Zicom Electronic Security Systems Ltd reported results for the quarter ending March 31, 2015. Revenue grew 8.22% year-over-year to Rs. 3307.15 million. Net profit increased 30.65% to Rs. 183.75 million and EPS grew 13.83% to Rs. 9.10. For the full year, net sales are expected to grow at a 20% CAGR from 2014-2017 while net profit is expected to increase at a 15% CAGR over the same period. The stock currently trades at price to earnings ratios of 5.40x for FY2016 estimates and 4.87x for FY2017 estimates.

1. CMP 150.90
Target Price 175.00
ISIN: INE871B01014
JUNE 25th
2015
ZICOM ELECTRONIC SECURITY SYSTEMS LTD
CONSOLIDATED Result Update: Q4 FY15
BUYBUYBUYBUY
Index Details
Stock Data
Sector Electronic Components
BSE Code 531404
Face Value 10.00
52wk. High / Low (Rs.) 196.50/95.00
Volume (2wk. Avg.) 15000
Market Cap (Rs. in mn.) 3048.15
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS FY15A FY16E FY17E
Net Sales 11081.17 12632.53 14148.44
EBITDA 1446.82 1632.11 1797.54
Net Profit 505.86 564.71 626.30
EPS 25.04 27.96 31.01
P/E 6.03 5.40 4.87
Shareholding Pattern (%)
1 Year Comparative Graph
ZICOM ELECTRONIC SECURITY SYSTEMS LTD BSE SENSEX
SYNOPSIS
Zicom Electronic Security Systems Ltd. is a pioneer
and leader in the field of Electronic Security brand
in India.
Revenue for the quarter ended March 31, 2015 at
Rs. 3307.15 mn, shows a growth of 8.22% as
compared to Rs. 3055.92 mn in the corresponding
previous quarter.
During Q4 FY15, EBDITA stood at Rs. 449.76 mn as
against Rs. 363.17 mn, an increase of 23.84% over
comparative quarter in the previous year. EBIDTA
margin has remained stable at 14%.
Net Profit after Tax and Minority Interest stood at
Rs. 183.75 mn as against Rs. 140.64 mn of the
corresponding previous quarter, grew by 30.65%.
EPS stood at Rs. 9.10 as against Rs. 7.99 in that of
corresponding previous quarter.
Zicom Electronic Security Systems has entered into
a distributor agreement with Bengaluru based
Biometronic Technology F'vt.Ltd to supply IriTECH
product line for authentication market in India.
The Company has recommended a Dividend of Rs.
1.20 per share (i.e. 12%) on Face Value of Rs. 10/-
each, for the year ended March 31, 2015.
Revenue for the year ended March 31, 2015 at Rs.
1,081.17 mn as compared to Rs. 9260.96 mn in
FY14 shows a growth of 20%.
Net Profit at Rs. 505.86 mn in FY15 as against Rs.
419.43 mn of the corresponding previous year
shows a jump of 21%.
Net Sales and PAT of the company are expected to
grow at a CAGR of 20% and 15% over 2014 to
2017E respectively.
PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Zicom Electronic Security Systems Ltd 150.90 3048.15 25.04 6.03 0.84 12.00
Switching Technologies Gunther Ltd 112.60 275.90 2.04 55.20 13.95 0.00
Shivalik Bimetal Controls Ltd 28.00 537.60 1.85 15.14 1.17 0.00
Hind Rectifiers Ltd 71.50 1076.60 - - 1.74 0.00

2. QUARTERLY HIGHLIGHTS (CONSOLIDATED BASIS)
Results updates- Q4 FY15,
MONTHS Mar-15 Mar-14 % Change
Net Sales 3307.15 3055.92 8.22
Net Profit 183.75 140.64 30.65
EPS 9.10 7.99 13.83
EBITDA 449.76 363.17 23.84
Zicom Electronic Security Systems Ltd achieved a turnover of Rs. 3307.15 million for the 4th quarter of the
financial year 2014-15 as against Rs. 3055.92 millions in the corresponding quarter of the previous year, an
increase of 8.22%. The company has reported an EBITDA of Rs. 449.76 millions in Q4 FY15. During the quarter,
net profit was Rs. 183.75 million against Rs. 140.64 million in the corresponding quarter of the previous year.
The company has reported an EPS of Rs. 9.10 for the 4th quarter as against an EPS of Rs. 7.99 in the
corresponding quarter of the previous year.
Break up of Expenditure
Particulars (Rs. Million) Q4 FY15 Q4 FY14
%
Change
Cost of Materials
Consumed
2592.70 2130.02 22%
Employee Benefit
Expenses
229.17 210.89 9%
Depreciation &
Amortization Expense
69.96 64.43 9%
Other Expenditure 82.43 144.37 -43%
Latest updates
• Zicom Electronic Security Systems Ltd has entered into a distributor agreement with Bengaluru based
Biometronic Technology F'vt.Ltd, a company engaged in research and development and manufacture of
products, equipment, accessories, spare parts and software based on iris recognition algorithm of IriTECH
USA.

3. • Zicom Electronic Security Systems Ltd has recommended a Dividend of Rs. 1.20 per share (i.e. 12%) on Face
Value of Rs. 10/- each, for the year ended March 31, 2015.
On Standalone Basis (FY15):
• Total Income for the year ended March 31, 2015 at Rs. 3835.2 mn as compared to Rs. 3230.6 mn in the
corresponding previous period shows a growth of 19%.
• Earnings before Depreciation, Interest and Tax (EBDITA) stood at Rs. 388.4 mn as against Rs. 325.6 mn, an
increase of 19% over corresponding previous period.
• Net Profit After Tax at Rs. 113.0 mn as against Rs. 81.5 mn of the corresponding previous period shows a
jump of 39%.
COMPANY PROFILE
Zicom Electronic Security Systems Ltd is the leading electronic security brand in India. The Company offers a
wide range of products and customized solutions including services in Intrusion and Burglar Alarm Systems,
Access Control Systems, Fire Detection Systems, CCTV Surveillance Systems, Central Monitoring Station and
Video Monitoring Station, etc., with focus on retail and SME sectors. Zicom has PAN India operations with service
capabilities in 1100 cities.
Zicom SaaS Pvt. Ltd., wholly owned subsidiary, offers security services to protect retail shops, bank branches,
ATMs, residences, apartments and remotely located assets using state-of-the-art electronic security equipments
and Command and Control Station located in Mumbai.
Unisafe Fire Protection Specialists LLC, Dubai, is a subsidiary of Zicom in U.A.E and has strong presence in
Dubai and Abu Dhabi in the business of fire detection and protection in infrastructure projects. Unisafe Dubai
offers wide spectrum of products and services in fire detection and protection, ranging from designing,
supplying, installing and maintaining integrated fire protection system capabilities. Unisafe is associated with
many iconic projects in U.A.E. in government and private sectors.
Phoenix International WLL, Qatar, is one of the leading fire security solutions providers in Qatar. Phoenix
offers turn keys solutions in fire protection and suppression projects and it has license to operate in
petrochemical sector. Phoenix has exclusive tie-up to market safety and security equipments of leading
international suppliers. The portfolio of services offered by Phoenix covers design, engineering, integrating,
testing and commissioning of Fire Safety, Security and Building Management Systems, with main focus on Fire
Prevention and Protection.

4. FINANCIAL HIGHLIGHT (CONSOLIDATED BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at March 31, 2014 -2017E
ZICOM ELECTRONIC SECURITY SYSTEMS LTD. FY14A FY15A FY16E FY17E
EQUITY AND LIABILITIES:
Shareholders’ Funds:
Share Capital 176.00 202.00 202.00 202.00
Reserves and Surplus 2507.47 3436.43 4001.14 4627.44
Money received against Share Warrants 0.00 42.00 0.00 0.00
A) Total - Net worth 2683.47 3680.43 4203.14 4829.44
B) Minority Interest 375.45 391.44 403.19 419.31
Non-Current Liabilities:
Long-term borrowings 1437.13 1454.69 1483.79 1513.46
Deferred Tax Liabilities [Net] 58.73 42.43 37.34 33.98
Other Long Term Liabilities 13.24 13.20 13.72 14.41
Long Term Provisions 44.98 69.18 79.56 86.72
C) Sub Total - Non-Current Liabilities 1554.08 1579.51 1614.41 1648.57
Current Liabilities:
Short-term borrowings 2713.52 3699.68 4365.62 4976.81
Trade Payables 1163.40 1305.86 1436.44 1551.36
Other Current Liabilities 652.87 768.49 868.40 955.24
Short Term Provisions 63.41 176.01 207.70 226.39
D) Sub Total - Current Liabilities 4593.20 5950.05 6878.16 7709.79
Total Equity & Liabilities (A+B+C+D) 9206.20 11601.42 13098.90 14607.12
ASSETS:
Non-Current Assets:
a) Fixed Assets 1855.05 2020.42 2182.05 2312.97
b) Non Current Investments 99.27 100.20 104.21 108.38
c) Long Term Loans and Advances 9.67 0.88 1.05 1.20
E) Sub Total - Non-Current Assets 1963.99 2121.50 2287.31 2422.55
Current Assets:
Inventories 1388.97 1912.34 2216.52 2594.75
Trade Receivables 3680.97 4565.26 5204.39 5828.92
Cash and Bank Balances 657.63 838.27 964.01 1089.33
Short Term Loans and Advances 1461.82 2066.70 2314.70 2546.17
Other Current Assets 52.82 97.36 111.96 125.40
F) Sub Total - Current Assets 7242.21 9479.92 10811.58 12184.57
Total Assets (E+F) 9206.20 11601.42 13098.90 14607.12

5. Annual Profit & Loss Statement for the period of 2014A to 2017E
Value(Rs. in.mn) FY14A FY15A FY16E FY17E
Description 12m 12m 12m 12m
Net Sales 9260.96 11081.17 12632.53 14148.44
Other Income 25.32 47.36 53.04 57.28
Total Income 9286.28 11128.53 12685.57 14205.72
Expenditure -8176.58 -9681.71 -11053.47 -12408.18
Operating Profit 1109.70 1446.82 1632.11 1797.54
Interest -349.35 -538.68 -624.87 -699.85
Gross profit 760.35 908.14 1007.24 1097.69
Depreciation -249.28 -307.69 -338.46 -365.54
Exceptional Items -45.96 0.00 0.00 0.00
Profit Before Tax 465.11 600.45 668.78 732.15
Tax -18.88 -65.27 -73.57 -76.88
Profit After Tax 446.23 535.18 595.21 655.28
Minority Interest -26.80 -29.33 -30.50 -28.97
Net Profit 419.43 505.86 564.71 626.30
Equity capital 176.00 202.00 202.00 202.00
Reserves 2547.54 3436.43 4001.14 4627.44
Face value 10.00 10.00 10.00 10.00
EPS 23.83 25.04 27.96 31.01
Quarterly Profit & Loss Statement for the period of 30th Sep, 2014 to 30th June, 2015E
Value(Rs.in.mn) 30-Sep-14 31-Dec-14 31-Mar-15 30-Jun-15E
Description 3m 3m 3m 3m
Net sales 2613.74 2952.40 3307.15 2744.93
Other income 3.08 2.84 39.43 43.37
Total Income 2616.82 2955.24 3346.58 2788.30
Expenditure -2289.72 -2587.02 -2896.82 -2396.33
Operating Profit 327.10 368.22 449.76 391.98
Interest -95.90 -150.38 -172.14 -185.91
Gross profit 231.20 217.84 277.62 206.07
Depreciation -76.81 -86.51 -69.96 -76.26
Profit Before Tax 154.39 131.33 207.66 129.81
Tax -18.62 -18.66 -12.77 -15.06
Profit After Tax 135.77 112.67 194.89 114.75
Minority Interest -6.56 -6.06 -11.14 -8.24
Net Profit 129.21 106.61 183.75 106.51
Equity capital 176.00 176.00 202.00 202.00
Face value 10.00 10.00 10.00 10.00
EPS 7.34 6.06 9.10 5.27

6. Ratio Analysis
Particulars FY14A FY15A FY16E FY17E
EPS (Rs.) 23.83 25.04 27.96 31.01
EBITDA Margin (%) 11.98% 13.06% 12.92% 12.70%
PBT Margin (%) 5.02% 5.42% 5.29% 5.17%
PAT Margin (%) 4.82% 4.83% 4.71% 4.63%
P/E Ratio (x) 6.33 6.03 5.40 4.87
ROE (%) 16.38% 14.71% 14.16% 13.57%
ROCE (%) 19.77% 19.95% 19.60% 19.11%
Debt Equity Ratio 1.52 1.42 1.39 1.34
EV/EBITDA (x) 5.54 5.09 4.86 4.70
Book Value (Rs.) 154.75 180.12 208.08 239.08
P/BV 0.98 0.84 0.73 0.63
Charts

7. OUTLOOK AND CONCLUSION
At the current market price of Rs. 150.90, the stock P/E ratio is at 5.40 x FY16E and 4.87 x FY17E
respectively.
Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs.27.96 and
Rs.31.01 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 20% and 15% over 2014 to 2017E
respectively.
On the basis of EV/EBITDA, the stock trades at 4.86 x for FY16E and 4.70 x for FY17E.
Price to Book Value of the stock is expected to be at 0.73 x and 0.63 x for FY16E and FY17E respectively.
The consolidated performance of the Company shows a growth of 20% which is encouraging. Zicom SaaS
performed exceedingly well with continued flow of orders from Banks for ATM Surveillance and Housing
Societies under Make Your City Safe. On standalone basis also the Company showed 19% growth in topline and
39% growth in bottomline. During the Financial Year the Company has received first pilot order for iris
technology based biometric reader for PDS Distribution Scheme of Andhra Pradesh Government. The company
expects this business to grow in current year keeping in mind Government desire to implement various financial
inclusive Schemes. Hence, we recommend ‘BUY’ in this particular scrip with a target price of Rs.175.00 for
Medium to Long term investment.

8. INDUSTRY OVERVIEW
The market for Security and Safety in India is estimated at about Rs. 17,500 crores, and is fast growing at a CAGR
of around 25% p.a. As such it is found to be quite attractive for new entrants. Analysis of the total Indian Security
and Safety market shows that about 75% of it is shared between Electronic Security Solution Markets and Fire
Protection Markets, with the former having greater share of 45% i.e. above Rs. 7,500 crore and the balance being
contributed by the later. Remaining about 25% of the market share is divided between various other security
components. Closed Circuit Television (CCTV) and Access Control Systems, both jointly forming parts of
Surveillance Systems shares about 85% of the Electronic Security Solution Market, followed by 4% share of the
Intrusion Detection and Door Intercom Systems jointly. All other segments share about balance 11%.
Off late the Indian market for Electronic Security, Safety and Solutions has witnessed major transformation. In
the beginning, it was crowded by numerous small players, who used to import, trade and to some extent install,
mainly cheap sub-standard systems and equipments. This was partly attributable to the psychology of Indian
consumers, who are highly price sensitive than quality sensitive.
However, various factors like the entry of MNCs, FIIs, major development in infrastructure and public utilities,
airports, metros, foreign and private sector banks, ATMs, Retail chain stores, large scale government and
infrastructure projects have changed the scenario substantially. Large scale and corporate customers are more
quality conscious and fewer prices sensitive. This led to rapid growth in Indian Electronic Security market with
change in focus now to meet global standards. This is a welcome development as it will help to curtail stiff
competition from the players in unorganized sector dealing mainly in sub-standard systems and equipments.
In the past few years, Indian Electronic Security market has shown a remarkable growth. The Indian industry is
driven by sustained threat perception and infrastructure investment by private and public sector. The demand
for Electronic Security products are highly price elastic with little product differentiation. The demand of
Electronic Security system is expected to rise on account of cost cutting initiatives by companies, as they proceed
to replace the traditional security and invest in technology. Introduction of “Safe City” concept across States to
address security concerns in India is expected to be a game changer. Larger chunk of business from Government
authorities, and extended local presence is expected to drive success of key players.
Electronic Security market will continue to grow at 25% CAGR (2012-17). Key sectors driving growth of
Electronic Security market in India are robust growth in infrastructure projects like airports, public transport,
city traffic surveillance, etc.; revival in real estate and construction activities leading to creation of new offices,
shopping and residential complexes, etc.; banking and financial sector resorting more and more to Electronic
Security protection by installation of video surveillance at branches and ATMs; installation of video surveillance
and access controls at factories, leading retail outlets, eateries, colleges and school campuses across India, etc.

9. Growth in retail, banking and SMEs will fuel the growth for Electronics Security Services on account of the high
adoption rate among corporates. India has around 35 million SMEs, ranging from small mom-and-pop outfits, to
small companies with 500 employees and medium-sized ones with 2,000 employees creating a large market for
Electronic Security as a Service (e-SaaS) for Enterprises. Organised retail is expected to grow at a CAGR of 25%
p.a. from 2012–17. In addition, there exists a large replacement market wherein corporate prefer to migrate to a
service provider who provides equipment and manages the service.
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it is accurate or complete and it should not be relied on as such. Firstcall Research or any of its affiliates shall not be
in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. Firstcall Research and/ or its affiliates and/or employees will not be liable for
the recipients’ investment decision based on this document.

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