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Thursday, July 23, 2009

BET ON : VIDEOCON

If you’re looking to invest in a solid Indian consumer electronics company then Videocon is probably an ideal fit for you. Its stock is not priced too high and a single share of the company is currently trading under the Rs.173 range on the Sensex . It’s a decent fit for intraday movements but considering the situation that the company has been in and the progress it is slowly making. Videocon is a pretty good and robust long term stock. If you have an investment horizon of 1-3 yrs then you should take a look and consider Videocon. A best buy under Rs.150,
Market Cap of Rs.3,964.33, EPS-18.88, P/E-9.16, Book Value of Rs.294.96,
Price/Book- 0.65, Div(%)-10.00, Div Yield(%)-0.52, Industry P/E 4.70

A few years ago Videocon was facing tough competition from foreign companies that had just set up base in India. LG and Samsung had begun to take root in India. They arrived with a host of innovative schemes and products and turned the consumer electronics division in India on its head. Many Indian companies had to match up, either sell out, shut shop or compete on the same level as these companies who had both the resources and the technology to turn profitable in India.

Companies like BPL were beaten down, Onida barely survives .Videocon on the other hand weathered the storm and has gone from strength to strength in the past few years.

Videocon’s bread and butter is without a doubt its television division. The company as it stands is the world’s third largest maker of television picture tubes.

It’s got a worldwide manufacturing presence and has started to boost its sales in other countries too. The company’s acquisition of Thomson has greatly benefitted its television business.

Even though it is not a market leader in televisions in India its manufacturing capabilities allow it to make money. Many companies use Videocon’s technology and license their products to be manufactured by Videocon before retailing them under their own brand names.

The company’s also got a decent enough presence in the field of washing machines, refrigerators and other home appliances.
Recently, Videocon has initiated a total brand makeover with a greener, more environmental friendly theme. The company has plans to do well outside India and will be helped by this new marketing campaign which is projecting the company as one that has had a major overhaul.

Pretty soon the company is also expected to enter the fast growing DTH space with its own Satellite TV service. Of late under the astute leadership of Mr.Venugopal Dhoot, the company has been diversifying into sectors different from its core services including the competitive mobile services market. Its sales have shown a capacity to grow and the company is making money.

Also the company has oil and gas joint venture which extracts 50,000 barrels of oil per day.which is 7% of all oil in the private sector in India.Videocon has bagged exploration and production contracts in countries like Oman, Australia and the Timor Sea near Indonesia.

Besides this it is also in the glass mkt. Videocon produces a superior range of panels and funnels to meet the demand for large-size, flat, and slim CRT display products.

In view of all this it is a good long term bet.

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