Capstocks Equity Research
Company Analysis
12th Nov 2014
_____________________________________________________________________________________
Capstocks Research Team
Buy
Target
Holding Period
: ` 558
: ` 675
: 3 Months
Conviction Ideas - 144
Centum Electronics
COMPANY OVERVIEW:
Centum Electronics was founded in 1994 by Mr. Apparao Mallavarapu in Bangalore, India.
Centum Group’s offerings range from customized product design & development,
manufacturing services and turnkey solutions for mission-critical applications in the Defence,
Aerospace, Space, Industrial, Medical and Communications markets. It has continuously
invested in strengthening its design & product development capabilities and has established truly
world-class manufacturing facilities which today are spread across 4 locations in Bangalore. A
key contributor to Centum’s growth has been the strong relationships forged with international
customers and partners that have enabled the company to establish a global presence and bring
value to a range of customers. This customer-focused approach coupled with Centum’s corevalues of Technology-Teamwork-Trust has resulted in a track-record of high quality products &
services and excellent execution ability.
BUSINESS:
The company has three major operating units each lead by a strong & experienced management
team.
Centum Strategic Electronics- Strategic Electronics Business Unit offers design services and
develops electronics products for defence and space customers. The company is a leading
industry partner for India’s DRDO labs, Defence PSUs as well as key international defence
companies in several critical programs. It is also a key partner for the Indian Space Research
Organization having delivered mission critical electronics on almost all satellite programs over
the last decade.
Centum EMS- Electronics Manufacturing Services business unit addresses high-mix lowmedium volume products in the defence, aerospace, industrial, medical and telecom segments.
The offerings include box builds, system integration, PCBA, test, environmental screening and
repair & return services.
Centum Rakon- Centum Rakon, a joint venture between Centum Electronics Ltd, India and
Rakon Ltd, New Zealand, is engaged in the design and manufacturing of high performance
frequency control products for the Telecommunications, Industrial, Defense, Aerospace and
Space markets. The product range includes OCXO, TCXO, VCXO, clock oscillators and filters
Overall business is geographically balanced with domestic contribution is around 30% and
Europe and USA 35% each.
FINANCIAL HIGHLIGHTS:
FY 2012
FY 2013
FY 2014
Total Income Cr.
257.3
282.6
425.1
Net Profit Cr.
9.0
9.6
44.1
EPS Rs.
5.6
5.9
27.1
Book Value Rs.
79.2
80.8
105.2
Dividend Rs.
1.0
1.0
2.5
____________________________________________________________________________________
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For Private circulation only
1
Capstocks Equity Research
Company Analysis
12th Nov 2014
_____________________________________________________________________________________
INVESTMENT RATIONALE:
Centum is a globally recognized electronics company with strong presence in the Defence &
Aerospace, Space, Industrial, Medical and Telecom industry segments. They design and
manufacture customized, high-reliability products in the Analog, Digital, Mixed Signal, Power,
RF & Microelectronics domains. The company has high profile clientele list which includes
DRDO, BEL, ISRO, General Electric, Thales, Rafael, Ericsson, Nokia Siemens Network and
Samsung. Recently, Centum Electronics is among Seventeen “fastest growing” Indian
companies, who are invited to join the World Economic Forum Global Growth Companies
(GGCs) community comprising 370 firms. The new Government’s policy towards indigenous
procurement of defence products is positive for the company. The company’s business in terms
of key products and markets are balanced which reduces risk to great extent. Centum is expected
to show good growth in coming days based on its business prospects. Investors willing to buy a
growth company at reasonable valuation can consider buying Centum Electronics at current
price for decent return.
SHAREHOLDING PATTERN
AS ON June 2014
PROMOTERS
Indian
%
STOCKS DETAILS
NSE SYMBOL
CENTUM
60.72
FACE VALUE Rs.
10
INSTITUTIONS
Mutual Funds
Bodies Corporate
Public and Others
EPS Rs.
27.1
BOOK VALUE Rs.
105.2
P/E
20.4
5.27
5.91
28.10
____________________________________________________________________________________
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For Private circulation only
2
Capstocks Equity Research
Company Analysis
12th Nov 2014
_____________________________________________________________________________________
P revious Conviction Ideas:
Sl.
No.
Recommendation Date
Target
CMP
Status
& Price
Price
143 PNB Gilts
5-Nov-14 ` 25.3
` 32
27
142 Sanghi Industries
` 75
15-Oct-14 ` 61
57
141 Canfin Homes
` 520
516
Target Achieved
8-Oct-14 ` 452
140 LG Balakrishnan
` 790
1-Oct-14 ` 704
701
139 Castrol India
24-Sep-14 ` 434
` 490
417
138 Garware Wallropes
` 218
10-Sep-14 ` 180
178
137 V-Mart
` 490
27-Aug-14 ` 432
522
Target Achieved
136 Amararaja Batteries
` 625
13-Aug-14 ` 532
703
Target Achieved
135 Gujarat Alkalies
` 245
30-July-14 ` 201
193
134 Hindustan Zinc
` 195
23-July-14 ` 169
163
133 Aarti Industries
` 245
16-July-14 ` 204
302
Target Achieved
132 Nilkamal
` 475
2-July-14 ` 392
324
131 Zensar Tech
25-June-14 ` 415
` 476
603
Target Achieved
130 JK Tyres
` 325
11-June-14 ` 280
507
Target Achieved
129 M&M Financials
` 352
28-May-14 ` 304
309
128 JMC Projects
` 185
21-May-14 ` 149
165
127 LG Balakrishnan
7-May-14 ` 233
` 263
701
Target Achieved
126 Amararaja Batteries
` 490
30-April-14 ` 422
703
Target Achieved
125 Atul
` 590
23-Apr-14 ` 520
1334 Target Achieved
124 Canfin Homes
` 280
16-Apr-14 ` 240
516
Target Achieved
123 TVS Srichakra
` 345
1336 Target Achieved
2-Apr-14 ` 304
122 Styrolution ABS
` 555
25-Mar-14 ` 475
647
Target Achieved
121 SKF India
` 890
19-Mar-14 ` 795
1336 Target Achieved
120 Cox & Kings
` 175
12-Mar-14 ` 152
307
Target Achieved
119 Crompton Greaves
5-Mar-14 ` 134
` 150
195
Target Achieved
118 L G Balakrishnan
` 187
19-Feb-14 ` 163
701
Target Achieved
117 TV Today
` 140
12-Feb-14 ` 113
212
Target Achieved
116 Accelya Kale
` 845
29-Jan-14 ` 750
807
Target Achieved
115 NIIT Tech
22-Jan-14 ` 413
` 475
386
Target Achieved
114 JK Tyre
` 194
15-Jan-14 ` 167
507
Target Achieved
` 72
113 Gujarat Pipavav
8-Jan-14 ` 63
180
Target Achieved
112 NIIT Ltd
` 36
01-Jan-13 ` 28
50
Target Achieved
111 V-Mart
` 260
26-Dec-13 ` 220
522
Target Achieved
110 Atul
` 475
04-Dec-13 ` 430
1334 Target Achieved
109 FDC
` 118
27-Nov-13 ` 101
155
Target Achieved
108 TVS Motor
` 58
20-Nov-13 ` 50.3
248
Target Achieved
107 Gujrat Gas
13-Nov-13 ` 289
` 330
477
Target Achieved
106 Infotech Enter.
` 285
06-Nov-13 ` 250
497
Target Achieved
____________________________________________________________________________________
Please see the disclaimer at the end
For Private circulation only
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Company Name
Capstocks Equity Research
Company Analysis
12th Nov 2014
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104
103
102
101
99
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96
95
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92
91
90
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88
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79
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71
70
69
68
67
66
65
64
63
Tata Steel
VST Tillers
Avanti Feeds
Amararaja Battery
Alembic Pharma
Gujrat Gas
Atul
Bajaj Corp
Biocon
Indraprastha Gas
Accelya Kale
Avanti Feeds
Hindalco
Pfizer
Avanti Feeds
Amararaja Batt.
Sundaram Finance
NDTV
JK Tyre
Jammu & Kashmir
JK Lakshmi
Bajaj Corp
ITC
GIPCL
Yes bank
Chettinad Cement
ABirla Nuvo
JB Chemicals
Vijaya Bank
NMDC
HIL Limited
Tata Motor DVR
LIC Housing
Gujarat Alkalies
Texmaco Rail
Bajaj Auto
Sundaram Finance
IDFC
Karur Vysya Bank
JB Chemicals
23-Oct-13
09-Oct-13
03-Oct-13
18-Sep-13
11-Sep-13
21-Aug-13
14-Aug-13
07-Aug-13
31-Jul-13
17-Jul-13
10-Jul-13
03-Jul-13
26-Jun-13
12-Jun-13
05-Jun-13
29-May-13
22-May-13
15-May-13
09-May-13
02-May-13
17-Apr-13
03-Apr-13
13-Mar-13
06-Mar-13
13-Feb-13
06-Feb-13
23-Jan-13
16-Jan-13
09-Jan-13
02-Jan-13
26-Dec-12
19-Dec-12
12-Dec-12
03-Dec-12
29-Nov-12
22-Nov-12
15-Nov-12
31-Oct-12
10-Oct-12
03-Oct-12
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335
460
225
297
141
207
313
245
318
305
557
160
97
1061
130
274
560
93
116
137
90
243
300
71
522
910
1170
90
66
170
490
174
274
141
64
1830
480
161
433
75
` 390
` 536
` 258
` 345
` 162
` 237
` 360
` 276
` 375
` 345
` 625
` 185
` 112
` 1220
` 155
` 305
` 650
` 110
` 135
` 152
` 104
` 275
` 330
` 82
` 575
` 1090
` 1290
` 104
` 77
` 196
` 575
` 195
` 314
` 171
` 74
` 2050
` 575
` 180
` 495
` 90
481
1455
1876
703
423
477
1334
278
447
430
807
1876
151
1667
1876
703
1307
109
507
138
404
278
363
88
676
710
1725
217
51
156
709
323
395
193
109
2545
1307
154
529
217
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Booked Loss
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
____________________________________________________________________________________
Please see the disclaimer at the end
For Private circulation only
4
Capstocks Equity Research
Company Analysis
12th Nov 2014
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57
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52
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49
48
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40
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38
37
36
35
34
33
32
31
30
29
28
27
26
25
24
23
22
21
20
Cairn India
Zensar Tech
Bajaj Corp
JKTyre
Kale Consultants
Goodricke Group
Orient Paper
Ceat
Venky’s
Tata Sponge *
Cera Sanitaryware
Mangalam Cement
Alembic Pharma
IDFC
FDC
Force Motor
Chettinad Cement
Automobile Corp
Everest Industries
Goodricke Group
Amararaja Battery
HSIL Limited
Goodyear Tyres
Gateway Distriparks
Sundaram Finance
Raymond
Hydrabad Industries
Cera Sanitaryware
Zensar Tech
NIIT Tech
Fag Bearings
Escorts
Oracle Financial
Tata Motors
Zensar Tech
Manglore chemicals
Amararaja Battery
LIC Housing
Raymond
Grindwell Norton
FDC
26-Sep-12
12-Sep-12
05-Sep-12
22-Aug-12
16-Aug-12
08-Aug-12
01-Aug-12
25-Jul-12
18-Jul-12
11-Jul-12
04-Jul-12
20-Jun-12
13-Jun-12
06-Jun-12
30-May-12
23-May-12
16-May-12
09-May-12
02-May-12
24-Apr-12
18-Apr-12
11-Apr-12
04-Apr-12
28-Mar-12
21-Mar-12
14-Mar-12
29-Feb-12
22-Feb-12
15-Feb-12
09-Feb-12
01-Feb-12
25-Jan-12
18-Jan-12
11-Jan-12
05-Jan-12
30-Nov-11
17-Nov-11
02-Nov-11
20-Oct-11
12-Oct-11
05-Oct-11
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335
270
185
116
168
145
64
96
458
339
287
122
52
126
81
458
700
350
160
155
158
165
365
150
320
400
345
219
181
240
1199
84
2020
205
135
33
112
235
356
235
89
` 375
` 305
` 220
` 128
` 192
` 175
` 78
` 114
` 520
` 375
` 330
` 152
` 62
` 153
` 95
` 550
` 875
` 425
` 205
` 175
` 188
` 205
` 440
` 180
` 363
` 460
` 420
` 260
` 215
` 310
` 1430
` 102
` 2280
` 240
` 165
` 40
` 130
` 275
` 415
` 268
` 106
273
603
278
507
807
170
29
929
488
705
1642
300
423
154
155
1262
710
569
285
170
703
373
631
309
1307
454
709
1642
603
386
3011
155
3325
521
603
86
703
395
464
519
155
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
____________________________________________________________________________________
Please see the disclaimer at the end
For Private circulation only
5
Capstocks Equity Research
Company Analysis
12th Nov 2014
_____________________________________________________________________________________
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
•
•
•
Biocon
United Phosphorus
Gujarat Industries
Ashok Leyland
Gateway Distriparks
Balmer Lawrie
Wyeth
L.G. Balakrishnan
CRISIL
ITC
Sundaram Finance
Yes Bank
Goodyear Tyres
IDFC
City Union Bank
Ineos ABS
IGL
GMDC
Amararaja Batteries
28-Sep-11
21-Sep-11
14-Sep-11
07-Sep-11
24-Aug-11
17-Aug-11
10-Aug-11
03-Aug-11
27-Jul-11
20-Jul-11
13-Jul-11
06-Jul-11
29-Jun-11
22-Jun-11
15-Jun-11
08-Jun-11
01-Jun-11
25-May-11
18-May-11
` 345
` 155
` 76
` 27
` 130
` 377
` 1016
` 145
` 1720
` 205
` 276
` 325
` 322
` 122
` 45
` 595
` 342
` 138
` 104
` 385
` 179
` 86
` 32
` 150
` 428
` 1150
` 170
` 1920
` 226
` 320
` 374
` 396
` 154
` 54
` 690
` 409
` 180
` 128
447
329
88
49
309
572
1129
701
1909
363
1307
676
631
154
85
647
430
152
703
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Tata Sponge adjusted buy price post open offer is 285
Model Portfolio was given in Conviction Idea 50 , 59 ,77 ,80 & 55 Demerged
Some stocks have achieved target after the holding period mentioned in our report
Prepared By:
Capstocks Research Team
Capstocks & Securities (India) Pvt. Ltd
Tel: 0471-4093361 | E-mail: [email protected]
www.capstocks.com
************************************************************************************************************
Disclaimer: Capstocks & Securities India (Pvt) Ltd do not accept responsibility for consequences of financial decisions taken by
readers on the basis of information provided herein. The aim is to provide a reasonably accurate picture of financial and related
opportunities based on information available with us. Issued by the Equity Research & Analysis Department of Capstocks & Securities
India (Pvt) Ltd, Capstocks Towers, Thakaraparambu Road, Trivandrum 695023, Kerala. Please note that Capstocks, its directors and
associates may have trading or investment positions in the securities mentioned herein
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Please see the disclaimer at the end
For Private circulation only
6