Jan 18, 2012, 01.09 PM | Source: Moneycontrol.com
Unicon Investment is bullish on OnMobile Global and has recommended buy rating on the stock with a target of Rs 94 in its January 17, 2012 research report.
, Unicon Investment |
“OnMobile Global Ltd (OMGL) is a global mobile value added services (MVAS) provider with offerings such as ring back tones (RBT), music, mobile video and media, messaging and personal cloud products.”
“OMGL has over 45 VAS products and services, covering most of the product lines in the industry. Successful products such as RBT, sports information service and speech recognition technology have garnered subscriber base. Despite the current short-term hiccups, medium term outlook for domestic VAS look positive with expected increase in 3G penetration in the next two years, usage of utility VAS products and penetration levels of existing products through product innovation and brining in lower versions. For 1HFY12, revenue from international operations grew at 87.5% backed by continued investments in LatAm, Africa and other regions. We believe these investments to drive the future growth of OMGL and estimate a 3-year revenue CAGR of 44% for outside India operations. We believe the existing growth opportunities for OMGL from international business and projected increase in EBITDA margins going forward to facilitate adj. EPS to reach INR 8.6 by FY14, a jump of 62% from FY11 levels.”
“With higher penetration levels in LatAm and Africa and expected revival on the domestic front we estimate a 3-year revenue and adj. EPS CAGR of 16.2% and 16.3% respectively. Further, divestment of remaining stake in Verse Innovation Pvt. Ltd. is likely to garner a pre-tax profit of INR 700mn during FY12. Coming to stock performance, OMGL had underperformed the whole market and lost over 50% of its share price in the last one year. At CMP of INR 72.4, the share is currently trading at 15x 12-month historical PE (adj. EPS) as against a one-year median PE of 18x. Based on this data, we value OMGL stock at 14.4x (a 20% discount to median PE) our estimated FY13 EPS of INR 6.5, thus giving a target price of INR 93.6 and an upside potential of 29.3% in the next 12-18 months. Thus we recommend our investors to BUY OMGL shares,” says Unicon Investment research report.
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