; target of Rs 83: ICICIdirect.com

ICICIdirect.com is bullish on OnMobile Global and has recommended buy rating on the stock with a target of Rs 83 in its August 08, 2011 research report.

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RELATED NEWS Hold 3i Infotech; target of Rs 44: KRChoksey Buy Dena Bank; target of Rs 129: Nirmal Bang Hold Hero Motocorp; target of Rs 1911: KRChoksey ALSO READ See previous views by ICICIdirect.com See what other Experts & Brokerages are saying about OnMobile Global See messages about OnMobile Global OnMobile Global BSE | NSE 30/05/12 Are Mutual Funds betting on OnMobile Global?

ICICIdirect.com is bullish on OnMobile Global and has recommended buy rating on the stock with a target of Rs 83 in its August 08, 2011 research report.

"OnMobile Global reported its consolidated numbers which were below our estimates. The company reported a topline of Rs 136.4 crore against our expectation of Rs 144.8 crore, growing 2.3% QoQ and 10.2% YoY. EBITDA for the quarter stood at Rs 27.0 crore against our expectation of Rs 32.7 crore, de growing by 12.1% QoQ and 4.9% YoY due to higher cost of sales. EBITDA margin for the quarter stood at 19.8%, falling by 326 bps QoQ and 315 bps YoY. PAT stood at Rs 13.9 crore, de growing by 48.1% QoQ and 25.0% YoY."

"OnMobile Global's revenue stood at Rs 136.4 crore as against our expectation of Rs 144.8 crore. EBITDA margins took a tumble in this quarter and stood at 19.8% falling 326 bps QoQ on the back of a higher cost of sales and services inclusive of content cost. Dilithium also did not have any significant impact on the revenues. The telephonica services went live in 7 countries covering 85% of the total subscriber base of LatAm. The active user base has grown by ~50% from Q4FY11 to 4.6 million users in Q1FY12. The company also completed the deployment of their sports pack 'Futbol' in all 12 countries ahead of the big event, COPA America in July."

"The company's reported a topline that was below our expectations and even on the EBITDA margin front the company disappointed. Recent TRAI guidelines regarding activation of VAS may be a dampener. Execution in international businesses seems to be on track; however slowdown in core business is a cause of concern for OnMobile. At the CMP of Rs 71, the stock is trading at 10.8x FY13E EPS of Rs 6.6. Using the DCF methodology, we value the stock at Rs 83, implying an upside 16.9%. Our target price discounts FY13E EPS by 12.7x. We maintain our BUY rating on the stock," says ICICIdirect.com research report.

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To read the full report click on the attachment