Geodesic : Should not miss this stock
Results Review ReportRead about the initial report on Geodesic here
The third Qtr results of Geodesic were very encouraging. The company reported revenues of Rs. 465.8 million for the quarter ended Decemeber 31, 2006, an increase of 75% compared to the third quarter of 2005. Net profit after tax stood at Rs. 253.8 million an increase of 107% as compared to third quarter of 2005. Which is strong by any means.
But the cracker news came from its new relationship with BenQ where by BenQ mobiles will be now bundled with the Mundu platform. The users of BenQ mobiles will now be able to chat with their friends across other IM networks. Also it allows BenQ mobile users to listen to thousands of radio stations across the globe.
This has bought Mundu with a quick increase with its users there by increasing the value of the Product. I feel that this is a starting deal and more such deals are there in the pipeline.
The mundu radio will go retail from next month onwards so we can expect a steady set of revenues coming from that going forward.
The stock has appreciated from around 180Rs to 260Rs since the first report. I expect that the stock will continue with a similar trend going forward also.
posted by Sajith @ 9:33 AM
28 Comments:
Dear investor ,
Things do look good for geodesic. To sound a note of caution however the company has not concentrated on the branding aspect so far which could prove to be crucial going forward.
Their product is not well differentiated which might mean that the revenue stream could be quite fickle in nature ( This is the view of a partner in a respected venture capital firm active in the software sector I talked to recently )
Regards,
objectivist
Hi Objectivist,
I have a differrent openion here.
Their first retail product was launched 4 months ago. The product was Mundu Radio. The other product Mundu Speak was basically a B2B product or say an OEM product.
In case of Mundu Radio , till now the product was a free one with. It is also not true that they did not do any marketing. Look at the product reviews about the Mundu radio in blogs. Thats a very peculier marketing approach that they took with Mundu Radio. Since it is mostly used by people with very good technical knowledge you will see the reviews of Mundu radio in many technical bloogs. [ This is called Blog marketing and it works very well ].
But now the product is going retail and the company is planning the next level of marketing. Look at the latest recruitment of the company in recent times ..Big marketing guns from Orange telecom and Microsoft has already joined the company ( look at some of the recent exchange notices given by the comnpany )
Now this all gives the feeling that they may be forming a strategy for marketing their products and it is now not late.
I see great market for some of their products because of the technical qualities. For example take the example of Mundu IM for mobile. Usially most of the mobile IM's (other than windows mobile) uses polling to see if there are any new messages. But Mundu IM uses the actual messaging feature and is a true IM in its sense.
Same is the case with Mundu Radio as it is the only product that can stream Internet radio. (Infact there was another promising project in this direction in 2001 by some other startup..but it failed)
Hi hero,
I visit your blog to frequently to see, if there is any update on Geodesic/Aftek. I have to admit that after going tru your blog i got interested in the fundamentals of the company and the potential for this story. I picked up Geodesic recently.. however.. i think i was bit late.. at Rs. 269/270. I dint find your update on the Chandamana acquisition/ merger. What is the total consideration paid for Chandamana (there is also cash component apart from 317,617 equity shares of Rs 2 each @ Rs 265 for 94% stake )and whats the potential market you think for this animation segment? Is geodesic planing to entry animation segment. Heard there is great potential for this espceially after looking at reveiws of Crest anaimation. Do you track this btw..its on same segement animation setment. Do you think I can accumulate geodesic now on?? Also, I dint pick your reco of triveni...do u still belive in the story? Waiting your reply..
Regards,
Rags
Hi,
That chandamama acqusition is one thing i couldnt quite understant. I am not sure why geodesic is taking a majority stake in that company. The management has not comeup with any clarification on that sort. Infact right from the start i also couldnt well swallow this one :-). But since the outflow is not that much big it really dosent make any differrence.
No need to get too much worry abt ur acqusition price of 270 for this stock. Infact even today also it came till 265 in a crashing market. Infact geodesic is one stock which was not affected in the carnage. This is because many players were busy accumulating the stock. (Look at the NSE data for block deals).
As far as the animation industry is concerned i am not too positive on it. The reason is that the sector itself is not big in India. And there is high scarcity of animation professionals. Infact some 2 months back i read a report on UTV animation where they said that they had tough time recruiting 100 professionals onboard due to lack of skilled professionals.
Infact i was looking for a crash in geodesic stock inline with the rest of the markets so that i can buy some more to my holdings. But unfortunately this stock is not breaking :-).
As far as sugar sector is concerned i feel that the bad news is factored. I am positive on two stocks Triveni and Bajaj Hind. Triveni at 40 and babaj at 140-150 levels should be an excellent buy. But keep a one year horizon.
Infact this carnage has bought up some excellent oppertunities. Some of the good stocks are now comming to reasonable levels. Look for Moser Baer below 300Rs. 3i Infotech etc
Hi Sajith ,
Moser Baer looks very interesting with its diversification into photo-voltaic space as well its retail initiative. Have you done any research on the potential in these two areas and any targets for Moser Baer moving forward ?
Regards,
objectivist
Yes Moser Bear i hold and track as part of the stocks which i see great future. Infact the recent solar cell business the company is in to has great potential going forward. The market in itself is evolving in a great way for this market globally.
Infact this sector of alternative energy is a hot sector among global investors. I usually dont have any target for such stocks ( because when the stocks moveup u will definetely miss the targets). The best strategy for such stocks is holding on to a prolonged period.
Infact these are some stocks which i find comfortable holding for long term
Geodesic - In the mobile instant messaging and entertainment market
Tanla - Mobile aggregation business
Moser baer - Storage and Solar energy
Aftek - High end communication Communication
Man Industries - long term benificiary of a strategic shift of mode of oil transportation in India
hi Sajith,
Did u read the new tie up of Geodesic with swedish Media major.. but nothing is mentioned abt revenue sharing...Also, no update about BenQ tie up...
Dear Sajith, Geodesic on upper circuit.. i shud thank u.. its based on your report i did some more research frm my end and invested.. its my top holding now .. its started yeilding now.. thanks again for the tip!!!..Rags
Is it right price to pick at 280-300. I plan to pick tomorrow should i
This stock is even worth investing at this level..The growth story has just started..the revenues of all its retail products would start kicking in in next few Qtrs..
Key highlights of Q4FY07 results:
Revenues grew 8.3% qoq (+64.5% yoy) in Q4FY07 to Rs 490 million on sales of Mundu IM applications and its variants to various segments.
EBITDA margins increased to 63.4% from 55.2% in the last quarter on account capitalization of software development related expenses as advised by new auditors Ernst and Young. EBITDA increased 24.5% qoq to Rs 311 million (increased 112% yoy). Both EBITDA and EBITDA margin were higher than our estimate of Rs 274 million and 54%, respectively.
Other income of Rs 52.9 million (Rs 51.2 million in last quarter) was inclusive of Rs 28 million of forex gains. Depreciation was lower at Rs 41 million (Rs 57.9 million in last quarter). Effective tax rate was 5.1% for the quarter. PAT grew 25.6% qoq in line with EBITDA growth of 24.5% qoq. PAT was Rs 305 million against our estimate of Rs 212 million.
FY07 full year consolidated results:
Revenues grew 73.6% yoy during FY07 to Rs 1.68 billion against its guidance of Rs 1.60-1.70 billion and our expectation of Rs 1.74 billion. EBITDA at Rs 1.04 billion (+96.3%) was higher than our estimate of Rs 1.01 billion (+89.9%). EBITDA margins were 62.2% against our expectation of 58.2%. PAT was Rs 911 million (+123% yoy) against our estimate of Rs 818 million (+101% yoy) and guidance of Rs 650-700 million.
Client addition:
Geodesic added five new clients in the new sectors including Portals and Publishers, Handset Manufacturers, ISPs and Telecom carriers. BenQ, Gothenberg Posten and Adeprimo were some of the names announced during the quarter.
New product launch:
Geodesic launched the 4th generation of Mundu Interoperable IM. Free version of 1st generation Mundu Internet Radio was launched to cater to the rising smart phone market. Paid version is likely to be launched by August 07.
Developments on Simputer related products:
Amida Simputers are being used to pilot projects such as Traffic Rule Enforcement in India and as Mobile Data Readers and Writers for the National Indian Identity Card. The pilot for traffic rule enforcement is going on in Delhi, Bangalore, Kolkata and Pune. The product is being distributed by BEL. The company is in talks with universities in US for marketing and development of “Olai”.
Developments pertaining to Chandamama acquisition:
The work of digitization of content available with Chandamama is in progress. The content delivery through internet and mobile is expected by end August.
Standalone results audited by Ernst and Young:
FY07 standalone results were audited by Ernst and Young, the new auditor appointed last year. Consolidated results announced are provisional and the audited numbers are expected soon.
Bonus announced:
Geodesic announced 1:2 bonus and total 20% dividend (including interim) for the year FY07.
Valuations and view
Geodesic has reported strong net profit growth - topline growth was, however, lower than our expectations. Client wins continue to be decent with another five new clients added in the quarter. We have reduced FY08 revenues and EBITDA by 11.7% and 7.7% respectively to account for rupee appreciation and the delay in launch of paid version of radio product. FY09 revenues are lower by 4.7% due to our lower Rupee assumption. Earning estimates for both FY08 and FY09 are left unchanged on account of higher margins, other income and lower depreciation expenses. We have assumed a tax rate of 11% in FY08 and FY09 and hence the net profit growth appears lower in FY08. We expect CAGR in EBITDA of 44% over FY07-09E. At Rs 275 the stock trades at 10.9x FY09E - Outperformer
..Rags
Excellent Group to Learn Investment Lessons
Dear friends,
Recently I have joined one Google group which aim on Value investing . This I found by searching through Google on stock. After becoming member of that I group, I found it very useful because of following reason,
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I would Like to clarify the following,
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3. After becoming member I found its very good and I am bemifitted from the group.
I advice members to become the members of group and monitor for sometime. If you find it good then continue.
Link to join the group is here,
http://groups.google.com/group/investmentsupergrowth
regards
stock student.
Geodesic did some further announcement laterly on its IM for Apple Iphone and its tie up with MIC for its GPS PDA. What are your views at the current level. The scrip appears to be facing some resistance at 220 levels. The volumes have gone down as well. With FII heavily invested in the company what do you think about the company. I was talking to a senior IT researcher in UK. Looking at the website and the products that it has, she said that sooner or latter this company should be bought by Google, as Google is big in this space.
Also a CEO has been appointed for Chandamama. Do you think this can be another growth enging for the company. Other than the Mundu product, the other products do not seem to do much for the organistion though.
some one just mentioned about Crest animations in this blog. The company does look promising with the first feature film expected to be released worldwide in 2009. Looking at the revenues a global release can generate and the average revenues similar releases generate, the risk of losing money on the project seems minimal. Especially since the cost of one feature film in India is expected at $20 Mio V/s $80-$100 Million in the US. Tie up with a company like Lions Gate international should further dilute the risk of losing money. Vinod Sethi has been invested in this company since 3 years now at a price range of 150-175. Bhansali of Enam also owns shares in this company. If the feature film to be released in 2009 proves even a medium performer, it should give a tremendous boost to the bottom line. The bottom line for this company so far has not been worth talking about. However it might change with the release of the movie. Companies like Tata Elxsi who also have animation division are pretty bullish on this segment. Lack of animation professional thoguh is an issue in this industry. However strong entry and exit barriers should agur well for already establsihed players in this industry.
The recent tie up does not means much in terms of financials. But what it brings is popularity and credibility to the software. The Ipod version of Mundu was an instant hit. And the company released its IPOD version within 24 hrs of its official launch. That one can definitely bring more money. But it all takes some time to get the required popularity. One that happens we can see the valuations skyrocketing
I had seen one free IM some 6 months ago and now this one for mobiles is also free:
http://sachinkraj.wordpress.com/2007/11/01/nimbuzz%c2%ae-chat-with-your-all-im-friends-from-your-cell-phone-for-free/
www.nimbuzz.com
http://www.nimbuzz.com/help/company/
How much of such free offers can dent the Geodesic revenues? Also, if we see last 3 quarters (till Q2 FY08), company's profits have not shown that big growth, keeping near the 30 crore mark. The PE has also gone down to about 15 from about 22-25 that used to remain earlier. Although I am hopefull for this quarter since management has given positive comments in media about the product sales. On a hold now.
Media Reports:
http://www.theequitydesk.com/forum/forum_posts.asp?TID=502&PN=9
Why you have stopped writing. You can check out Free Indian Stock Tips and leave a comment for the readers to get benefitted.
I am not getting enough time for blooging due to my work..but surely i will start writing again soon
This comment has been removed by the author.
I too heard about Nimbuzz . Pls keep posting.You made killing i guess with tiveni, micro, geo but for aftek. Miss your comments
Hindustan Times, 26th Jan 2008.
Apart from iPhone, Geodesic has tied up with handset manufacturer Sony Ericsson, which will bundle this software on all Walkman and K-series mobile phones. A month ago, the company entered into tie-ups with other smart phone makers like Palm, Motorola and HTC.
The company through Mundu is also now looking at offering Internet radio on mobile phones through tie-ups with telecom operators like Idea Cellular. For developing this customised version, Geodesic has tied up with radioIO, a website that streams popular music to computers and mobile phones. “With this 17 million users of Idea Cellular will be able to chat on the move,” said Kulkarni. He added that this would be rolled out in a year.
From the same news report:
Accessing the Internet on mobile phones is catching on in the US and users are hooked to instant messaging, in contrast with text messaging in India,” said Kulkarni. According to company executives, Mundu has 230 million downloads till date.
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Can 230 million figure be a correct one? There is something absolutely wrong in it.
-Gaurav.
230m users is definetely on the high side..i really dont think it will be that much..may be a typo..but definetely this company holds lot of promise.
Sajith,
I nowadays am studying the Amination industry in detail. Two companies, Compact Disc and Crest Animation, seem to be very promising. In Crest, Vinod Sethi and Enam's co-partener... not recalling his name.. have also invested. Both the companies look set to earn huge revenues in next 2-3 years. Do you have any idea on these? I can send you research reports on these if you require.
-Gaurav.
I will be very careful while investing in animation companies. There are many reasons for this
1) Indian animation industry itself is not able to pickup even after 15 years ( Remember IT and animation started almost at the same time here and total revenues from animation remained very small ( negligible ))
2) There are many reasons for it the main is lack of adequate talent and infrastructure. Unlike IT animation requires huge creative talent which is missing here ( even after lot of efforts )
This is one reason why even foriegn studios still dominate in animation
3) Infrastructure..initial investment is very high and there is not enough support from the govt side.
This is the many reason many animation companies went bust ( like pentamedia ) or remained very small ( like crest )
Infact crest and DQ enter ( unlisted) are the biggest animation companies in india but still there revenues combines will not even match the NP of a midsized IT copany :-)
Hi Sajit, Geo has mopped up 125M$ during Jan08. Any idea what is the growth path .
Hello,
Visiting ur blog after a long time. Truly speaking, I left Geodesic last year but thinking of entering now.
First of all, was pleased to see the Mundu ads appearing all over the google ad space. Even typing messenger on google get an ad link. Also earlier I didn't get info about the geodesic products but now there were quite appreciating reviews, and lots of downloads. With mobile IM appearing to make a blast in next 2 years, it seems Geodesic is at a tipping point now. The results are good though partially on the back of a weak dollar, but still company looks set to register 60%+ growth for next few years.
Regarding the Animation companies, though past has not been so bright, I now see a lot of Animation institutes have intensified their presence.. Arena, Framebox... and companies like Crest and Compact Disc are collaborating with reputed (as they claim) production houses of west to co-produce movies... Compact disc for last 3-4 years registering 60-90% growth... Isn't it a good time to look Animation sector also...
Yes gaurav,
Geodesic seems to be at a tippin point. I have re=cently increased my holdings in this company.
Animation somehow i dont like ( may be a personal preference )..but yes compact disk looks promising..
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