Zicom Electronic Security Systems Ltd. (CMP Rs 185) is India's largest System Integrator of Embedded Electronic Security. Over the past decade the company has developed a wide array of products and service to cater to various consumer as well as industrial requirements. Zicom is the preferred vendor in diverse companies all over India.
After the 7/11 Mumbai bomb blast disaster there has been a new found impetus to security solution products. The company has been receiving enquiries from all corporate customers as well various temples and government authorities. Immediately after the 7/11 the incident the company immediately installed systems at six locations on Western Railway. Talks are being held with the railway authorities on a large scale to offer a complete package of securities solution for the railways passengers.
The security solutions system can detect any security threats or lapses, which are likely to happen at the specified premises and the Response Executives monitor customer’s premises at all times, thus providing protection 24x7, 365 days a year, regardless whether the consumer is at home or away, awake or asleep.. To take care of the power break down situation these devices have an 8 hour power back-up facility. The Financial Snapshot of the company is as under:
C.M.P |
Rs 185 |
Market Capitalization |
Rs 173 crores |
Sales FY 06 |
Rs 75.09 crores |
Net profit FY 06 |
Rs 5.52 crores |
Sales FY 07 Q1 |
Rs 30.89 crores |
Net profit FY 07 Q1 |
Rs 2.07 crores |
EPS FY 07 (E) |
Rs 10.00 |
PE |
19.2 |
RoE |
14.72% |
In FY 07 Q1 the company did a sales that was almost 40% of the total sales of Fy 06 Out of the Rs 30 crore of this quarter Rs 18.5 crore from Security Solution Group. The RoE is low but should improve over the current year. The company states that growth is coming from both the corporate sectors well as from new retail malls and multiplexes; During FY 07 the new age business (retail and residential segment) will significantly contribute to the growth. There are almost 1.8 million apartments, which are coming up in the residential segment as well as small offices and homes. Therefore the potential business is huge..
Recently the company launched its ZICOMhome and ZICOMbusiness. ZICOMhome is an electronic security system that secures a home at the press of a button. ZICOMbusiness includes products such as TFT Monitor, Digital Video Recorder, Color Dome Camera and an Intrusion Detection System that is specially designed to supplement the security needs of shops and business establishments.
Over the next few months the company has chalked out a five-pronged Sales and Marketing strategy, which includes, appointing franchisee locations, appointing distributors, appointment of Direct Sales Agents, embarking on institutional sales and mass media advertising.
Zicom admits that privacy is an issue, but the magnitude is miniscule and does not warrant any serious concern. The company has tied-up with Iffco-Tokio General Insurance to provide insurance cover to customers on burglary. Insurance cover up to Rs3 lakhs is provided on burglary to consumers who have opted for specified Zicom products. However, the amount is variable depending on the product configuration.
Recommendation: While the Zicom stock does not look cheap the immense growth that the company is looking at will make the stock cheap over the next few quarters. Long term investors should look for an opportunity to get in because security control systems in a growing economy with increasing danger to public and private property (terrorism and otherwise) could be a huge business.
Edited by basant - 16/Aug/2006 at 12:53pm