Zicom Electronic Security Systems is an attractive growth stock

03-06-2015 • About Zicom Electronic Security Systems ($ZICOM) • By InTwits

Zicom Electronic Security Systems is an attractive growth stock in Electronic Components industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.

Growth story

Zicom Electronic Security Systems showed fast growth in the last financial year. The company's revenue surged on 19.7% in FY2015. EBITDA also increased considerably: 28.9% for the same period.

If we look for the longer period the company showed fast revenue growth of 31.8% from FY2012 to FY2015 annually. EBITDA surged on 40.3% from FY2012 to FY2015 annually.

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

mln. INR	FY2011	FY2012	FY2013	FY2014	FY2015
Revenue	3,734	4,841	6,913	9,261	11,081
Revenue growth, %		29.6%	42.8%	34.0%	19.7%
SG&A, %
EBITDA	282	508	826	1,089	1,403
EBITDA growth, %		80.0%	62.5%	31.7%	28.9%
EBITDA margin, %	7.57%	10.5%	12.0%	11.8%	12.7%
Net Income	445	168	303	419	506
Net Income margin, %	11.9%	3.48%	4.39%	4.53%	4.56%

CAPEX	243	189	926	606	489
CAPEX/Revenue, %	6.50%	3.90%	13.4%	6.54%	4.41%
Debt	1,354	1,604	3,183	4,368	5,557
Cash	139	32	168	96	92
Net Debt/EBITDA	4.3x	3.1x	3.6x	3.9x	3.9x

ROIC, %	3.8%	10.4%	13.2%	12.4%	12.7%
ROE, %	30.8%	9.5%	14.1%	16.4%	15.9%

Profitability and return on investment

Margin expansion supported EBITDA growth. Zicom Electronic Security Systems's EBITDA margin increased on 0.900 pp from 11.8% to 12.7% in FY2015. In the last 3 years EBITDA margin surged on 2.20 pp from 10.5% in FY2012 to 12.7% in FY2015.

Zicom Electronic Security Systems shows attractive ROIC at 12.7% for the last 12 months which assumes stable development model. Three years ago it was a bit lower at 10.4%. Average ROIC for the last three years was 12.7%.

The company's Net Income margin increased slightly on 0.100 pp from 4.50% to 4.60% in FY2015. In the longer period the company's Net Income margin surged on 1.10 pp from 3.50% in FY2012 to 4.60% in FY2015.

Zicom Electronic Security Systems operates at ROE of 15.9%. It's average level of ROE for the last three years was 15.5%.

Capital expenditures (CAPEX)

Zicom Electronic Security Systems's CAPEX/Revenue was 4.41% in FY2015. The company's CAPEX/Revenue surged on 0.508 pp from 3.90% in FY2012 to 4.41% in FY2015. It's average level of CAPEX/Revenue for the last three years was 8.12%.

Leverage (Debt)

The company has medium debt level at 3.9x Net Debt/EBITDA to maintain high growth. In the longer period leverage surged on 0.81x from 3.09x in FY2012 to 3.90x in FY2015.

Peers in Electronic Components

Below we provide Zicom Electronic Security Systems benchmarking against other companies in Electronic Components industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Gross margin, %

Top
	FY2011	FY2012	FY2013	FY2014	FY2015
Nubal (India) ($NUBALIN)		0.0%	0.0%	0.0%	0.0%

Median (1 company)		0.0%	0.0%	0.0%	0.0%

Top companies by EBITDA margin, %

Top
	FY2011	FY2012	FY2013	FY2014	FY2015
Ruttonsha International Rectifier ($RIR)					8.7%

Median (1 company)					8.7%
Zicom Electronic Security Systems ($ZICOM)	7.6%	10.5%	12.0%	11.8%	12.7%

Top companies by ROIC, %

Top 5
	FY2011	FY2012	FY2013	FY2014	FY2015
Nubal (India) ($NUBALIN)		0.0%	0.0%	0.0%	0.0%
Eco Recycling ($ECORECO)	2.3%	2.5%	3.0%	-2.2%
Precision Electronics ($PRECISIO)	5.2%	6.3%	5.7%	-8.8%
Kilburn Office Automation ($KILBURN)	12.3%	-8.7%
Bcc Fuba India ($BCCFUBA)			-14.0%

Median (9 companies)	8.8%	4.4%	4.3%	-2.2%	0.0%
Zicom Electronic Security Systems ($ZICOM)	3.8%	10.4%	13.2%	12.4%	12.7%

Top companies by Net Debt / EBITDA

Top
	FY2011	FY2012	FY2013	FY2014	FY2015
Ruttonsha International Rectifier ($RIR)	1.3x	1.5x	1.7x		0.0x

Median (1 company)	1.0x	0.9x	1.6x	0.0x	0.0x
Zicom Electronic Security Systems ($ZICOM)	4.3x	3.1x	3.6x	3.9x	3.9x

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.