>OPTO CIRCUITS LIMITED (ANTIQUE)

Investment Rationale
Opto Circuits (I) Ltd. (OCIL) is manufacturer of invasive and noninvasive medical devices, with strong brand equity and proven track record of pioneering products, rooted in proprietary technology.

The consistent ramp up in revenues and profits over the years (3 year CAGR of 80% and 70% respectively), brought about by organic and inorganic growth, underscores the management bandwidth, technology assimilation and implementation skills.

OCIL is focussing on improving the monetisation of its base of proprietary technology in the patient monitoring (Criticare) and invasive cardiac (Eurocor) segments, with a marked thrust on
increasing profitabililty of operations.

Its marquee products (viz. patient monitors and stents) are making significant inroads at home and abroad, as is apparent from the sales volumes and geographical distribution of revenues.
At the CMP of INR184, OCIL is trading at a PER of 7.7x and EV/EBIDTA of 6.9x, discounting its FY11e numbers.

Valuation
OCIL is currently maintaining focussing on developing cost-effective and technologically superior products, while simultaneously expanding its reach in domestic and international markets through appropriate products at suitable price points. In the backdrop of increasing non-discretionary healthcare spend and greater product acceptance, the company is interestingly poised, in terms of revenue and profit growth. Hence we inititate coverage with a ‘BUY’ recommendation and a price target of INR295, which represents an upside of 60% from current levels.

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