Wednesday, April 1, 2009

Bartronics -Buy on declines


A good mix of technology and efforts to scale up its businesses in terms of capacities, geographical presence and products offerings has enabled Bartronics India to grow at a fast pace. A smaller base, too, has helped it grow at a compounded annual growth rate (CAGR) of 100 per cent in revenues and 220 per cent in profits during FY2003-08. Even for FY09, revenues are seen growing by 85 per cent year-on-year (y-o-y) to Rs 500 crore (Rs 417 crore in nine months ended December 2008).

The company's inventory and supply chain management products and solutions find application in different industries and hold promising future thanks to increasing applications in retail and manufacturing sectors. The company has recently extended its product offering through its partnership with US-based Intelleflex Corporation for RFID(radio frequency based identification)-based solutions for the Indian market.

Notably, its smart cards business also holds promise and finds wide application in data capturing and identification. The company has a manufacturing capacity of 80 million cards per annum. While in FY08, it sold 31 million cards (Rs 93 crore in revenues), for FY09 and FY10, the company is expected to achieve higher sales on the back of strong order book of Rs 140 crore. Also, the average realisation (Rs 30 per card) and volumes, so far, has been low due to high dependence on a single vertical (telecom).

The company is eyeing orders from the government and banking sectors, which should help in improving pricing power and volumes going ahead. With the introduction of 3G cards itself, the realisation will jump by 40-50 per cent. The expected introduction of 'master' banking cards (consolidated card assisting multi-banking transactions) in 2010 should also help improve realisations. Thus, both margins and volumes are seen improving in this business. The company is operating in fast growing segments and has a strong order book of Rs 1,100 crore (four times its FY08 revenue and executable over the next two years), which provides good growth visibility.

Source : business-standard