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Friday, September 10, 2010

Mid Cap Stock To Buy : Onmobile Global

I am a technology guy and I am always in search of future technology opportunities where I should invest in stocks of those companies and achieve best investment returns. Onmobile global is one mid cap stock to buy from such space, which has excellent chances to grow at very good pace.

OnMobile Global Limited (OnMobile) is a global value added services (MVAS) Company. OnMobile is engaged in providing value added services in telecom business globally. OnMobile offers a range of products like application based voice portals, network products, data products, speech products, messaging and m-commerce.

The products introduced by the Company during the fiscal year ended March 31, 2010 were ringback tone, subscription manager, voice portal, social address book, my social home, messaging platform, telephone, pollenStudio 2.0 and business intelligence.

OnMobile Global is the market leader in the non-SMS VAS (Value Added Services) segment in India. VAS is doing better than voice. Company enjoys a 33% market share in India. Company has managed to grow at the rate of 12-13% in a year compared to other telecom VAS providers.

In FY10, it won two major contracts from Telefonica in 13 Latin American countries and Vodafone in three countries. The upfront costs in building up operations for these projects took a toll on earnings before interest, tax, depreciation and amortisation (Ebitda) margins, which plummeted to around 18 per cent in FY10 from 32 per cent in the previous year.

Telefonica and Vodafone operations are expected to come onstream by the end of the current financial year, and should start showing results in FY12. Ebitda margins are also expected to improve by that time, but not to the earlier 30 per cent plus levels.

As stated above, project costs for Telefonica and vodafone are factored in and bad times are over in terms of profitability. These expenses had affected in terms of return ratios and right now ratios are at the bottom. If you look at the historical P/E ratio band, this company used to command very high P/E multiple in past and currently it is trading at the lower end of the band.

Market Cap 2138.82
EPS (TTM) 9.56
P/E 38.16
P/C 21.11
Book Value 123.37
Price/Book 2.96
Div(%) 0.00%
Div Yield(%) -
Market Lot 1.00
Face Value 10.00
Industry P/E 17.78

Stock price level around Rs. 320 - 340 is good to buy stocks of Onmobile. Overall, Onmobile global is a good mid cap stock to buy and one may invest in it for long term for excellent returns.

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