Looking for fundamental growth story? Pay attention to Zicom Electronic Security Systems

03-06-2014 • About Zicom Electronic Security Systems ($ZICOM) • By InTwits

Zicom Electronic Security Systems is an attractive growth stock in Electronic Components industry. Its revenue performance, profitability and financial model stands it out vs. other public companies on the market.

Growth story

Zicom Electronic Security Systems showed growth in the last financial year. Zicom Electronic Security Systems's revenue surged on 34.0% in FY2014. EBITDA also increased considerably: 31.7% for the same period.

In the last 3 years the company showed fast revenue growth of 35.4% from FY2011 to FY2014 annually. EBITDA surged on 56.8% from FY2011 to FY2014 annually.

Zicom Electronic Security Systems ($ZICOM) financials for the last 5 years

mln. INR	FY2010	FY2011	FY2012	FY2013	FY2014
Revenue	13,128	3,734	4,841	6,913	9,261
Revenue growth, %		-71.6%	29.6%	42.8%	34.0%
SG&A, %
EBITDA	553	282	508	826	1,089
EBITDA growth, %		-48.9%	80.0%	62.5%	31.7%
EBITDA margin, %	4.21%	7.57%	10.5%	12.0%	11.8%
Net Income	286	445	168	303	419
Net Income margin, %	2.18%	11.9%	3.48%	4.39%	4.53%

CAPEX	359	243	189	926	606
CAPEX/Revenue, %	2.73%	6.50%	3.90%	13.4%	6.54%
Debt	2,241	1,354	1,604	3,183	4,368
Cash	127	139	32	168	96
Net Debt/EBITDA	3.8x	4.3x	3.1x	3.6x	3.9x

ROIC, %	12.9%	3.8%	10.4%	13.2%	12.4%
ROE, %	23.7%	30.8%	9.5%	14.1%	16.4%

Profitability and return on investment

EBITDA margin declined slightly from 12% in FY2013 to 11.8% in FY2014. In the last 3 years EBITDA margin surged on 4.20 pp from 7.60% in FY2011 to 11.8% in FY2014.

Zicom Electronic Security Systems shows attractive ROIC at 12.4% for the last 12 months which assumes stable development model. Three years ago it was lower at 3.82%. Average ROIC for the last three years was 12.0%.

The company's Net Income margin increased slightly on 0.100 pp from 4.40% to 4.50% in FY2014. If we look for the longer period the company's Net Income margin dropped on 7.40 pp from 11.9% in FY2011 to 4.50% in FY2014.

Zicom Electronic Security Systems operates at ROE of 16.4%. It's average ROE for the last three years was 13.3%.

Capital expenditures (CAPEX)

To this fast growth the company had to invest in CAPEX.In FY2014 the company had CAPEX/Revenue of 6.54%. Zicom Electronic Security Systems showed small growth in CAPEX/Revenue of 0.0376 pp from 6.50% in FY2011 to 6.54% in FY2014. Average CAPEX/Revenue for the last three years was 7.95%.

Leverage (Debt)

Having such a fast growth profile Zicom Electronic Security Systems keeps medium debt level at 3.9x Net Debt/EBITDA. If we look for the longer period the company showed decline of 0.38x from 4.30x in FY2011 to 3.93x in FY2014.

Peers in Electronic Components

Below you can find Zicom Electronic Security Systems benchmarking vs. other companies in Electronic Components industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Gross margin, %

Top
	FY2010	FY2011	FY2012	FY2013	FY2014
Nubal (India) ($NUBALIN)			0.0%	0.0%	0.0%

Median (1 company)			0.0%	0.0%	0.0%

Top companies by ROIC, %

Top
	FY2010	FY2011	FY2012	FY2013	FY2014
Nubal (India) ($NUBALIN)			0.0%	0.0%	0.0%

Median (1 company)			0.0%	0.0%	0.0%
Zicom Electronic Security Systems ($ZICOM)	12.9%	3.8%	10.4%	13.2%	12.4%

Zicom Electronic Security Systems stock price chart

Zicom Electronic Security Systems financials

mln.	FY2010	FY2011	FY2012

Revenue	13,128	3,734	4,841
EBITDA	553.3	282.5	508.5
Net income	286.5	444.6	168.4
CAPEX	358.8	242.8	189.0
Debt	2,241	1,354	1,604
Cash	127.5	139.2	32.466

About Zicom Electronic Security Systems

Zicom Electronic Security Systems Limited, together with its subsidiaries, manufactures and sells electronic security systems and equipments in India and internationally. Its products and solutions include closed circuit television (CCTV) surveillance systems, access control systems, fire alarm systems, multi-apartment video door phones, video door phones, intruder alarm systems, push video alarm systems, fingerprint locks, baby watch and office alarm systems, and remote managed services. The company also provides annual maintenance services for electronic security products; remote alarm management service; fire alarm monitoring services; a solution to monitor and register the attendance of employees; video surveillance service to monitor and manage CCTV surveillance at various locations; and people counting solution that provides details on footfalls for business enterprises. In addition, it offers basic hydrant and sprinkler systems, analogue addressable fire alarm systems, specialized gaseous fire suppression systems, dry and wet chemical extinguishing systems, and water mist fire extinguishing systems to government and corporate clients, refineries, shopping malls, multi storey buildings, resorts, and others. Further, the company provides turnkey solutions, including design, engineering, integration, testing, and commissioning of fire safety, security, and building management systems; and remote managed electronic security services to banks, retail chains, and residential societies. Zicom Electronic Security Systems Limited was founded in 1994 and is based in Mumbai, India.