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Wednesday, July 27, 2011

Small Cap Multi Bagger Stock - Logix Microsystems

Logix Microsystems is a small cap stock that could be a multi bagger in medium term but slightly risky stock due to it's very high FII holdings. Let's have a look at it's stock analysis and why one may consider to buy stocks of this company.

Logix Microsystems Limited operates in two segments namely enterprise connectivity and security, and Izmo cars solutions. The Company has various solutions such as izmoWeb is an automotive online store for auto dealers. izmoMobi is a mobile Website. izmoRainmaker is an online marketing solution. AddOnAuto involves in-store accessories sales. izmoTele Trak involves call management and tracking. iCRM is an customer relationship management solution for the Automotive industry. iEquity is a database sales solution. iConsult involves sales performance coaching. iService is a automotive service management system. izmoStudio provides digital imagery and interactive media solutions for the automotive vertical.

Company has regional subsidiaries in Europe, USA and ASIA which are Izmo Europe BVBA, Logix Americas Inc., Midrange Software Pte Ltd and izmo Media.

Most of the company solutions cater hundreds of auto dealers with over thousands of showrooms and automobile portals such as Yahoo Auto, AOL Auto and some of the auto OEMs General Motors, Ford Motor Co., Mitsubishi Motors, etc.

Logix Microsystems also operates a web portal www.carazoo.com for Indian market.
Internet has been off lately proving as a big marketing tool for automobile sector due to it’s wide and ever growing reach. Due to very huge user base and low cost to reach that user base automakers have started using internet based interactive websites/application for auto marketing and Logix Microsystems is an established player in catering this market. Logix has an established track record of 7 years in the largest auto market in this world, the US market!

The company is planning to focus on adding big clients and auto dealers in US as well other big auto markets such as Europe, Asia and home ground India. It plans to tap the auto dealers to strengthen their presence in the auto accessories market. Carazoo division has started growing its customer base allover India. It includes automotive as well as 2 wheeler dealers which are huge in numbers.

Stock Valuation
Logix Microsystems is a micro cap stock with market cap of just Rs.20 crores. With trailing four quarters EPS of Rs 3.89, at current stock price of Rs.16.8, the stock trades at P/E of just 4.33 which is very cheap. The book value of stock stands at Rs. 136.65 It is trading at Price/Book ratio of 0.12 So why is it available at such steep discounted valuations? There could be only one possible reason. The stock has low promoters holding (21.49%), high FII holdings (21.10%) The stocks with high FII holdings are very volatile and so is this small cap stock. It has 52 week high/low of 57/14.7

The company has a very niche and unique business model with huge opportunities. Looking at the stock valuations, one may buy stocks of Logix Microsystems for medium term gains and it may even prove to be a multi bagger stock.

1 comment:

  1. If we look at the last 5 years financial of Logix there seems to be nothing in advantage for the company but rather a very disappointing scenario. The net profit ,EPS have gone down , the net sales and the book value has been almost stagnant for two years, ROC employed has been very low for this years and their debt has only been increasing ......now looking at the numbers there is nothing that is saying that the company is fundamentally sound just because the PE is low and BV is high one can't buy the stock.. Let me know your view on this ..

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