OCI designs, develops, manufactures and markets medical electronic devices such as pulse oximeters, cholesterol monitors, fluid warmers and stents. It enjoys the fruits of the growth of the industry it is in.
The opto electronics market is currently growing at around 15 per cent a year and, for the next 10 years, it is expected to grow at 10-20 per cent per year. The stents market, another industry that OCI operates in, is expected to grow in India at more than 15 per cent annually over the next 2-3 years.
These growth figures are also reflected in the company's statement of income. In FY09, the y-o-y growth of net sales and profit was 74.84 per cent and 60.31 per cent, respectively.
OCI's clients are mainly hospitals and large companies. This helps the company maintain high quality of earnings as almost all the sales made on credit to its clients are recoverable.
OCI plans to continue growing both through organic and inorganic means. Recently, it acquired a leading US healthcare company, which will give OCI greater visibility in global markets.
Backed by revenue visibility in the coming quarters, OCI's stock looks attractive at a PE of 18.74. Also, the stock's dividend yield of 2.15 assures some kind of fixed return to investors.
Image:Opto Circuits (India) Photographs:Courtesy, Outlook Money