By the above caption I am not referring just the business of this company, but something more.Zicom once recommended here @ Rs.38 in 2011 ( old posting HERE) which is currently trading around Rs.85.As you are aware this is one of the largest player in electronic security devices market in India with a turnover of Rs.485 Cr and a net profit of Rs.16 Cr in last FY. Company's products includes fire alarm systems, videophones, electronic burglar alarm systems, access control systems, infra-red sensing and CCTV surveillance..etc.With a sharp rise in crime rates all over India this industry is expected to show robust growth in coming years.Even if there is lot of cheap unbranded products are importing from China ,quality and servicing is a real problem for such products and because of this reason Indian customers are now preferring the products offered by Indian Companies with large sales and service network.Godrej and Boyce Manufacturing Company,Zicom and Security vision are the three major organised players in this industry.Zicom having many overseas subsidiaries outside India especially in Middle East and company showing very good growth rate for the past many years.Even the industry having bright future and the company showing robust growth rate ,stock market is giving only lower valuation for the stock of Zicom.With an EPS of Rs.15 ( Consolidated) it is still available at a P/E close to just 5. Currently promoters are holding just 22 % stake in this company and this lower promoter stake may be a reason for markets dislike .But if the recent activities of Godrej Group is any indication they are taking this lower promoter stake as an opportunity.Ensemble Holdings & Finance Ltd a Godrej Group company is slowly buying the shares of Zicom from open market in past few quarters.Godrej bought 2.26 % stake in last two quarters .Another investor one Mr.Venu Raman Kumar holding close to 20% stake in Zicom personally and through his investment arm Aark Singapore.There is even an interesting link between Godrej Group and V R Kumar.As a private investor and venture capitalist he started his operations in 2000 with an initial funding support of Godrej Group itself.
Godrej group is very successful in spotting opportunities and expanding their business through mergers and acquisitions.They executed many such M&A's for Godrej Consumer Products in past many years in international level.If we trace back the history of Godrej Group they are not taking passive investment's in outside companies otherwise they have some real business interests.Here, Godrej is the main competitor of Zicom and they know the business very well .
Now Raman Kumar and Godrej together holding close to 23 % stake and another 10% is held by institutions including General Insurance Corporation. Considering all the factors mainly the history of Godrej Group , I strongly believe - Bird is already in the Cage and the door will shut at appropriate time .
CMP of Zicom is Rs.85/- ,traded both in NSE and BSE.
Link to company website HERE
Disc: I have Vested interest in Zicom