TVS Electronics Ltd (www.tvse.com ), has been promoted by Sundaram Clayton (part of the TVS group) and is the largest manufacturer of computer peripherals in India.

Equity [Face Value per share of Rs.10]: Rs.17.67 crores

Debt: Rs.88.60 crores

Market Cap:  Rs.77.74 crores [@ current price of Rs.44]

Enterprise Value = Market Cap + Debt = Rs.166.34 crores

Promoter Holding: 59.72 %

Key Business Highlights:

 1] TVSE’s product range includes the following:

 

   a) Dot Matrix Printer which include transaction, banking, financial, business & Indian language printers. The company had a market share in India of around 41% in value terms last year. The company was last year ranked No.2 in Asia by Gartner in this business.

 

  b) Thermal Printer specifically suited for printing POS receipts, tickets, barcodes and labels.

 

  c) Key boards: The company’s mechanical key boards hold a dominant market share and enjoy brand preference by customers in India.

 

  d) Point of Sale terminals

 

  e) Payment systems: TVSE, through a tie up with Verifone, USA provides Credit Authorization Terminal hardware, software & value added services.

 

  f) Consumable which include ribbons & print heads.

 

2] Last month,TVSE has sold its Contract Manufacturing services business to Incap Corporation of Finland for Rs.41 crores and also is in the process of transfering the Contract Customer support services business to a wholly owned subsidiary.

3] The company’s board has recently proposed a resolution authorizing an increase in share capital from Rs.20 crores to Rs.25 crores and an issue and allotments of 36 lakhs warrants convertible into an equal number of shares at a price of Rs.48.50 per share.

4] Last year, TVSE transferred its unutilized property at Nandabakkam in Chennai to its wholly owned subsidiary Sravanaa Properties Ltd for Rs.45 crores with a purpose to develop the same into an IT park  . This property is spread over 6 acres.

5] TVSE has a 35% stake in Modular Infotech Ltd (www.modular-infotech ) which it bought 6 years back at around Rs.2.30 crores. Modular Infotech has pioneered in developing the largest library of Indian fonts in the world of over 2700 fonts for 10 Indian languages besides Arabic, Sinhala, Russian & Sindhi.It has 3 software products with a combined user base of over 2 lakh users in India & abroad.Shree-Lipi is one of its well known products. 

6] TVSE also owns a 35.84% stake in TVS Finance and Services, which although currently a loss making company is one of the largest 2-wheeler finance company’s in the southern Indian market.

Future prospects:

The sustained growth in PC products & introduction of VAT which has given a tremendous boost to the printing business, as the need for more invoice and bill printing will drive the demand for Dot Matrix printers are major positives. Large scale automation in Government departments as also implementation of core banking solutions (CBS) by banks is expected to provide a significant boost to the printer demand.

Valuation:

The markets have not taken too kindly to the wafer thin margins that TVSE manages and the TVSE stock has been a huge underperformer on the bourses. Point to be however noted is that inspite of its very low margins and commoditised kind of business,the market has always given a very high average PE ( 30-40) to the company . This indicates that any change in its operating margins, can lead to a large price expansion.

AT one point a few years back the chat man was strongly recommending TVSE. Company has done nothing since those days of 2001.

I guess this has been a market underperformer for years !! (pls correct me if I am wrong ) and competitors like HP are superb in quality (not sure if HP also has dot matrix printer !!) ,nobody except old govt offices probably use dot matrix technology and printer...

Edited by India_Bull - 14/Aug/2007 at 1:46am