Saturday, April 17, 2010

Securing India

Please note that the idea in this posting is for an Indian company listed on Indian exchange. As I look at opportunities I will be exploring for Indian companies as well that seem attractively priced.

What would you think of a company with the following characteristics:
  • Low P/E - Expected to be below 3 given earnings for the last 3 quarters in 2009-2010.
  • Low P/B - of 0.74
  • High rate of compounded growth - Above 25% over the last few years

These factors become even more interesting because the company is in security products. This is a relatively new field in India with most of the security currently handled manually. Any need for sophisticated equipments are met through imports.

Micro Technologies India has been in business since 1992. However, it is only in the last few years that it has shown dramatic improvements in revenue and profitability. It seems to have gained the critical mass and the trajectory is exponential.

The firm is very research oriented and have come up with innovative products keeping the needs of India in mind. Some of the recent product release like Jai Kisan builds on top of technologies that has gained mass acceptance in technology - mobile phones. Besides many other products - Vehicle Security System, Lost Mobile Tracking System, Access Control System, Bike Security System, Fleet Monitoring system and so on have been developed keeping the needs of India in mind.

Micro Technologies is being very aggressive in expanding the presence of its products outside India by tying up with companies in Gulf, Europe, Japan, Israel and so on. Incremental expansion of products in other regions of the world will leverage a lot of research that has already been done so the leverage to earnings will be significant.

Micro Technologies India has also been the receipient of many awards over the last few years including Deloitte award, Amity award and so on.

I recently initiated a position in this company and will be keeping a very close eye on this. This has the potential of being a multi-bagger over the next few years. One thing to watch out for is that it has already trippled over the last year so investor should make their entry carefully.

Happy investing!