Onmobile Global Ltd - Buy

Stock Market Listing Details:

Current Market Price: Rs. 209
PE Ratio: 56.00
Market Capitalization: 2563.93 Crores

Company Overview:

OnMobile Global is India's largest value added services (VAS) company for mobile,landline and media service providers. Incorporated in the year 2000, OnMobile is the first Indian telecom VAS company to go public. It made its debut on the two prominent Indian Stock Exchanges in Feb 2008. OnMobile is headquartered in Bangalore, India where it has a large R&D center and network operations center. OnMobile also has offices in Mumbai, Delhi, Singapore, Paris, Jakarta, London, Kuala Lumpur, Seattle and Sydney. OnMobile has employee strength of over 900.

Stock Price Movement Chart for OnMobile Global:



Investment Rationale:

• OnMobile is one of the largest VAS companies in India and is a high growth company. The topline for the company for FY 08 grew by 77.0% to Rs. 230.7 crores. This kind of growth for the company is expected to go on considering the robust growth in the mobile market in India.

• OnMobile has a very wide array of products and services including mobile technologies like voice,SMS,WAP,USSD and On-Device portal. The acquisition of French data products company Voxmobili has further strengthened the product portfolio with products like Phone Backup, Network Address Book & Mobile Paparazzi. With such wide offerings its one of the best integrated players in the industry and is lkely to have a huge share of the industry growth pie in the future.

• OnMobile already has some of the best customers it is offering serivces to. Its client list includes prestigous companies like Airtel,Aircel,Idea,MTNL,Reliance,Vodafone,ESPN,AOL, Star Tv, Sony, Adlabs,Fame,PVR and Nokia to mention a few. This ensures steady revenue flow for the company and also increased revenues from each client as their customer base increases.

• Mobile penetration in India still has a long way to go. There is also an increase in standards of living and all this adds to the attractiveness of the mobile VAS markets.

• OnMobile is not only growing organically but also through the inorganic route. The company has already made some major acquisitions and would be looking for more in the near future. This will ensure rapid growth for the company both in the local markets and in the global markets where it has made some major acquisitions.

• OnMobile has incurred huge capital expenditure in the yer FY 07 and FY 08. These investments will reflect in the future financials of the company supporting its robust growth. The company also has a good balance sheet position with minimal amount of debt. This places OnMobile in a good spot to use leverage,if needed for its future growth and acquisition.

• The company has the backing of perstigous investors like Argo Global capital,Infosys Technologies ltd, Deutsche Bank,Goldman Sachs and Polygon investment partners. This not only ensures back up for capital needs but also a good management team in place always as these investors would look to maximize their gains through investment in this company.

All these factors make OnMobile Global a good investment theme to consider for long run. The company had made a high of Rs. 744 on the exchange but has been beaten down in the recent carnage. The current PE of 46 still looks high but considering the growth potential the company holds one can invest in small numbers and invest more on corrctions.

Disclaimer: Investors and Readers are advised to do their own research before taking positions in any stocks mentioned in the blog. The author of the blog may or may not have positions in the stocks discussed in the blog.