Most of you would have heard of Onmobile Global, its meteoric rise, and dramatic fall. This company got more than its share of electronic media coverage;good, bad and ugly. Lot of people would also have, at some point, bought it, sold it, made money and lost some, in this stock. Hence, my presentationapproach is a little different.
MY TAKE:
The last 3 years have been terrible for this company. Corporate governance issues,unfavourableregulations by the Indian telecom authority, declines in Indiarevenue, dubious actions by ex-CEO, senior management resignations, telecom scams in India. Everything that could have gone wrong went wrong.
The onceposter-boy of mobile VAS became its whipping-boy. Share price collapsed from a high of 340 rs in July 2009 to a low of 19 rs in Aug 2013.
As the Oracle of Omaha says, “Buy when others are fearful, Sell when others are greedy”
In the last 6 quarters, the company has systematically grown the business across multiple geographies; Latin America, Africa, North America, Europe (whileholding their fort in India). Further, they have set right systems and processes, strengthened corporate governance, brought back some of the erstwhilestars, strengthened their top management, organized their service offerings and painstakingly brought the company back on rails.
With the foundation in place, fully energized by revamp and re-organization, Onmobile Global is equipped and well placed to become a top global MVAS company.Further the recent corporate action, whereby the promoters have come up with an open offer at 40 rs, to increase their stake from 32% to 42% is a clearindication of their confidence in the future prospects of the company.
A strong potential multibagger!!
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MULTIBAGGER POTENTIAL CMP 32
Revenue diversification over last 4 years:
Revenue and mix in Q2 FY2010:** 106 cr [India 79 cr, International 27 cr] **
Revenue and mix in Q2 FY2014:** 225 cr**
** [India 50 cr, Latam 55 cr, Dev mkts 80 cr, Emrg mkts 38]**
(Except India, all geographies are growing since last 8 quarters. International business share at 76% in Q2FY14)
Current global representation:
In the year 2009, the company had presence/offices in Australia, Bangladesh, France, Indonesia, Malaysia, Singapore, Nepal, South Africa and Romania.
In 2013, Onmobile has added the following countries: Netherlands, USA, Mexico, Argentina, Venezuela, Brasil, Egypt, Uruguay, Senegal, Mali, Kenya, Malawi,Costa Rica, Spain, Tanzania, Zambia, Uganda, Madagascar, Rwanda, Nigeria, Ghana, Sierra Leone, Canada, Italy, Spain, Cyprus, Guatemala, Chile, Panama,Nicaragua, El Salvador, Peru.
The increase in the international spread of geography during last 4 years, in conjunction with the increase in annual revenues, and change in the revenue mix****speaks volumes about the future potential of this company.
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IMPORTANT INFO
1). Sanjay Bhambri, the current Chief commercial officer, re-joined the company as Regional VP, Emerging markets. In his earlier stint with Onmobile, he wasVP, APAC and MEA.
2). Onmobile has inducted 2 new independent directors into the board within the last 1 year. Both people with impecabble credentials who earlier heldpositions of repute in their respective countries. Mr R Chandrashekhar, who was Chairman, Telecom commission and Secretary, DoT. Ambassador (Ret.) BarryWhite, who was US ambassador to Norway.
Views invited!! Cheer!!