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GICS Industry : Software l Sub Industry : Systems Software l Website : www.microtechnologies.

net

Micro Technologies (India) Ltd


Key Stock Indicators
NSE Ticker :
Bloomberg Ticker :
Face value / Share:
Div. Yield (%):

MICROTECH
MTCH:IN
10.0
2.29

CMP (as on 11 Apr 2011 Rs/share):


52-week range up to 11 Apr 2011 (Rs)(H/L):
Market Cap as on 11 Apr 2011 (Rs mn):
Enterprise Value as on 11 Apr 2011 (Rs mn):
Div. Yield (%):
0.0

129.9
229.50/110.10
1,807
2,809

Shares outstanding (mn) :


Free Float (%) :
Average daily volumes (12 months) :
Beta (2 year) :

Micro Technologies (India) Limited (MTIL) is an information technology (IT) based company which
primarily deals into security solutions. It provides security solutions for vehicles, homes, mobiles,
premises and other verticals. The company has two subsidiaries and operates in the markets of
South Africa, Japan, Israel, Australia and Middle East countries along with India.

KEY HIGHLIGHTS
Operates in niche security market
MTIL is one of the few companies providing IT based security solutions. It provides messaging and
anti-theft security systems for security of vehicles, homes, premises and other assets. Its solutions
are used in monitoring cyber activities, energy consumption, employees- who are constantly on the
move, fleet for transport companies and other verticals. The company offers disaster management
systems, wi-fi security systems and mobile tracking systems. Along with these security solutions
MTIL provides group and emergency messaging facilities, attendance and visitors management
systems and individual identity solutions. In FY10, the companys security solution business
contributed ~73% of total revenues, messaging ~19% and IT products ~8%.
New launches; widening product portfolio
In FY10, MTIL launched water management tool for rural India. This tool enables farmers to
manage motor pumps with the help of mobile phones. The company also launched unique identity
solution and uninterrupted power supply (UPS) systems during the year. Unique identity solution
was launched for individual security and identity management while UPS systems were launched
primarily for household segment.

13.9
68.8
45,729
1.2

Key Financial Indicators


Revenue (Rs mn)
EBITDA ma rgi ns (%)
PAT (Rs mn)
PAT ma rgi ns (%)
Gea ri ng (x)
EPS (Rs /s ha re)
PE (x)
P/BV (x)
RoCE (%)
RoE (%)
EV/EBITDA (x)

Mar-08
1,880.9
41.1
519.7
27.6
0.3
47.4
4.4
1.1
29.7
29.8
3.7

Mar-09
2,899.5
39.2
720.9
24.9
0.3
65.6
1.1
0.3
25.1
28.5
1.2

Mar-10
4,592.5
36.8
899.8
19.6
0.4
70.1
1.9
0.4
27.1
25.1
1.6

n.m. : Not meaningful

Shareholding (As on December 31, 2010)


Others
64%

Growing global presence


The company has been taking efforts to expand its presence globally. In FY10, it tied-up with H.A.
Sh Group System Services Ltd an Israel based company to provide security for the major sectors of
Israel. It has also tied-up with Kuwait based company to expand its business in Kuwait markets.
MTIL has presence in various nations which include South Africa, Japan, Israel, Australia and Middle
East countries. Its exports have grown at a CAGR of ~71% from FY06 to FY10 reaching ~Rs.1623 mn.

KEY RISKS

Foreign exchange fluctuation; exports contributed ~36% of total FY10s revenues

Cheaper imported products

Change in laws of foreign nations

High employee cost and attrition level

FII
2%

Promoter
34%

Indexed price chart

Stock Performances vis--vis market


(index )
140
120

-33

-16

-35

100

80
60
40
20

V olumes (RHS )

MICR OTEC H

F eb-11

J an-11

D ec -10

O c t-10

Nov-10

S ep-10

Aug-10

Mar-11

12-m

J ul-10

Note:
1) YTD returns are since Apr 01, 2010 to Apr 11, 2011.
2) 1-m, 3-m and 12-m returns are up to Apr 11, 2011.

3-m

J un-10

NIFTY

1-m

Apr-10

MICROTECH

YTD

('000)
800
700
600
500
400
300
200
100
0
May-10

Returns (%)

NIFTY

Micro Technologies (India) Ltd


BACKGROUND
MTIL was incorporated in 1992. It is an IT based company which primarily deals into security solutions. It is one of the few companies to develop security systems using
short messaging services on mobile platform. Initially, MTIL was serving mainly state and central governments for management of civil utilities such as state entry tax,
electricity bills, water and telephone bill and other. Later the company forayed into different segments. In 2000, MTIL went public through initial public offer (IPO) to
concentrate on research and development activities to develop innovative products. MTIL has diversified portfolio and serves to various segments of vehicle, premises,
mobile and other assets along with energy and health sector. The company segments its business under three heads viz- security, messaging and IT products. In FY10,
security segment contributed ~73% of total revenues, messaging ~19% and IT products ~8%.

COMPETITIVE POSITION
Peer Comparison

R evenue (R s m n)
E B ITD A m a rg ins (% )
P AT (R s m n)
P AT m a rg ins (% )
G ea ring (x)
E P S (R s /s ha re)
P E (x)
P /B V (x)
R oC E (% )
R oE (% )
E V/E B ITD A (x)

Mic ro
Tec hnolog ies
(India) L td
Mar-10
4,592.5
36.8
899.8
19.6
0.4
70.1
1.9
0.4
27.1
25.1
1.6

NEL C O L td
S ep-10
1,608.2
-3.2
223.9
13.9
1.6
9.8
8.4
4.1
35.1
60.5
n.m .

Honeywell Z ic om Elec tronic


Autom ation India S ec urity S ys tems
L td
L td.
Dec -09
Mar-10
11,734.2
5,285.9
16.6
11.6
1,327.9
177.7
11.3
3.4
2.1
150.2
-17.0
14.4
n.m .
4.4
0.4
50.9
12.3
35.2
16.7
9.3
3.9

n.m: Not meaningful

FINANCIAL PROFILE

Key Financial Indicators


Units

Significant growth in top-line however operating margin drops in FY10

Revenue
Top-line grew significantly by 58.4% on y-o-y basis reaching ~Rs.4.6 bn in FY10.
During the year domestic revenues grew by ~40% and exports grew by ~31%.
Operating margin declined to 36.8% in FY10 compared to 39.2% in FY09 primarily on
account of increase in profession charges and other administrative costs as a
percentage of total revenues. As a result of better operating profits, PAT grew from
Rs.720.9 mn in FY09 to Rs.899.8 mn in FY10, a growth of ~25%.

Rs mil li on

EBITDA ma rgins Per cent


PAT

Rs mil li on

PAT ma rgi ns

Mar-08

Mar-09

Mar-10

1,880.9

2,899.5

4,592.5

41.1

39.2

36.8

519.7

720.9

899.8

Per cent

27.6

24.9

19.6

Revenue growth Per cent

76.4

54.1

58.4

EBITDA growth

Per cent

82.0

46.8

48.7

PAT growth

Per cent

68.5

38.7

24.8

Gea ri ng

Ti mes

0.3

0.3

0.4

RoCE

Per cent

29.7

25.1

27.1

RoE

Per cent

29.8

28.5

25.1

INDUSTRY PROFILE
IT services
Indian IT services revenues are estimated to be around $34 billion in 2009-10, registering a CAGR of 20 per cent from 2004-05 to 2009-10. During the same period, IT
services exports, which accounted for 80 per cent of the revenues, are estimated to have grown at a CAGR of 22 per cent to $27 billion in 2009-10. The industry is highly
dependent on the US and UK markets, which contribute to around 75 per cent of export revenues. With IT services deriving a large portion of its revenues from exports, the
sector`s profitability is highly correlated to foreign exchange movements. An appreciating rupee is thus a key risk factor. Also, as human resource is the main input in IT
services, issues related to non-availability of skilled labor, attrition and wage inflation would also impact Indian IT players.

Micro Technologies (India) Ltd


ANNUAL RESULTS
Income Statement
(Rs million )
Net Sales
Operating Income

Mar-08
1,880.8
1,880.9

Mar-09
2,899.3
2,899.5

Mar-10
4,591.8
4,592.5

EBITDA
EBITDA Margin

773.8
41.1

1,136.1
39.2

1,689.0
36.8

Depreciation
Interest
Other Income

140.7
40.1
4.6

270.2
33.9
0.3

394.2
199.0
13.5

PBT
PAT

599.2
519.7

818.8
720.9

1,117.0
899.8

PAT Margin

27.6

24.9

19.6

No. of shares (Mn No.)

11.0

11.0

12.8

Earnings per share (EPS)

47.4

65.6

70.1

Mar-08
597.7
-68.0
140.7
-503.2

Mar-09
832.3
-88.7
270.2
-682.8

Mar-10
1,109.2
-200.1
394.2
-565.6

167.2
-985.1
-4.4

331.0
-581.3
3.9

737.7
-1,215.2
-170.5

Cash flow
(Rs million )
Pre-tax profit
Total tax paid
Depreciation
Change in working capital

Balance sheet
(Rs million )
Equity share capital
Reserves and surplus
Tangible net worth
Deferred tax liablity:|asset|
Long-term debt
Short-term-debt
Total debt
Current liabilities
Total provisions
Total liabilities
Gross block
Net fixed assets
Investments
Current assets
Receivables
Inventories
Cash
Total assets

Mar-08
109.7
1,939.1
2,048.7
16.2
613.2
89.2
702.4
151.1
42.2
2,960.6
1,601.8
1,563.2
4.3
1,393.1
719.6
393.5
114.1
2,960.6

Mar-09
150.0
2,859.6
3,009.6
25.5
617.1
370.6
987.6
372.4
107.1
4,502.2
2,178.6
1,874.3
0.5
2,627.4
1,298.1
590.3
379.4
4,502.2

Mar-10
128.4
4,027.6
4,156.0
42.6
613.2
866.0
1,479.2
590.0
205.5
6,473.3
2,945.4
2,695.3
171.0
3,607.0
1,728.8
833.3
477.3
6,473.3

Revenue growth (%)


EBITDA growth(%)
PAT growth(%)

Mar-08
76.4
82.0
68.5

Mar-09
54.1
46.8
38.7

Mar-10
58.4
48.7
24.8

EBITDA margins(%)
Tax rate (%)
PAT margins (%)

41.1
11.3
27.6

39.2
10.8
24.9

36.8
17.9
19.6

4.2
2.0
186.8
29.8
29.7

2.7
1.7
273.7
28.5
25.1

4.2
3.0
323.8
25.1
27.1

0.3
19.3
0.9

0.3
33.5
0.9

0.4
8.5
0.9

1.7
5.0

1.5
3.1

1.8
2.2

270

331

287

Ratio

Cash flow from operating activities


Capital Expenditure
Investments and others

Dividend payout (%)


Dividend per share (Rs)
BV (Rs)
Return on Equity (%)
Return on capital employed (%)

Cash flow from investing activities


Equity raised/(repaid)
Debt raised/(repaid)
Dividend (incl. tax)
Others (incl extraordinaries)

-989.5
36.3
608.7
-25.6
78.0

-577.4
89.1
285.2
-22.4
159.7

-1,385.7
396.9
491.6
-44.6
-98.0

Cash flow from financing activities


Change in cash position
Opening cash

697.4
-124.9
239.0

511.6
265.2
114.1

745.9
97.9
379.4

Asset turnover (x)


Current ratio (x)

114.1

379.4

477.3

Gross current assets (days)

Closing cash

Gearing (x)
Interest coverage (x)
Debt/EBITDA (x)

n.m : Not meaningful;

QUARTERLY RESULTS
Profit and loss account
(Rs million)
No of Months
Revenue

Dec-10

% of Rev

Dec-09

% of Rev

Sep-10

% of Rev

Dec-10

% of Rev

Dec-09

% of Rev

1,337.2

100.0

1,190.2

100.0

1,410.5

100.0

4,048.4

100.0

3,056.5

100.0

EBITDA

482.6

36.1

404.1

33.9

482.1

34.2

1,400.1

34.6

1,073.1

35.1

Intere s t

50.1

3.7

25.3

2.1

35.7

2.5

112.7

2.8

57.8

1.9

Depre ci a ti on

144.0

10.8

103.2

8.7

133.6

9.5

399.2

9.9

287.7

9.4

PBT

288.5

21.6

275.6

23.2

312.8

22.2

888.2

21.9

727.6

23.8

PAT

231.0

17.3

228.8

19.2

250.4

17.8

711.2

17.6

620.1

20.3

Micro Technologies (India) Ltd


FOCUS CHARTS & TABLES

80
60
40

Per c ent
80
70
60
50
40
30
20
10
0

Qua rte rly P AT & y-o-y g row th

250
200
150
100
50

20

Shareholding Pattern (Per cent)


Mar 2010
Jun 2010
Promoter
32.5
31.8
FII
2.8
5.0
DII
0.1
Others
64.7
63.1

Sep 2010
31.0
5.5
63.6

Dec 2010
34.2
2.2
0.2
63.4

S ep-10

J un-10

Mar-10

D ec -09

S ep-09

J un-09

Net profit growth y-o-y (RHS)

OPM

J un-10

Mar-10

D ec -09

S ep-09

J un-09

Mar-09

D ec -08

Movem ent in operating and net ma rg ins

S ep-08

Mar-08

Dec-10

Sep-10

Jun-10

Mar-10

Dec-09

Per c ent
45
40
35
30
25
20
15
10
5
0
Sep-09

Mar-09

Dec-08

Sep-08

Jun-08

Mar-08

Jun-09

EPS

Rs/share
20
18
16
14
12
10
8
6
4
2
0

Mar-09

Net Profit

J un-08

Sales growth y-o-y (RHS)

D ec -08

J un-08

D ec -10

S ep-10

J un-10

Mar-10

D ec -09

S ep-09

J un-09

Mar-09

D ec -08

S ep-08

J un-08

Sales

S ep-08

0
0

D ec -10

100

Rs mn
300

D ec -10

Per c ent
120

Qua rte rly sa le s & y-o-y g row th

S ep-10

Rs mn
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0

NPM

Board of Directors
Director Name
Paul Jerome Colema n(Jr.) (Dr.)

Designation
Independent Director

Ra vindra Ses hrao Des hmukh (Dr.)

Non-Executive Di rector

Anant Ra jaram Ka le (Mr.)


Ra gha vendra Ana nt Raichur (Mr.)
Ja yanthi Sekha r (Ms .)
Sekhar Padmanabhan (Dr.)

Non-Executive Di rector
Non-Executive Di rector
Promoter-Di rector, Executive Di rector
Executi ve Cha irman & Mana gi ng
Di rector, Promoter-Di rector
Independent Director
Executi ve Di rector

Pra kas h Ha ri har Bhave (Mr.)


Mukund Gupta (Mr.)

Additional Disclosure
This report has been sponsored by NSE - Investor Protection Fund Trust (NSEIPFT).
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