Opto Circuits

Main Products Main Customer Industries
Medical Devices: Invasive & Non-Invasive products
Invasive -Bare Metal Stents (BMS), Drug eluting Stents (DES), Drug Eluting Balloon Catheter (DIOR)
Non-Invasive -Sensors, Pulse Oxymeters,digital thermometers and fluid warmers
OEMs, Hospitals
Bullish Arguments Bearish Arguments
Opto Circuits has been setting a scorching growth pace. From a Sales turnover of Rs. 50 Cr in FY02, Opto Circuits has grown over 16x to Rs. 818 Cr plus in FY09. Well positioned for future growth backed by strong brands and proprietary technology The working capital requirements for Opto Circuits have jumped over the last two years primarily due to higher debtorsâ collection period and due to large inventory levels. Debtor Days stands at ~180 days
Invasive business - Stents- will be the growth engine in future. EuroCor Stents are CE approved. The Invasive business contributes ~22% of revenues today. Opto Circuits exports over 95% of its annual turnover. There is therefore huge foreign exchange related exposure, which is cause for concern. However with Opto Circuits being a 100% EOU with large imports (ranging between 40-50% of Sales) enjoys the position of natural hedging for some of its foreign currency transactions.
Opto is the only company in the world to have obtained the CE mark for DIOR - a drug eluting balloon catheter, enabling it to sell DIOR in all markets except US and Japan. Opto also plans to launch DIOR in USA and has initiated clinical trials on DIOR, which are required to obtain the US FDA approval (under process). Technology plays a vital role in Medical Electronics industry in which Opto Circuits operates where it is required to constantly upgrade and innovate. The threat of technological obsolescence is omnipresent in this environment, which may lead to substantial expenditure in order to stay competitive.
Opto has emerged as the largest supplier of SpO2 sensors in the organised sector. Opto's sensors are sold across the world through over 200 distributors across 36 countries, with around 160 of the distributors in the USA alone. Opto Circuits makes gross margins of around 65-70% on its sensors, while operating margins are around 30-35%. Opto Circuits will have to provision for covering risks on patent infringement protection and other related costs, as well as for defending against claims of infringement by others as it engages deeper in the invasive (and non-invasive) segments of healthcare and competes with the bigger players. The invasive stents business, for example, is particularly mired in litigation.
Consistent dividend paying record, strong operating margins (>30%) and Returns (~40%), reasonable D/E (~1%)
Entry Barriers Interesting Viewpoints
Certain specialized skill sets in terms of technology, design, licenses, trials and regulatory approvals are needed in these businesses and the gestation period is long âwhich serve as major entry barriers. For example any new entrant entering the industry today with all the technological skills, will usually take a minimum of 18-24 months before FDA regulatory approvals can be obtained and supply started in the US. Today Opto Circuits has an installed base of 200,000 pulse oxymeters (Opto + Criticare) that is significant. A big advantage is the disposable trail of sensors. Even reusable sensors need to be replaced in 6-9 months depending on usage - these are the high value sensors. The disposable sensors sell from $4-5 while reusable sells from $40 -$100.


Donald, do you still track this? I was taking a re-look at Opto today and think it is probably running ahead of its fundamentals. Let me know what do you think.

Thanks Abhishek. I still hold all of it. But my entry level had made me complacent:)

I have been meaning to take a look and update on Opto. Maybe a good time to do it. why don’t you start putting down your observations. Thatway it will incentivise me to dig in, qualify/rebut and revise based on current information.



It is 10% of my portfolio as well and bought a long time back. I was meaning to just touch base all my holdings. Well I was just revisiting their basic numbers (their AR is not out yet for me to actually dig deeper) but their FY10 EPS is 8.24. Concerns relating to their free cash flow continues. You also have to factor in some amount of equity dilution. Assuming a 30% growth, the fair value for FY11 should be close to around 350 at an expected PE of 30. That does not leave much scope for error on the valuation front.The business story however is as compelling as ever.

So, I was wondering if it is the right time to book some long-term capital gains and move into some relatively undervalued stock right now.

On a generic basis, that is what I am doing to all my core holdings - Booking partial profits and moving those to the new undervalued finds.

I will do a more involved update on Opto in some time. Will be posting observations here in the process of collecting current info.

Summary of recent developments at Opto Circuits

For the first quarter ending June 30, 2010 (Q1 FY11):

Consolidated Results

â Net Sales at Rs. 291.98 crore as against Rs 230.36 crore in the same period last year

â PBT at Rs. 92.57 crore vs Rs 59.57 crore in the same period last year, a 55%growth.

â PAT at Rs 83.36 crore vs Rs 59. 28 crore in the same period last year, a 41%growth.

Standalone Results

â Net Sales at Rs 127.49 crore as against Rs 98.12 crore in the same period last year

â PBT at Rs 57.64 crore vs Rs 28.53 crore in the same period last year, a 102%growth

â PAT at Rs 56.95 crore vs Rs 28.49 crore in the same period last year, a 100% growth

On a consolidated basis, 27 per cent of the turnover is from the Invasive segment, 71 per cent from theNon-Invasive segment and 2 per cent from other businesses.

Management Comment

Mr. Vinod Ramnani, Chairman and Managing Director, OCI comments: âThe results meet ourexpectations. Both our business segments continue to grow and our future plans are on track.â

Key Highlights of the quarter:

Invasive Segment:

  • OCI acquired Kolkata (India) based N. S. Remedies Ltd. for about USD 1.5 million through an all cashdeal. N. S. Remedies has an advanced facility for stent manufacturing and R & D. The company has therequired capabilities to produce stainless steel and cobalt chromium stents. The company also hasnecessary CE approvals on its stents.

  • Eurocor GmbH participated in EuroPCR 2010, Europeâs leading congress on interventional cardiology.The company presented very convincing clinical results from DIOR DEBIUT trial. The study comparedthe effectiveness of the DIOR drug-eluting balloon device in combination with a bare metal stent (BMS)vs. other treatment options involving drug-eluting stents and coated balloon catheters.

  • Eurocor GmbH participated in the 6th Asian Interventional Cardiovascular Therapeutics (AICT) 2010in Singapore. Two successful lives cases, both using DIOR were presented. The company also hosted asymposium - âDIOR - Drug Eluting Balloon (DEB) - Concept to Clinical applicationâ.

  • Eurocor Gmbh launched its drug-eluting balloon DIOR in Canadian market through collaboration withMedivations Inc., a local distributor.

  • Non-invasive segment:Criticare Systems Inc. (CSI) won large orders for nGenuity (A multi-parameter vital signs patientmonitor) and nCompass (A multi-parameter vital signs patient monitor) from leading hospitals basedout of Delhi and Trivandrum.

Commenting on the deal Mr. Vinod Ramnani, Chairman and Managing Director, Opto

Circuits India, said, âWe are pleased to conclude this acquisition that will extend our

capabilities from designing cardiac stents to now manufacturing them, filling in related

processes along the value chain. This backward integration was essential to enhance the

value of the products offered by us in the interventional cardiac space.âMr. Ramnani added, âThe acquisition, besides enhancing our manufacturing capacity,will significantly reduce the cost of manufacturing bare metal stents and will also reduceour dependency on external agencies. This will, in turn, help us access additionalmarkets.â

Other recent developments

  • Sep 6 2010 -Opto Circuitsâ US subsidiary - Criticare Systems Inc.âs new modularpatient monitor eVision 9100 receives US FDA 510(K) Clearance.
    Management CommentCommenting on the latest development, Mr. Vinod Ramnani, Chairman and ManagingDirector, OCI said, âThe US FDA 510(K) clearance will now enable us to commercializeeVision 9100 in the US and will help boost sales in other parts of the world. Multi-parametermonitors have the largest share in the patient monitoring market. An US FDA clearedmodular vital signs monitor in our portfolio will help us capitalize on the market potential.âThe global revenue for multi-parameter patient monitors is estimated to be around US$2249 million. (Source: Global Markets Direct).

  • July 27th 2010 -Opto Circuits (India) Limited (OCI), a leading developer and manufacturer of patient monitoring systems and interventional products, today announced the 100 percent acquisition of the capital stock of US-based Unetixs Vascular, Inc, a specialist in the detection of peripheral arterial disease (PAD), for a cash consideration of approximately USD 9.7 million. OCI will fund the acquisition through internal accruals.
    Management comment:
    âAccess to the state-of-the-art PAD detection technology of Unetixs Vascular is a key milestone for Opto. It will allow us to now offer to the world, diagnostic products from Unetixs and treatment products provided by Eurocor, our European subsidiary. We also expect the Unetixs product line to open doors for our Criticare range of patient monitors in key US healthcare establishmentsâ, stated Vinod Ramnani, Chairman and Managing Director, Opto Circuits India.Unetixs holds 14 patents worldwide and is driven by a strong R&D team based out of RI.

Quick Observations on the recent developments:

1). CE-approved Drug Eluting Baloon Catheter (DEB) product can/will be the next trigger for Opto Circuits. Its heartening to see the progress in clinical trial data which augurs well for the USFDA approval filing for the product - likely due in FY11?

we will get this confirmed from Opto management soon

2). Unetixs Vascular acquisition - is just the kind of synergisitic acquisitions that Opto Circuits has made a successful habit of. Revenue wise this may not be a big addition going by the announcement, but strategically makes enormous sense -detection by Unetix PAD and cure by Eurocor DEB. $10 mn is funded thru internal accruals

3). NS remedies acquisition - manufacturing the BMS EuroCor stents from India will reduce costs and may provide Opto good cost advantages for aggressive market penetration

4). Results continue to be good. If 1QFy11 results can be sustained, this means the company is available even now at an attractive <15 Consolidated forward PE

will study sustainability of revenue & PAT growth and revert; preparation for a follow-up discussion with management.

Hi Donald,

I am not invested in this company. Was just looking at it.

Please answer some of my queries:

1). a) Has management given hints of another acquisition? I am asking this question as this compay is a serial acquirer (for good or bad). My concern is that are they going to do some big acquisition and puts loads of debt (which will supress the EPS just like few quarters back) again in next one year?

b) What are the capex plans and where are they going to get the cash from? There operating cash flow are very poor because of working capital management. Are they able to generate sufficient cash to fund their capex plans? or Are they going to take some debt (they repaid some debt recently with QIP funds) ?

2). Any idea as to how sustainable is low tax rate? They have manufacturing in tax free zones but what is the tax free time period.

3). Who were the investors in QIP? Promoters ?

4). Any idea as to why the cost of debt is so high?

5). What are the margins in Invasive Vs Non Invasive business ? Asking this question because next leg of growth is coming from Invasive and if its margin is higher than oveall operating margin will inch higher ( or at least remain stable).

6). I read somewhere that 55 % of sales is from OEM? Is that true?

7). What is the key Raw Materials and what are their proportion to total raw material expenses?

8). Any product liability litigation pending on them?

9). And finally the working capital. Everybody knows its bad. Inventory is high. Receivables are high. Any suggestion by management on whether these will improve going forward? Nature of inventory and business and bla bla reasons are ok but working capital requirement still look very high for this company.

Forgive me if i am asking some stupid questions. Havent gone through the Annual Report completely :slight_smile:




Not sure how familiar you are with Opto. This is a question that everyone comes to when looking at this company for the first time. But if you strudy the company you will see they have made a success of each acquisition -8 in the last so many years. On my quizzing on the success mantra, Mgmt said except EuroCor (where they took a leap of faith) each acquisition has a been a party they have dealt with for years - as suppliers, customers, vendors - so they know the company inside out, know where the flab is, etc. and have moved quickly on the plans!

Another big acquisition is unlikely at this stage. They need money (raised) for more clinical trials to gather essential data bank for the DIOR. Mgmt had told me the more data they have, the more sales they will be able to generate in the medium term. But clinical trials are costly and company has been judicious about the spends so far!

I trust Opto Management judgement! They know what they are doing (I may be wrong:))

The record is improving. Operating Cash flow in FY09 at 14% of Sales is not so bad for a manufacturing concern. Free cash flow has been at 5-6% for last 2 years, so capex is being funded thru internal accruals. We will know about FY10 shortly.


The EOU units will lose the tax advantage in FY11. They have set up a 100% subsidiary in Malayasia for a manufacturing facility which enjoys a 7 yr tax holiday. Needs to be seen how much they are able to leverage through that in FY12. There will be some tax impact in FY12.


They raised 400 Cr in QIP on Sep 8 2009 from qualifiedinstitutionalbuyers. Huge response at the floor price of Rs. 186. No idea who. Promoters issued warrants for themselves, so that they can maintain their share…promoter shares (#) have gone up but shareholding is currently down to 27.4% from 31% in Mar 2009.


Are you looking at Consolidated data? I don’t find the debt costs as high. between 10 & 11% for last few years. infact will be lower in FY10 as they would have repaid a big chunk of the debt from the QIP proceeds.


Invasive is still only 27% of the mix. By the way, the sensor+pulse oximetry business is always a better business -much less competition, complete control over costs. Teh USFDA approval when it comes may change the mix…and margins may lower, thats a possibility because of increased costs, litigation provisions.

That was a good question:)


No idea. But yes its a big chunk. Opto sells sensors to PHilips & GE in bulk…and the margins are good there. Again a good question;)


Non-invasive - Medical electronics products. PCBs, electronic components. As you are aware here raw material prices are usually stable/move down over time. In Invasive products - cobalt, chromium, steel wires, catheter baloons. Opto doesn’t report on raw materials. COGS is only about 56% of Sales


Not known so far.


Management has said these will remain high…may come to 170 days at best. Every new country they enter, the nature of the business is such that they have to tie up with the top 5 distributors…to gain entry thay have to accommodate higher terms. Invasives will change this picture somewhat…a DIOR USFDA approval would mean they are the only one with a unique product! they will dictate terms in Invasisves…but you will have to wait a couple of years for that scenario to emerge.


bachhe ki jaan le li:-)

par koi baat nahi, this will benefit others for sure, and has put some new questions in my mind. You can come up with more. But study a little history of Opto to get convinced on the Management! Thanks, Donald



1 Like

Any updates on the AGM, which was to be held today? Thanks in advance! :slight_smile:

I did not attend the AGM. need to wait for some announcement.

In my opinion, we have a much better interaction with the Management when they are done with the statutory obligations!:slight_smile:


Two similar companies feature recently in outlook profit are Poly medicure and span diagnosys. Both are worth looking into as they are available cheaply. The article also is worth reading


Any updates on the AGM, which was to be held today? Thanks in advance! :))

Thanks Donald jee, appreciate it!

Opto CircuitsQ3FY11 Investor Update

Another good set of numbers.


Revenues up 62.5% to 417.66 Cr from 257 Cr

Operating profit (EBITDA-Other Income) up 39% to 122 Cr from 88 Cr

Net Profit up 45.7% to 95.68 Cr from 65.68 Cr

Some details from the Conference call 19 Jan on Q3 results

This includes 1 month Revenues of Cardiac Sciences the latest acquisition completed in Dec 2010. Cardiac Science was EBITDA negative for the last 8 Quarters. This being year-end for Cardiac Sciences they saw a big jump in revenues and had NPM of ~3%. This can not be sustainable in the coming quarter.

However Management has initiated rationalisation in high-cost Manpower, R&D and mfring which will take 6 months to take effect. This Qr Cardiac Sciences is EBITDA positive, and in next 3 quarters Management is confident of taking it to Cash and PAT positive range. They cited specific cost reduction targets for R&D, manpower and manufacturing. Cardiac Sciences being a conglomerate of 3 scompanies with separate marketing, R&D, and manufacturing teams, Opto Circuits sees huge scope for input cost rationalisations.

Debt is up to 750 Cr from ~400 Cr last qr (mainly the acqusition cost of Cardiac). Not expected to go up further in 1 year. Working Capital will see significant additional requirements to boost growth. Capex incurred will be in the region of 200-350 Crs in next 2 years. ~100 Cr outflow in this last quarter of FY11. Balance in FY12. Primarily for shifting lot of manufacturing out of US, and Eurocor manufacturing expansion.

Categorically ruled out further Equity dilution.

Invasive business seen growing at 30-35% for next 2-3 years

Non-Invasive business seen growing at 20-25% for next 2-3 years

Malayasia SEZ manufacturing will be ramped up by next 6 months. Mainly waiting for delivery of machinery.

Tax rate is expected to stay slightly under 10%

Please check this space for actual transcript of conference call.

I see all developments as positive and EPS accretive for the company. Another vindication of Management walking the talk. Over to forum members for your reactions and further analysis.

**Opto Circuitsa US subsidiary Cardiac Science wins large European AED contract
**Cardiac Science to deploy 650 AEDs in Spain

April 27th2011 | Bengaluru, India | Bothell, WA

The wholly-owned subsidiary ofOpto Circuits (India) Ltd.,Cardiac Science Corporation, a global leader in automated external defibrillator (AED) and diagnosticcardiac monitoringdevices, has been awarded a contract to deploy 650 PowerheartAEDs in Girona, Spain, home to 700,000 Catalonians. With this initiative, Gironabecomes the first Spanish city to implement a wide network of defibrillators to protect its citizens against sudden cardiac


Dipsalut, thePublic Health organization of the Girona Council (Organismo de Salud PÂşblica de la DiputaciÂłn de Gerona),estimates more than 3,000 Catalonians die from sudden cardiac arrest each year. A defibrillating shock administered within one minute after cardiac arrest increases the chance of survival to 90 percent, according to the European Resuscitation Council.

Cardiac Scienceand a valued partner MC Infortecnicaworked together to win the Girona contract, a decision made with input fromthe Brugada Foundation, the University of Girona Faculty of Medicine and the Emergency Medical System of Catalonia.

aWe are pleased to partner with Dipsalut in providing AEDs that will protect the Girona community,a says Cardiac Science CEO, Dave Marver. aWe believe our fully automatic Powerheart AED G3 Plus is the best technology for any large-scale public access defibrillation (PAD) program.a

Dipsalut also ordered 500 aintelligenta AED cabinets. When a cabinet is opened to access an AED, a signal is automatically sent to alert the local emergency medical response team.

Most of the fully automatic Cardiac Science AEDs will be deployed in streets or public squares. Other defibrillators will be used to protect high-risk facilities such as sports centers, train stations, airports and bus stations.

About: Cardiac Science**

Cardiac Science, a wholly owned subsidiary ofOpto Circuits (India) Ltd.,develops, manufactures, and markets a family of advanced diagnostic and therapeutic cardiology devices and systems, including automated external defibrillators (AED), electrocardiograph devices (ECG/EKG), cardiacstress treadmilland systems,PC-based diagnostic workstations,Holtermonitoring systems, hospital defibrillators,vital signs monitors,cardiac rehabilitationtelemetry systems, andcardiology data managementsystems (informatics) thatconnect with hospital information(HIS),electronic medical record(EMR), and other information systems. The company sells a variety of related products and consumables and provides a portfolio of training, maintenance, and support services. Cardiac Science, the successor to the cardiac businesses that established the trustedBurdick,HeartCentrix,PowerheartandQuintonbrands, is headquartered in Bothell, Washington. With customers in almost 100 countries worldwide, the company has operations in North America, Europe, and Asia. For information, call 425.402.2000 or visithttp://www.cardiacscience.com.

For updates and information on worldwide defibrillation and cardiac monitoring, find us on the Cardiac Science blog athttp://www.cardiacscience.com/blog, Twitter athttp://twitter.com/cardiacscience,Facebook athttp://budurl.com/CSonFBand YouTube athttp://budurl.com/CSonYT.

Any reason why the stock has corrected nearly 10% in the last 2 days? I could not find any news … maybe poor results expected?

Opto Circuitsa foray into US stent market may take 2-3 years more


Quarter IV and Full-year FY11 Results Conference Call
Opto Circuits (India) Limited invites Investors and Equity Analysts to a conference call on
17th May, 2011 at 04.30 PM ISTto present and discuss the Q4 & FY 2011 Results.
Interested participants are requested to send in their questions by email toir@optoindia.combefore the call begins.
Dial-in Numbers:
India Access Numbers
Toll Number
Toll Free Number (All India)
+91 22 2821 3311, +91 22 2821 8855
1800425 4061,1800425 4250
+91 11 2685 2727, +91 11 2644 8899
+91 80 2532 6215
+91 20 2445 0506, +91 20 2445 0507
+91 33 2559 0707
International Toll Access Number:+91 44 2370 2370


INTERVIEW - Opto Circuits sees FY12 rev up 33-38 pct, margins steady

By Kaustubh Kulkarni

MUMBAI (Reuters) - Medical equipment maker Opto Circuits (India) plans to launch at least two new products this year and leverage the potential of its latest acquisition in the U.S. to boost sales by 32-38 percent this year, a top official said on Wednesday.

“With the acquisition of Cardiac Science, we plan to enter a new business vertical - of AEDs (automatic external defibrillators) - in domestic market with demands from government departments, malls and MNCs,” V. Bhaskar, director finance, told Reuters in a telephone interview.

The Bangalore-based firm, which has 10 manufacturing units in three countries, also plans to consolidate its U.S. operations to cut costs, he said adding the company expected to maintain profit margins in FY12.

Opto Circuits’ FY11 profit margin stood at 23 percent on consolidated net sales of 15.85 billion rupees.

“We have two other factories (excluding Cardiac Science) in the U.S. and the plan is to integrate them into one unit,” he said. “While all this is happening, we might retain (profit) margins this year. They could dip by a percentage or two.”

Opto Circuits paid about $89 million - including restructuring costs and other expenses - to acquire Cardiac Science in December last year.

“We do not see very large growth in the Cardiac Science business as the priority is to make this company profitable this fiscal,” he added.


The firm, which reported a 68 percent rise in January-March net profit on Tuesday, plans to shift some manufacturing operations in the U.S. to low cost-centres over the next two years, Bhaskar said.

“While 25 to 30 percent of production will continue to happen in the U.S., the rest would be moved out.”

The company is planning to spend about 3 billion rupees over two years to set up new facilities in India and Malaysia, where most of the U.S. production would be moved, he added.

Opto Circuits plans to launch newer and updated versions of its existing products along with at least two new products in FY12 to further push sales, he said.

“In the non-invasive segment, we would launch a non-cardiac application while a new stent would be commercialised in the third quarter of this year,” he said.

At 1:24 p.m. shares of Opto Circuits (India) - valued at 55.02 billion rupees - were trading at 282.15 rupees, down 4.4 percent in a weak Mumbai market.