Zicom -- cup and handle pattern

attached is a potential cup and handle pattern in zicom ltd. company is mainly into security systems and has been posting good results till dec 12. There is likely to be equity dilution to around 17.63 crores post pref allotment of shares on conversion of warrants.

Company has posted net profit of around 17.87 crores for 9M fy 13 compared to 11.62 cr for 9M fy 12. Their new venture of Remote management electronic security services (named e-Saas) is supposed to be the new growth driver

Promoter holding is low at 21% and 1% out of this is pledged.

Potential targets and stop losses put up in the chart itself.

Bosco Menezes (zeenut blogspot) had put up a detailed report on this stock back in july 12 on his blog for anyone wanting to follow up in details.

disc: no holding but would be keenly watching the progress of chart

Have been studying this co and sometimes looking at the growing problems of crime etc in our Country, it seems to be an excellent area, Zicom is operating in. Plus they have a huge brand value and sort of a first mover advantage. Also if one looks at the recent qtrs, the co seems to have done pretty well in scaling up quickly and valuations don’t seem expensive.

While if one looks at the promoters shareholding, corporate structure, acquisitions they keep doing, handing of money on selling of the business last time it doesn’t give a lot of confidence on the corporate governance and quality of promoters to create wealth for minority too.

Hence pretty confused on this one. Would love to hear thoughts of other members.


I haven’t heard really great things about promoters in banking circle Not sure if the business quality can override this.

Will try and investigate more on the promoters.



A contra view on the business.

The products they have is typical commodity businesses e.g. security cameras is sold by almost everyone and much bigger brands. Similar with fire safety.

How much of the opportunity from big folks e.g. ATMs or Govt projects have they managed to handle till now? If not then they do not have an advantage in sales. Haven’t seen their products in ezone or other retailers so am not sure how good their distribution is for the retail market.

The services (e-alert,e-sense etc.) they offer would be handled by security agencies within the bigger company. Why would anyone use them?

Also some of the products from others in the market like fire safety/gas leakage do send alerts directly so not sure why they have services for such things. These can be automated.

Unless they bring cost differential, don’t see much advantages in the business here.

PS : Thread for discussing Zicom is already existing :http://www.valuepickr.com/forum/untested-worth-a-look/758884552