BARTRONICS
*Bartronics India (BARLTD)*
*Price: Rs 234 Target: Rs 338 OUT PERFORMER*
*Bartronics India (BIL), one of the first Automatic Identification and Data Capture (AIDC) solutions company, is leveraging its existing client base and expertise to move up the value chain and emerge as the largest end-to-end AIDC solutions provider in the country. It is investing more than Rs 270 crore into a new 80-million smart cards manufacturing facility, that would make it one of the biggest players in South Asia and enable revenue growth by 130% CAGR over FY07-09E. The stock is currently trading at 10.32x FY09E earnings and 6.23x FY09E EV/EBIDTA, which we believe is very attractive considering the sharp earnings growth. We initiate coverage on the company with an out performer rating with a target price of Rs 338.*
=A7 *** AIDC segment - First mover advantage*
BIL is one of the first organized players to provide end-to-end AIDC solutions in India with more than 1,600 clients and five international distribution centers. Strong technical know-how has helped the company mo= ve up the value chain from bar code to RFID solutions and increase realizati= on per client. The company has also diversified into the retail space considering the low penetration of organized retail, a sector that is clocking at 30% CAGR growth.
=A7 *** Changing gears with smart cards*
Smart cards are expected to take the company into fifth gear with the South Asia’s largest manufacturing facility. Having an order book for mor= e than 100 million smart cards over next two years is expected to generate 3.5x FY07 revenues from this segment alone.
=A7 *** Strong earnings growth - Outperformer*
The stock is trading at 10.32x earnings and 6.23x EV/EBIDTA for FY09. We believe the valuations are attractive considering the changing busines= s model, robust 73.2% earnings CAGR over FY07-09E, strong bargaining position in the smart cards segment and its ability to scale up AIDC segment. We rate the stock an out performer rating with a target price of= Rs 338, an upside of 44%.
*ICICIdirect Research Desk*
