ONMOBILE GLOBAL v2.0 A global MVAS leader in the making

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!!

1 Like

Just realized, I missed posting the basic numbers.

PRESENT DAY NUMBERS

CMP: Rs 32 Market cap: 366 crores BV: 79 FV: 10

Debt: 130 cr Net worth: 722 cr (excl goodwill) Cash on books: 212 cr

Cheers!!

1 Like

Hi Hemanth,

Thanks.Seems like a great turnaround to look at.

They had corporate governance issue in the past. How well can you rate management pedigree?

Thanks,

Ravi

Hi Ravi,

The corporate governance issues are a thing of the past. They were due to some dubious actions by the ex-CEO.

He has since long, resigned from the company. He is no more in the promoter group nor in the board of directors. Completely cut off from the company.

Check the track record and experience of the current management team on the website.Also, take a look at the credentials of the new board. They are impeccable.

So I rate them pretty high. No two thoughts about that.

Cheers!!

Hi Hemanth

by any chance, did you attended the AGM on Aug 1? Any updates from that?

Thanks

Achal

The only problem I find with the story is that with the advent of smartphones, a large number of MVAS services are now redundant. Except for may be the caller tunes and ring back tones.

If they find a way to stay relevant in this market, especially considering their excellent telecom service provider contacts, then its a story worth considering.

Hmm… infact that’s the same risk I see - this could become a value trap overnight if there is a whatsapp equivalent on CRBT that runs at a OS level rather than at a telco level. IMHO, not worth the risk - CRBT is hardly something that has a “moat” characteristic.

2 Likes

Now the stock ONMOBILE GLOBAL touched Rs 100 . from 32 congrats to Hemanth for this value pick!!!

2 Likes

Guys whats the latest view on the stock ?
Current the EV is 707cr
New products in place to be lauched.
FY17 profit target to be around 88cr so getting at 11.67 times the earnings.
Looks tempting, management optimistic.

Only issue I have is why isnt the management being able to come out with a concrete day as to when are they launching the new products.

Will love to hear your reviews on the same

Cheers!!

The stock looks interesting .At 400 crore market cap,zero debt and almost 300 crore cash.The downside looks limited.

OnMobile has enters into partnership with Bharti Airtel to power games on Thanks app

OnMobile Global Limited, has announces partnership with Bharti Airtel Limited OnMobile enters into partnership with Bharti Airtel.pdf (462.1 KB) to launch a Diwali gaming solution for Airtel Thanks app users. It will be part of the Airtel Diwali Mahotsava during this festive season and will go live from 20th October 2019 until 3rd November 2019.

For a software company operating on a SaaS model, the OPMs will be pretty high, considering that the software is already developed and delivery to a higher user base will bring in the moolah. However, OnMobile has reported OPM as low as 5% in FY19. On looking at the numbers it is revealed that the cost of content is fairly high @ 41% of sales revenue, while employee cost is another 29%. This means that premium generated by the IP of the software is fairly low and may be quickly getting redundant in the fast changing telecom industry both on technology as well as user preference.

2 Likes

This is getting good traction due to recent tech and mobile related IPO’s. Last couple of quarters have been good, management also sound very optimistic in annual report. Please provide your views if anyone holding it.

Disc: Invested.

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Any updates on onmobile global. Please provide inputs?

From latest earning concall of onmobile, they are going to patent and launch a gaming platform “onmo” with around 100 games on. If anyone has any latest update about it, Please share

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Just wanted to understand, its just an solution. Why cant airtel or any teleco have an inhouse team for this? Is it just to keep the cost variable (as and when demand comes, outsource to onmobile)

Thanks

Onmobile could be a big player in Gaming

https://economictimes.indiatimes.com/markets/stocks/news/onmobile-can-sustain-higher-margins-higher-productivity-cfo/videoshow/81088409.cms

I stayed with that stock for at least three four years and the management always talks very promising things and delivers less. If you go through the transcripts of previous calls you would understand. I have no idea if any changes are there during the last two years since I lost hope and stopped tracking.

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Agreed, Management is too slow to deliver. Don’t have high hopes.

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The share witnessing some action since the onset of IPO of Nazara. Any positive development here?