DARK HORSE - Bartronics India Limited

Bartronics India Limited (Bartronics)
Total Equity - 28,977,1700
No. of outstanding shares - 28,977,170

Total Promoter/Group Holding – 33.19%
Institutions – 15.03%

Market Cap - 241.24 P/E - 3.74 EPS (TTM) - 22.26
B/V - 84.48 FV - 10.00 (values as on 17-Feb-09)

52 Wk High: 252.85
52 Wk Low: 55.05

Incorporated in 1990, Bartronics is a Hyderabad based company that started with providing solutions in Bar Coding, one of the oldest AIDC technologies, RFID, POS, Smart Cards working as AIDC division, RFID division, Smart Card Division and Retail-IT division in separate. Presently the company offers diverse range of AIDC technologies – Barcode, Biometrics, Radio Frequency Identification (RFID), Radio Frequency Data Communications (RFDC) and Electronic Article Surveillance (EAS).

INDUSTRY SCENARIO FOR AIDC/RFID/RETAIL/SMART CARD:
AIDC industry is rapidly moving towards the use of RFID in a number of high value and high volume market segment. The RFID market is expected to jump from $1.4 billion annually to $6.1 billion in 2010.
The Indian market is estimated to be around or more than Rs.300 crore in FY08 comprising of smart cards and bar codes solutions. This segment is expected to grow at 20-30% annually.

RFID and biometrics solutions are growing at a CAGR of 50% and are expected to have an exponential growth with retail and manufacturing growth in India . Bartronics having the highest market share and first mover advantage is expected to be the biggest beneficiary.

These include (but are not limited to):

Dramatic benefits being achieved by leading consumer packaged goods, retail,
manufacturing, logistics, transportation and healthcare companies.
Improvements in RFID technology:
Bartronics has made significant entry into Retail Sector through POS hardware
solutions. The retail trade in India is more than $7 billion and is growing at a rapid pace.
(The US Government’s use of RFID to track military shipments (to and from the
Persian Gulf, for example) & Wal-Mart’s mandate that has asked 138 of its retail
suppliers to be RFID-enabled at the case and pallet level by January 2005.)

Bartronics has set up a presence in four countries in the region – Bangladesh, Sri
Lanka, Dubai and Mauritius. This has been driven by a combination of queries
received directly by the company as well as queries directed to the company by its
principals (primarily Intermec, Synel and PSC).

The AIDC industry is moving rapidly towards the use of RFID in a number of highvalue and high-volume market segments. The RFID market is expected to jump from $1.4 billion annually to $3.8 billion in 2008 to $6.1 billion in 2010. It is still in a nascent stage but there are several factors, in addition to dropping chip prices, which are driving the growth of RFID as an enabling technology.

Some of the prestigious projects won by the company:

**Bartronics India Ltd has bagged the prestigious project "AapKe Dwar" from the Municipal Corporation of Delhi. The project envisages setting up and running 2000 G2C kiosks in Delhi. The project is on a Build-Operate-Transfer Model for a period of nine years. The Company expects minimum revenue of Rs 5000 crores over the project period.

**The company`s Singapore unit Bartronics Asia had on 12 February 2009 bagged a trial purchase order from Housing and Development Board, Government of Singapore for supply of radio frequency identification (RFID) tags. The initial order for 48000 tags is expected to be enhanced continuously and will be used in precast concrete slabs used in public housing. The financial details were not disclosed.

(In a recent budget announcement, the Government of Singapore had allocated about $212 million to the Housing Development Board in the form of operating grants.)

**Bartronics Asia Pte Ltd in December 2008 had secured EPPU (Expenditure and Procurement Policies Unit) registration with a S10 (highest) grade from the Singapore Government. EPPU is a unit under finance ministry of Singapore Government and the highest grading by it will enable the company to qualify for bidding for projects worth over S $30 million.
**Bartronics India Ltd had been awarded a prestigious contract worth over Rs 400 crores, for providing Smart Cards by the Employees State Insurance Corporation. The contract is for district-wise operation of Smart Cards under the RSBY Scheme covering 609 districts across the country.

It is possible that no segment in indian trade / people movement will be functional without Bar coding , RFID , Telecom cards , Smart cards etc.
Also Bartronics is one of the few global manufacturers to be certified by Arsenal Research for DESFire, making it eligible for bidding for large-scale Mass Transit applications world-wide.
Thus, Bartronics is well placed to capture the new opportunities provided by the requirements of the industry and specific applications within an industry with respect to the AIDC/RFID/Retail/Smart Cards related initiatives.

Strong international presence:
In order to have strong global presence the company has five international distribution centres. These centres cater to the growing AIDC demand in the countries such as Malaysia , Sri Lanka , Bangladesh and Dubai . The company has tied-up with Watchdata Technologies, Singapore , one of the leading global players in smart cards, for sourcing and marketing of smart cards based products in India and neighbouring countries and is likely to broaden its product portfolio. For expanding in the Sri Lankan market the company has tied up with Hayleys Group. More than 40% of the revenues in FY07 were from exports and the same is expected in FY08.

Strong Client Base:
Bartronics has established a brand value amongst its clients (over 1600) over a period of 16 years. The work includes system integration for Barcode solutions, which has applications in areas such as inventory management, attendance recording, dispatch management etc. The companies clientele includes TISCO, TELCO, HLL, ITC, Ashok Leyland, TVS, CMC, Ranbaxy, Compaq, VST, Whirlpool, ITW, Dr. Reddy’s to name a few. The company also services to the Devotees of Lord Balaji (Tirupati) by managing the inflow logistics of the pilgrims. While some of the multinational clients include Compaq, Panasonic, IBM, GM, Mercedes etc.

Results:
The Company has come out with an excellent results for 3rd Quarter of 08-09.
The net Sales are Rs. 92.30 crore (54.67 cr) & Net profit of Rs. 18.48 Crore (6.73 cr).

For Nine months ending Dec 08, net sales is Rs. 261.05 Cr & NP is Rs. 45.37 Cr.
Against the entire FY-07-08, the figures are Rs. 183 Cr & 33 Cr.

This clearly reflects the sound management along with the ethical business practice to create shareholders’ value.

CONCERNS:
Entry of global players in this industry may affect the company’s profitability as they have the brand and the money to implement the new technology very fast. The unorganized sector in India is also catching fast and may take some market share from Bartronics.

All these factors indicate that Bartronics might prove to be a dark horse in 4-5 years period. Accumulate on every decline.

Disclaimer: These are only the views of the analyst and we do not take any responsibility for the losses arising from it.