Fundamental: RFID Technology & other Emerging Sectors

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RFID Technology & other Emerging Sectors

Printed From: The Equity Desk
Category: Market Strategies
Forum Name: Fundamental
Forum Discription: Discuss the operations and finances of any of your companies.Make the other participants aware on the investment opportunities available in a stock on PE free cash flow etc
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=245
Printed Date: 07/May/2025 at 4:37pm

Topic: RFID Technology & other Emerging Sectors

Posted By: Equity Buff
Subject: RFID Technology & other Emerging Sectors
Date Posted: 30/Aug/2006 at 9:14am

Dear Basant,

Good Morning. I am a new member. First of all I really like your sight and also the articles you have posted. Very interesting. Keep up the good work.

A) Just wanted your views on the RFID space and the listed stocks in this space one could invest in for medium to Long Term. As this is a emerging technology and also with Retail revolution happening in India the demand for RFID tags going forward could be huge. Also these tags could find application in several other industries.

Will appreciate your views.

B) Also would like to know what you feel would be the emerging sectors going forward which the market could give a high P/E. Any listed stocks which you would be bullish on. Ex: In sectors like alternate energy (Solar, Wind(Suzlon), Bio Diesel, Thermal etc), Bio Technology, Media, Speciality Retail etc.

Thanks and Warm Regards

Equity Buff

Replies:

Posted By: basant
Date Posted: 30/Aug/2006 at 9:42am

Hi. Thanks for being on board. RFID could become a huge opportunity. I am not a technology guy so my views should be evaluated again but the organized retail boom will create multifold demand for this technology. There are two ways to play this.Either we buy WIPRO who I am told is doing a lot of work in this category or we could look at a small niche player like Bartronics (CMP Rs 71) - Company is run by technocrats should do Rs 6 as EPS for FY 07, available at a market cap of just over Rs 100 crores.

I could list out the companies that I. like in the emerging sectors:

Retail : http://www.theequitydesk.com/forum/forum_posts.asp?TID=135 - Pantaloon Retail, http://www.theequitydesk.com/forum/forum_posts.asp?TID=103 - Trent and http://www.theequitydesk.com/forum/forum_posts.asp?TID=180 - Gitanjali Gems

Media: http://www.theequitydesk.com/forum/forum_posts.asp?TID=29 - TV 18 Sun Tv and Zee Tv (Management concerns remain)

Education and Training : http://www.theequitydesk.com/forum/forum_posts.asp?TID=142 - Educomp Solutions

Insurance: http://www.theequitydesk.com/forum/forum_posts.asp?TID=117 - HDFC and Aditya Birla Nuvo and Max India

Alternate Energy: http://www.theequitydesk.com/forum/forum_posts.asp?TID=233 - Suzlon

Telecom : http://www.theequitydesk.com/forum/forum_posts.asp?TID=221 - Bharti Airtel

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: BubbleVision
Date Posted: 31/Aug/2006 at 4:43pm

Hi BasantJi,

Could you explain, for novices like me, what is RFID......

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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!

Posted By: basant
Date Posted: 31/Aug/2006 at 4:53pm

Radio Frequency Identification device. It works like this all products sold at malls will be RFID enabled that means that as the products leave the shelf it will be automatically updated at the biling section so that would enable much easier invesntory tracking containms an antenne which sends automatic signals to the receiver. Wal mart has asked its top 100 suppliers to be RFID compliant system ensures clarity between physical and accounted inventory and brings out large scale efficiencies in inventory management. (Not sure if I used the correct technical terms hope you got the concept right) shopping malls is just one such place of usage.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: Equity Buff
Date Posted: 31/Aug/2006 at 8:51am

Dear Basant,

Can you throw some light on a stock called Gemini Communications. I am told they are leaders in the RFID space in India. Will appreciate if you could have a look at the financials and give your views.

Thanks & Rgds.

Posted By: Equity Buff
Date Posted: 02/Sep/2006 at 7:03pm

Dear Basant,

Hi !

Ref: my earlier email of Aug 31st.

Have you been able to look at the the financials etc of Gemini Communications. Await your views.

Thanks

Equity Buff

Posted By: basant
Date Posted: 02/Sep/2006 at 7:58pm

Sorry, You know I do not understand the business model of technology companies and hence the delay. Quite a contrast to tha fact that in 2000 I had 80% of my portfolio into technology shares.

Just saw Gemini company is doing a lot of inetersting things seems to be the first into RFID in India also does a lot of other things. But when one looks at the financials it appears that the stock is cheap at around 8 times trailing PE but last year the RoCE and RoE have shot up from 19.45% and 28.14% to 32.76% and 49.41% respectively. Since the fundamentals have improved so dramatically one would need to understand what they are doing to be sure that this is not a one off case. Also no institution/MF are holding that stock. Normally for things I do not understand I look for at least one big brother maybe 5% MF holding of equity gives you a sense eof confidence since with these small niche players the jury is always out but on the contrary you could call it an opportunity.Broadly I would not recommend anyone to buy any small / mid cap technology stock unless he can understand the business very well. One large order can change such a company's fortune both ways therefore the client dependence and the sutainability of operations/growth assumes paramount importance.

What do you say? Have you studies Gemini in detail?If so please share your thoughts woith us since RFDID could definetely become. huge.The challenge is to look for a player that derives asignificant portion of its revenue from this technology and could also achieve scale.

Posted By: reetesh
Date Posted: 02/Sep/2006 at 9:52pm

Hi All,

Gemni Communication is betting very big in RFID, you can also look at Zicom Electronics it is into security system and working with RFID and will aquire a company which is into RFID they recently raised money for that keep a keen eye o that one of the emerging stock.

Reetesh

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When going gets tough, that’s when tough (people) gets going.

Posted By: Equity Buff
Date Posted: 02/Sep/2006 at 10:10am

Dear Basant,

As per my research Gemini has the first mover advantage in RFID technology. Its new plant will be operational later this year at Baddi for manufacturing RFID tags. The EPS for 07 is likely to be Rs. 20 and for 08 s likely to be Rs. 32 with good ROE and ROCE. Applications for RFID can be in several sectors like Retail, Pharma/Healthcare, Transport/Logistics, Industrial applications. So the areas of opportunity is huge. As far as no mutual fund holding goes, I think may be this could also well be an opportunity (Peter Lynch-One up on wall street). The Seths of G.E. Shipping who are known to be very good investors have picked up a 4% stake in the company. As you must be well aware the Seths took a big stake in Financial Technologies a few years ago and that stock has turned out to be a multibagger. Will await your comments.

Rgds.

Equty Buff.

Posted By: basant
Date Posted: 02/Sep/2006 at 10:25am

Appears interesting. The Sheth news is impressive and the MF factor is not much of a worry just we look for that signal when we are not sure about that company but you seem to have looked at it veryw ell. RFID will become huge nd that is no debate over that.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: Equity Buff
Date Posted: 02/Sep/2006 at 11:16am

Dear Basant,

Thanks.

Is there a section in your web sight whare one can post and view research reports ?

Also is their any possibility of doing a stock search ?

Rgds

Equity Buff

Posted By: basant
Date Posted: 03/Sep/2006 at 12:36pm

No. Sorry we cannot post research reports.

On the top right hand corner of the page there is a search button you could doa stock search from there on the forum.

Posted By: harshbhandari
Date Posted: 03/Sep/2006 at 6:37pm

Hi!! I also had a look at gemini comm. on the web. They seem to doing interesting stuff and more importantly are leveraging India exp. & inorganic growth. They have recently bought a co. in US which will give them good access & some reference customers in US.

RFID being an expensive technology has not been widely deployed. I expect Gemini to have a bigger market outside India than in India (though the retail story is so strong and competition is going to be intense in Retail). RFID can give an edge to the large retailers.

I am planning to start acquiring shares in Gemini. Thank you Basant for a very good forum. We are definitely sharing some meaningful stuff here.

Regards

Posted By: Equity Buff
Date Posted: 12/Oct/2006 at 10:14am

Basantjee,

Bartronics: The AIDC (automatic identification and data capature market) market size in India on 2005 was Rs. 100 Crs. This market is expected to grow at 40% CAGR for the next 5 years. Bartronics currently has a market share of 15%. Given the above information and the current market cap of Bartronics of approx 110 crs do you think the stock is a potential multibagger in the medium term (3 to 5 yrs).

Rgds.

Posted By: basant
Date Posted: 12/Oct/2006 at 10:45am

The opportunity at Bartronics is exciting not huge when compared to the user industry (Retail). Look at it this way even if Nartronics takes 100% market share it will tyrade at 1 times market cap to sales. So while I would agree with Nartronics as a concept (promoters are technocrats, user industry is bomming) I think that investors could make extra money from the user industry.Moreover Bar coding companies have no specific product/brand/locational advantages.

Posted By: kulman
Date Posted: 12/Oct/2006 at 11:47am

I feel AIDC is huge opportunity not only in retailing, but also in security, access control, SCM, airports, manufacturing sector-asset management, warehousing, container yards, logistics etc.

It remains to be seen how Bartronics would be able to encash. As Basantjee said this sector may not have branding preferences, however first mover advantage could be enjoyed by companies like Bartronics & Gemini Comm.

For basic details on RFID, here is an interesting article in http://www.hindustantimes.com/news/specials/rfid/index.shtml - Hind Times .

If one needs more detailed information on RFID Journal: http://www.rfidjournal.com - see this link as well .

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Life can only be understood backwards—but it must be lived forwards

Posted By: Equity Buff
Date Posted: 13/Oct/2006 at 9:54pm

Originally posted by basant

Basantjee,

Looking at it another way then according to you is Bartronics expensive today ? Bartronics today has a market share of 15% and a market cap of Rs. 110 Crs with total AIDC Market Size last year of Rs. 100 Crs expected to grow at 40 % CAGR for next 5 years.

At 40% CAGR market size by 2010 will be approx Rs. 537 Crs. Since Bartronics is expected to grow at around 50% for the next 4 yrs its market share by 2010 could be approx 20%. Rs. 537 crs is the expected market size, 20% of that is approx 107 crs. But market cap of Bartronics today is already 110 Crs. Then is it expensive at current market cap of Rs. 110 Crs based on total current & expected market size ?

However to me it looks very cheap on a PEG basis.

Your views ?

Rgds.

Posted By: basant
Date Posted: 13/Oct/2006 at 10:36pm

PEG is attractive but with tech application companies it is difficult to see 5 years ahead.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: Equity Buff
Date Posted: 13/Oct/2006 at 11:22pm

Originally posted by basant

PEG is attractive but with tech application companies it is difficult to see 5 years ahead.

Basantjee,

Can you pls give your views on this part of my earlier post:

Rgds.

Posted By: basant
Date Posted: 13/Oct/2006 at 12:03pm

Tech companies trade at multiples of market cap to sales (since margins are higher) but while everything is OK I said that we cannot look 4 years ahead for these companies. Concept is good but I would rather buy some other feeders then this.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: Siddhartha
Date Posted: 13/Oct/2006 at 5:45am

As I know RFID is very costly technology. Even it is very costly for european retailer. So I thínk this thing would take time to devlop in India.

Posted By: Equity Buff
Date Posted: 13/Oct/2006 at 9:44am

Kulmanjee,

Thanks for the links on RFID in your above post. I personally also think the opportunity is huge. If Bartronics and Gemini can make the most of this opportunity then I think the stocks will also deliver multibagger returns.

The main risk that I see is of any better and cheaper technology coming up. But this is always a risk with technology products.

Siddhartha, the current comparitively higher cost of RFID technology does not concern me too much as given the big opportunity the costs will definetly come down substantially over a period of time as is the case with many other technology products.

Rgds.

Posted By: kulman
Date Posted: 03/Nov/2006 at 8:08am

Another application for RFID...implemented by Gemini Comm's subsidiary. read this news item:

http://www.thehindubusinessline.com/2006/11/04/stories/2006110405300400.htm - ICC Champions Trophy deploys RFID

Cricket has gone high tech with Radio Frequency Identification (RFID) deployed at Jaipur for the semi-final match of the ICC Champions Trophy Cricket.

The `hands-free' RFID ticketing solution is provided for VIP guests. The guests holding these highly secure tickets simply need to walk through the gate for quick and convenient entry into the stadium.

Being adopted on a pilot project basis now, RCA plans to introduce this ticketing experience on a full-fledged basis for future events.

-----------------------------------

If successful in cricket, could there be big opportunity for Commonwealth Youth Games in Pune in 2008 & Commonwealth Games in New Delhi in 2010?

The main issue with such technologies is however difficulty to imagine what would happen to obsoletion.

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Life can only be understood backwards—but it must be lived forwards

Posted By: basant
Date Posted: 03/Nov/2006 at 10:25am

The later part of the current century could see RFID on the ball - that would help the fielders at the boundary locate the direction in which the ball arrives!!!

Posted By: tyler_durden
Date Posted: 06/Nov/2006 at 7:29pm

well for rfid technology i can give some inputs.

all the big warehouses in future will use RFID. maruti has started using radio freq terminals for picking the materials and receiving them. so the others will follow soon.

and since customer has to pay some maintenance fee it generates some revenue even after sales.

Posted By: omshivaya
Date Posted: 06/Nov/2006 at 8:46pm

TCS, Infy already have RFID dedicated teams who have done and are engaged in many big RFID projects. However, we need to see if a niche player can be produced here? And how can they be more competent than a TCS or INFY. Are there RFID-verticals too, that companies focus on? Any detailed views by anyone?

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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it

Posted By: tyler_durden
Date Posted: 06/Nov/2006 at 8:55pm

well the one maruti is using is supported by wipro so finding a new player here still remains a job. but if we can find one competent and dedicated player then there lies a multibagger because be it warehouses, retails or any other big storage or identification place this technology will be there...

Posted By: kulman
Date Posted: 06/Nov/2006 at 10:59pm

Tyler_Durden,

Could you please inform us more on how & where exactly Maruti is using RFID, I mean in assembly line or Warehousing/Stores? What is Wipro's role--complete project implementation of RFID or just the software part? Who has supplied hardware like RFID readers/Tags etc....is it from Gemini-traze/Bartronics or imported?

Thanks in advance...

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Life can only be understood backwards—but it must be lived forwards

Posted By: tyler_durden
Date Posted: 06/Nov/2006 at 10:37am

kulman ji maruti is using this technology in warehouse on a major scale and also in assembly line at few places.

what has been done is that RF tags have been developed which have every information regarding a part i.e. its part no., price, lot qty, carton qty, vendor etc.. for a single car model itself you have around 3500-4000 spare parts and 300-700 accesories.

so for all the models combined the total number of different spare parts come to around 40000 or so.

so the pickers and dispatchers re given RF terminals from where they read the rf tags and pick or dispatch the material.

due to implementation of this technology warehouse is running at 95 % + efficiency which used to be 50 % or so while things were done manually.

the hardware is imported because maruti signed the contract 3 years back with a canada based company, but they have a vendor in hyderabad. rf tags re printed in maruti itself and distributed to vendors.

wipro is helpin in maintenance of software installed.

i ll confirm the vendor from whom rf terminals were purchased.

Posted By: kulman
Date Posted: 07/Nov/2006 at 4:32pm

Thanks Tyler for the info on RFID. Some more queries:

Could you name the Canada company? The brand name of their products?
Who did the entire integration....rather was the complete RFID project awarded to a single supplier?
Could you also explain the role of Hyderabad based organisation...and its name if possible?
How much does each RFID tag cost? Is it active or passive type?

I hope I'm not bothering you too much...

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Life can only be understood backwards—but it must be lived forwards

Posted By: tyler_durden
Date Posted: 07/Nov/2006 at 5:36pm

its absolutely fine kulman ji. i ll collect all the details and post my reply here in a day or two.

Posted By: marketbuzz
Date Posted: 07/Nov/2006 at 10:28am

Bartronics seems to be a good player in this segment.

Recently company has reported good numbers also.

Stock can see a good upside.

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I do it becoz I Like it!

Posted By: deveshkayal
Date Posted: 15/Nov/2006 at 10:55pm

Bartronics has run up in the last two days.The excitement seems to be beginning.

Posted By: kulman
Date Posted: 15/Nov/2006 at 11:06pm

Devesh jee

Sure it has run up too soon too fast! Lagta hain yeh sab Karvy ki karamat hain!

At present however RFID contributes very little to Bartronics' business.

If the true potential of RFID in industrial applications is explored (meaning viable & feasible solutions are provided) & the execution risks are taken care of, then this company will achieve greater heights. A word of caution: 'too many ifs'

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Life can only be understood backwards—but it must be lived forwards

Posted By: Equity Buff
Date Posted: 15/Nov/2006 at 8:00am

Kulmanjee,

I agree with your above post. In this section (a few posts earlier) I have mentioned that I am very bullish on Bartronics and Gemini as I think the opportunity in RFID is huge. If I remember correctly you are also bullish on RFID. As mentioned earlier also if Bartronics and Gemini make the most of the opportunity in RFID both these stocks will be multibaggers. These are my views. I have investments in both the above stocks.

Rgds.

Posted By: kulman
Date Posted: 16/Nov/2006 at 9:14pm

EquityBuff

Let me put my views in an "expert analyst's" way: "I remain cautiously optimistic"

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Life can only be understood backwards—but it must be lived forwards

Posted By: deveshkayal
Date Posted: 18/Nov/2006 at 7:36pm

Kulmanji,
Bartronics is included in Business Today 20 Companies to watch in 2007.This means analyst,investment bankers r closely following this company.They r targeting 1000 crore sales.Lagta hain yeh sab Karvy ki karamat hain! Baliga must b smiling.

Posted By: basant
Date Posted: 18/Nov/2006 at 8:32pm

On a different nore did anyone know that Baliga also holds IFCI as a part of his bluechip portfolio!!!

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: kulman
Date Posted: 12/Dec/2006 at 11:51pm

Recently, I have had first-hand interaction with couple of engineers, ex-emlpoyees of Bartronics. The feedback they have given about the company is not encouraging.

There was recently mass exodus of 40+ employees, most of them now having joined even smaller competitors. Some offices have been closed down. While RFID remains an interesting space with lots of potential, this company does not seem well-managed. So, forum members who are concerned with this, please carry out your detailed research about this to verify & act accordingly.

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Life can only be understood backwards—but it must be lived forwards

Posted By: basant
Date Posted: 12/Dec/2006 at 7:42am

Thanks Kulmanji I would pay more attention to this rather then a 5 page report from a broke(rage)!

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: mintoo
Date Posted: 13/Dec/2006 at 7:26pm

hi,

I went through most of the topics on this forum but fail to understand that if multibaggers are so easy to pick then why are so less billionaires in this country and the site administrator would not have been investing his time here but sipping wine in california.we're in a terrific bull market and everything there looks cheap as everything goes up one time or the other,when world class cos. giving 30% per annum are easily available in nifty then why are people running for cos. in small cap and predicting earnings without any logical rationale for 2015 and 2020,i personally feel all readers on this site are small retailers with their equity not more than 10 lakhs and wish to be rakesh jhunjhunwala in 1 year when he took more than 20 years,i think its better to buy small breakouts and remain happy coz' in any market you cant do anything if you dont have good money as money makes money ,any reaction can be sent to mailto:[email protected] - [email protected]

Posted By: BubbleVision
Date Posted: 14/Dec/2006 at 12:37pm

Hi Mintoo....

I think that you are mistaken. No here (to my knowledge) one believes that moneymaking is easy. However everyone is trying to pick a multibagger and there is nothing wrong in that. How will one pick one if he does not even try. The members here are NOT dreaming of becomming RJ in one year, or for that matter even in 10 years.

The Administrator here is really helpful and i think that he would remain in India...rather than go to California to sip wine.

And to make money you need knowledge and wizdom .... to only retain money you need luck... and to lose money... you need to be a "Day Trader".

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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!

Posted By: basant
Date Posted: 14/Dec/2006 at 12:47pm

And to make money you need knowledge and wizdom .... to only retain money you need luck... and to lose money... you need to be a "Day Trader".

________________________________________________________

Hey, that was a good single sentence exhibition of what money making is really like.

Posted By: tigershark
Date Posted: 14/Dec/2006 at 1:50pm

basant do yu interact with ENAM it appears to be a good house they are reco telcos and reliance and igl what yu think bout them

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understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things

Posted By: basant
Date Posted: 14/Dec/2006 at 2:04pm

Great House. They have been pioneers in identifying the leaders of today Infosys,Zee, Pantaloon, Shree Cement you name it. But they have had their own share of the dogs in say the auto ancilliary companies where they took positions about a decade ago but on the whole this reserach house is the best in India.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: BubbleVision
Date Posted: 14/Dec/2006 at 2:37pm

Hey, that was a good single sentence exhibition of what money making is really like

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BasantJi... for that i would once again thank the wonderful forum.

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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!

Posted By: kulman
Date Posted: 14/Dec/2006 at 7:10pm

Bahut kathin hain, dagar panghat ki....

Kaise laaoon main, Jamuna se matki?

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Life can only be understood backwards—but it must be lived forwards

Posted By: ganeshbhandary
Date Posted: 02/May/2007 at 11:24pm

I'm an engineer in the similar field in my views RFID Can be big opportunity in future.With lot of Logistics activities for Retailing,manufacturing and industries in india can be very very big.you can not only manage the items but also track the location at the same time.

Posted By: KACHAM
Date Posted: 30/Jan/2008 at 4:08pm

How does one should invest with equity in this RFID segment.

Bartronics or any other company?

Thanks

Posted By: amitdate76
Date Posted: 22/Mar/2008 at 11:44pm

I think u have a point here Mintoo.

But even to be able to coumpound at 30odd % one needs to evaluate what and when to invest. Even an index stock can eat ur money liek many of my friends took positions in TCS and infy and it just not moving up.

But yes if one concentrates on the good liquid stocks and plays for annual compunding of 30% i think we would be more that happy.

Posted By: akshayapandey
Date Posted: 06/Apr/2008 at 6:28pm

does anybody ij this forum track zylog systems...previous years eps was around 40..current year eps is estimated to be around 60 ..at 180..seems a great bargain..could double from current levels..any ideas ...

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