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Note: The artciles are not research reports but assimilation of information available on public domain and it should not be treated as a research report.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that I might have the dkiscussed companies in my portfolio and hence my point of view can be biased.Readers should consult registered consultants before making any investments
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Archives : Old artciles

Friday, May 8, 2015

Microsec Financial Services Ltd:-The E-Commerce Play

Dear Friends,

I am delighted to inform you that our app "Share Bazaar Your Market Guide" has been launched for everyone on Android Play Store.Thanks a great deal for appreciating and liking it so much.

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btw:We are also going to start the techno-funda tutorials in the app from from tomorrow itself.To know more about it mail here:sharebazaarapp@gmail.com.




Stock idea:-

Scripscan:Microsec Financial Services Ltd
Traded in:Nse-Bse
Cmp:74rs
Target:No targets(can be multibagger)
Duration:3-5 years
Portfolio allocation:5%

Quote:I have covered the company earlier at 20 bucks.Its already been a multibagger.Can well be a multibagger from present levels too.Check the link to know more:- http://www.arunthestocksguru.com/2013/11/microsec-financial-services-ltd-next.html


Verticals:The company got three business verticals which are: 1)Financial Services 2)Innovative Digital Media of Consumer Engagement - www.foreseegame.com 3)Innovative Digital Pharmacy and Healthcare Store - www.sastasundar.com 1)Financial services:It provides financing and investment, investment banking, broking and wealth management, insurance broking, financial planning and related service.


Quote:Simply not interested in this business.The company is much more than a boring RBI registered NBFC.Read on:-


Ecommerce:Tailwinds are blowing in ecommerce with almost a dozen deals happening everyday.Unfortunately, in the Indian stock markets the numbers of ecommerce plays are limited.We have a handful of companies with the likes of Just Dial and Info edge,both valued at over billion USD. Who actually cares to buy them though?Then the micro caps follow with average business models-Intrasoft technologies,Istreet network to name a few.Now let's talk about the probable best ecommerce play which is yet to be noticed by markets.Not only its debt free with innovative Ecommerce verticals but the company also posses a lot of cash in its book.


2)FORESEEGAME.COM:Foreseegame.com has become no. 1 consumer engagement platform in India with Alexa ranking of 270 at India level.The company as on date is having over a million users and is growing at a very rapid pace. It is a value innovation in marketing media which offers complete engagement cycle to brands. It is value additon to Digital Media – beyond impressions and clicks and providing 360degree engagement through games of prediction engagement around TVC, feedback,Co-creation and Social Responsibility.Foreseegame.com has more than 15 million page views per month and the average time spend per user at foreseegame.com is 28 minutes which is far ahead from any other website.Yes its even higher than Facebook or any site that you may surf daily.The most interesting feature is that the user spends maximum time with brands while on foreseegame.com.It provides brands engagement with their target audience through age-wise, gender-wise and location wise games and capable of bringing customers to stores/websites of the brands.The digital Advertising market size in India is around Rs.4000 crs and which is expected to increase at a 30% growth rate. The Management is foreseeing tremendous growth opportunity in this business.


Business in simple words:It's kind of an online lottery portal.Users predict and they win cash prizes,discount vouchers from several brands.Foresee gets 10 bucks from brands per engagement/game.For example if 1 lakh users play a game daily,the revenues will be 3crs monthly or 36crs yearly(1*10*30).A portal offering "cash prizes" in a cash starved country with population of 125crs. Relax and fathom the potential members.I too won some discount vouchers and cash rewards.


3)SASTASUNDAR.COM: Sastasundar.com is an innovative Digital Pharmacy and Healthcare Store.Within a very short span of time,it has received tremendous response from the customers. "At present, the services of sastasundar.com is available in Kolkata and nearby suburb area and it is processing on an average 1600 plus orders on daily basis.The company is catering to over 1 lakh customers with average daily addition being a highly impressive 400-500."


Business in simple words.They simply sell medicines online.From generic to the daily needed necessities.Retail medicine shops make 20-30% on an average. Sastasundar aims to capture that segment by offering 15% discount to its customers.Since the volumes would be way higher,the margins for the company would be superior than the average retail shops.The company aims to have double digit EBITDA in this segment.They are also into trading through their healthbuddy products which ranges from coconut oil to herbal Ayurvedic stuff.


Think about the integration:Through foreseegame the company would have access to millions of users,migrate them to sastasundar with impressive discounts and they are yours.With foresee the cost of branding sastasundar is minimal.


Even 500crs revenues for sastasundar ain't a big deal.Think about the service period of medicines.So if you clock 42 crs in your monthly sales,you will hit 500crs easily (42crs*12 months).Additional new customers will further fuel revenues.They have got some retail sastasundar stores and is also offering franchise based opportunities at minimum costs.


Sastasundar is becoming a rage in our part of the country simply due to the fact of offering genuine medicines at discount of 15-20%.Its already into the alexa top 500 portals of the country which vindicates my point.Till 2500 bucks of medicine purchase you get 15% discount and above that 20% discount follows.


The company is also about to start high margin innovative segments like" Make to order ". You order the chef how to make the foods and they will deliver it to your doorsteps.


Reference:My family got a monthly recurring expenses of 2500 bucks in medicine.We used to buy from nearby retailers previously.Since last couple of months we switched to sastasundar.They are delivering timely to home with no additional logistics cost.We are saving about 500 bucks with added satisfaction of consuming "genuine medicines".Presume the scalability of the business with over 9crs of population in the state alone.Company has a vision of going pan India but only after creating profitable zones.


Recent deals:Healthkart.com,a company into nutritional supplements recently raised around 130crs from Intel capital at a talked about valuation of over 1000crs.Another customer engagement firm freecharge is in news of late with reports of snapdeal acquiring the company at 2800crs.


The private equity way to value ecommerce players:They range from 3x to 150x revenues.


Endorsement of Phaneesh Murthy:Murthy, who previously held senior positions at Infosys and was the CEO of Igate, has started PM Health and Life Care, an online pharmacy. He is raising $10 million for the venture, which is expected to start operations in September in 10 Indian cities.As per him,"The Indian pharmaceutical market is estimated to be worth $56 billion by 2020".“Buying medicines online is a different culture altogether. There is great scope as consumers are increasingly shopping online,” he added.The Indian pharmacy market is fragmented with unorganized players accounting for over 95%.Indian spending on healthcare is expected to nearly double to 13% of disposable incomes by 2025, according to PWC.


9 month results:The financial services segment delivered 21crs of sales vs 19crs.Foresee recorded 28 lakhs vs 8 lakhs.Sastasundar saw a massive rise in revenues with sales increasing from just 8 lakhs to over 11crs. Sastasundar is well on course to hit 9crs sales in the last quarter which will make it clock 20 crs.Both the ecommerce portals delivered losses to the tune of around 8crs each.The financial services division clocked a profit figure of around 9crs in the 9 months period of the present fiscal.It will end up with 12crs of PAT.


Loaded with cash:Company has investments and cash of about 90-100crs in book which if you subtract from the Marketcap provides an EV of 120crs.


Risks:The financial services business will continue to do well as long as equities perform.In any case, cash flows would be robust owing the fee based in nature. Ecommerce segments though are sun rising but are far from making profits.It will take a while before both the segments make any meaningful profit.


Conclusion:Microsec has been a laggard post it's listing in 2010.The issue priced at 118 was oversubscribed by 12 times.With a sound strategy and new Sunrising verticals in place,company is about to see a change in its fortunes.Both the ecommerce portals would grow at 80-100% CAGR for coming few years.As the segments attain scale,it would probably be demerged into three entities.At present valuation,market is valuing the company at 10x EV.God fearing management has a vision in place to make wealth for themselves and the minority shareholders.They are transparent in their dealings.The promoters including microsec trust and associates own around 80% stake in the company 'officially'.You are actually getting the ecommerce divisions for free.No sane investor can presume or pen a target here.Floating stocks are negligible,even average buying interest in the counter will make it hit the sky.

Btw:You don't need to interact with the management.Just keep track of the Alexa rankings.The lesser the rank the higher the growth of the company.

BTW:For different stock market related services,rush a mail at my mail id arunsharemarket@gmail.com to know more about it.



Note: The above is not a research report but assimilation of information available on public domain and it should not be treated as a research report.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that I might have microsec in my portfolio and hence my point of view can be biased.Readers should consult registered consultants before making any investments
.

36 comments:

Kaushik said...

Thanks Arunji for the new reco. Your app also has been greatly helpful.

Can you share your thoughts on Siemens? I entered at 1200 levels and sold at about late 1300s when most brokerage houses started giving sell ratings with target price of half the CMP. Otherwise I am a long term investor.

bsayan said...

Hi Arun, you really have great suggestions and the app is just great. I would like to ask a quick question regarding a script called Axiscades. What do you think of the company? Weak fundamentals? Fraud? Bought it @ 332, now at 202 and going down!! Alchemy aka Jhunjhunwala share stakes in the company stock. Any suggestions or thoughts would greatly help.

bsayan said...
This comment has been removed by the author.
Supam Das said...

Abhi nehi to kabhi nehi

Ayush said...

Hi Arun,
As you have mentioned about your Q&A with Microsec in Nov2013, you have asked on the Dividend payout, unfortunately there is no word about that even when you have asked twice.

The Fy13-14 have reported in -ve EPS (2.03) and the trailing EPS is too in -ve(3.44).

In Nov'13 itself, 1 lac user where registered (36cr), however the trailing number shows 39.59crs. Am I am missing anything here. Doesn't u think the management is not very investor friendly

hiren majethiya said...

Sir your valuable view on BABA ARTS...
Is it turnaround candidate as it entered in new business segment?

Amol Ingole said...

Sir you don't investigate in online medicine
Online medicine trading is illegal in India
I think u know what happen snapdeal CEO FIR registered

Arun Mukherjee said...

1)Ayush you need to check the consolidated figures and the notes below the quarterly results.

2)Snapdeal is a market place which was selling drugs without prescriptions and other approvals.Microsec sells drugs with the required license and other approvals in place.They only sell through prescription.Hope that helps

3)Avoid companies like baba arts.Axis Cade's are driven by few operators though got a story in place.Siemens a great long term hold

Kaushik said...

Thank you Arun ji. A validation through you gives a lot of confidence. Will re-nenter Siemens now :)

roysten lobo said...

Hi Arun,

Whats is u r view on stock DCM ltd for coming 3 to 5 yrs ? It has a multibagger potential ?

vivek said...

Hi Arun, do you have an indea about how the regulation for selling medicines online can affect sastasundar.com?? Snapdeal got into trouble for this recently, is there a risk to others also?

Arun Mukherjee said...

Have already mentioned the same in the above point. It's a good thing that not everyone can come in this business and compete.Sastasundar is into a lot of things which has been well accepted by the customers.Present indian alexa rank is at 427 which is incredible.

As mentioned in the note to know the growth in the verticals.Keep tracking the alexa.

Mari Periyasamy said...

Ur views on Sarda energy and Renaissance jewellery?

madhu sudan Acharya said...

tv today keeps falling. What is wrong with the stock? Are you negative with it NOW?

madhu sudan Acharya said...

tv today keeps falling. What is wrong with the stock? Are you negative with it NOW?

Eshant said...

Hi Madhu,

Arun, has answered this in share bazar app. His reply, " I own this stock, will never sell before it reaches 2000, sleeping with it till 2025."

I think you got your answer. I had similar doubt as I have heavily invested in this stock.

Dinesh Potdar said...

Arvind remedies, Freshtrop fruits,, ONGC, Arrow textile, Acrysil India ltd.are.following in this market. Your opinion about the future prospective of above companies.

Dinesh Potdar said...

Arvind remedies, Freshtrop fruits,, ONGC, Arrow textile, Acrysil India ltd.are.following in this market. Your opinion about the future prospective of above companies.

Roshan Joe said...

I am holding Binani Industries @Rs.120/-. Pl share your valuable advice whether can I continue to hold or exit it?

Roshan Joe said...

I am holding Binani Industries @Rs.120/-. Pl share your valuable advice whether can I continue to hold or exit it?

M.Rathna Reddy said...

Hi a run ji ways your view on mothers on si& mayuri uniquorters for long term(10 yrs span)

M.Rathna Reddy said...
This comment has been removed by the author.
M.Rathna Reddy said...

Sorry for typo its motherson sumi

Abbas Khoja said...

Sir, I want to about Jupiter info media and TV today network

Jhraana said...

Hi Arun ji,

Maico Kaya ka kya hua sir... ab trading hi nahi hoti...main demerger ka artical pada tha... soch raha hoon kahi loss na ho jaye.. sir kya hoga ab isme..kab se trading start hogi...

mere pass 100/1200 share hain. kya karoon main ab...

please give me your advise.

Sajid Aruvan said...

Hi Arun what about IFGL, is it good price to enter or wait for further correction, my current holding 40% in loss

Sajid Aruvan said...

Hi Arun what about IFGL, is it good price to enter or wait for further correction, my current holding 40% in loss

Sanjeev Singh said...

good analysis Arun and team...! for now company is not so profitable but in future it will.
Guys, I do find another site with on similar line like Arun. I hope, this will benefit other investor like us. something the multibagger..!

http://themultibagger.com

darshan chandra said...
This comment has been removed by the author.
darshan chandra said...
This comment has been removed by the author.
darshan chandra said...
This comment has been removed by the author.
metu said...

Remain bullish on ifgl and fluidomat

darshan chandra said...

Why u r not giving update on ur favorite stock Fluidomat because results are bad u r updating only stocks which r moving higher

darshan chandra said...
This comment has been removed by the author.
metu said...

Already commented about fluidomat.

Btw:

Regards
Arun

Arun Mukherjee said...

Disabling comment as whatever queries you got post them on my android share bazaar app

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