Opto Circuits India Ltd.: Pulsating with explicit growth

By Amol Dhake - Posted on October 20, 2009
 
Opto Circuits India Ltd.: Pulsating with explicit growth  image

Dated : 2 Oct 2009

Schools and colleges closed for 4 days, masks compulsory in offices are some of the news recently heard. Yes, a kind of recent havoc, the excruciating Swine Flu, which has become a phobia in the mind and soul of the people. With the headway in the technology, the epidemics and the viruses are also showing their advancement. And not a denying fact, we all know and accept the significance of health industry in our lives. And Opto Circuits India Ltd. (OCIL) is one of the greatest players in this sector, which provides us with various equipments needed for ailments. 

Stock Holding Pattern as on 31 Mar 09 
 

Indian Promoters 24.61
Foreign Promoters 6.49
Banks, Financial Institutions and Insurance 0.65
FII's 24.66
Private Corporate Bodies 8.88
NRI's/OCB's/Foreign Others 8.65
Others 1.28
General public 22.29

 

Stock Info 

Year of Incorporation 1992
Face Value (Rs) 10
Market Cap (Rs Cr) 3651.27
52 WK High / Low 260/69.50
P/E (Price Earning Ratio) 26.65
ROCE (Return on Capital employed) (%) 41.35
EPS (Earning per share) 7.68

 

About Company: Opto Circuits is a leading manufacturer of healthcare equipments in India. The product profile includes digital thermometers, sensors, probes, pulse oximeters, patient monitoring systems, Stents and Catheters.  OCIL designs, develops, manufactures, and distributes devices that use light to detect and sense, and medical monitoring equipment. Its non-invasive product profile includes SpO2, multi-parameter monitors, pulse oxy-meters, digital thermometers, and fluid warmers. The company also operates in the invasive segment through its 100% subsidiary EuroCor, which specialises in research,
development, and manufacture of interventional cardiology products. Following the acquisition of Criticare, OCIL has successfully expanded the non-invasive product portfolio by adding gas monitors and central monitoring stations. 23 % of the turnover is from the Invasive segment. 75 % is from the Non-Invasive segment and 2 percent from the other businesses. The company primarily operates in India, Europe, the US and Dubai.
 

In April 2007, Opto Circuits ventured into new product segments – Urology, Gastroenterology, Gynecology and Orthopedics by acquiring Devon Innovations Private Limited (Bangalore) and Ormed Medical Technology Limited (Chennai). 

Foreseeing the boom in the health industry, Opto circuits started its strategic acquisitions gradually to expand its services and offer products at competitive prices nationally and internationally.

Its Healthcare products includes: 

Pulse Oximeter: It is a patient monitoring system which provides continuous confirmation that the delivery of oxygen to the tissues is adequate. It is used to measure the level of oxygen saturation in the blood, the pulse rate. 

Multiparameter Monitors: Used for monitoring the patient’s vital signs such as ECG, blood pressure, temperature, oxygen level saturations and heart rate. 

Pulse Oximeter Sensors: These products are the interface between the patient & the Monitoring systems and used along with the above mentioned products.

Digital Thermometer: OCI manufactures a range of Digital thermometers with different applications.

Cholesterol Monitors: It is used to measure the total cholesterol in the blood. It displays the cholesterol level through an LCD panel. The unit also undertakes health risk analysis based on the cholesterol value to indicate heart attack & cardiac arrest risk for various ages.

Fluid Warmers:  The Thermal Angel is an in-line, battery-powered disposable, lightweight and completely portable blood and IV fluid infusion warming device, capable of intravenous application and irrigation warming. 

Coronary Stent Technology: EuroCor is recognized as the new European Technology expert in Stent design & innovation. 

Opto electronics Products: 

Infrared Emitters: These are basic building blocks in optoelectronic applications. They emit infrared (invisible) light. 

Infra Red Detectors: Another building block in optoelectronic applications. They detect or receive infrared light. 

Photo Sensor, Detector, Emitter Assemblies: These products involve multiple components and combinations of detector and emitters. Opto’s sensor assembles are used to sense motion, objects, speed and distance.  

Key concerns: The pressure on working-capital arising from a combination of reasons. These include the onus of having to fund increasing levels of inventory in markets like the US, where hospitals pay Opto only three months after a product is used. Add to that a two-month delay that shipping products from India to global markets and then distributing them entails. So Opto’s average receivables cycle extends to 181 days even while it is forced to carry over 100 days worth of inventory.

The company derives more than 95% of its revenues from exports making it vulnerable to losses from exchange rate fluctuations.  

Positive outlook: In the last nine years, the company has grown from Rs. 19.38 crore to over Rs. 800 crore. Its US-based subsidiary, Criticare Systems Inc (CSI), has forged a multi-year original equipment manufacturing contract with another US company to privately label its anesthesia monitor for the US firm.

Swine flu pandemic has led to increase in thermometer sales. Judging from its journey thus far, Opto is a careful and shrewd player. In the Hospital and Medical Services sector, Opto Circuits (India) Ltd. is the preferred bet. 

My recommendations:

“ He who has health has hope; and he who has hope has everything.”

Add this hope to your portfolio at different pulses of 201-190-175 and enjoy a healthy fortune in 3-5 years. 

My Risk Meter: MR*

* (VHR- Very High Risk/ HR-High Risk / MR- Medium Risk/ LR- Low Risk /VLR – Very Low Risk) 
 
 

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