Geodesic: How big can “Mundu” become?

 

Geodesic (CMP Rs 180) is a technology products company. Its recently launched product “Mundu” is focused on how people communicate and interact with each other through the web and mobile phones. The company has grown 100% y-o-y since inception in 1999. Geodesic has under its umbrella brought out some very interesting products under the ‘Mundu’ platform.

 

While the company has been operating under a number of verticals their latest product “Mundu” draws attention. Mundu is Geodesic's instant messaging solution. The advantages of this platform (as I could make it) are that it combines AIM, Google Talk, ICQ, MSN, Mundu. All these platforms are interconnected through Internet, desktops, wireless devices and platforms including Windows mobile, Symbian, Palm, Linux and Blackberry. 

CMP	Rs 180
Market Capitalization	Rs 1059 crores
Revenues Fy 06	Rs 92.19 crores
EPS Fy 06	Rs 7.04
RoE	32.46%

 

The company has a history of growing its revenues 100% for the past several years. The operating margins have expanded to 62.73% in 2006 from 46.91% in 2002. In the current year the company should do a revenue of close to Rs 175 crores and report an EPS of Rs 12 per share.

 

The Company successfully launched Mundu Speak (Beta version).  Mundu Speak allows users to make and receive unlimited phone calls to other Mundu users anywhere in the world over the data service on GPRS, EDGE or Wi-Fi connectivity. The company shall charge a fixed monthly rental for this facility. The revenue model is flexible and includes combination of one-time license fee for IPR, customization fee, usage fee (per user per month, per operator per hour etc), supports and upgradation charges.

 

Geodesic plans to grow by increasing the usage of Mundu in various verticals. In this connection the company has made strategic acquisitions like Clangula (to understand work flow in corporate), PicoPeta Simputers (for application on Simputer) and Engage Solutions (for application in CRM area).

 

An The EIM market will grow at 30% CAGR from US $220m in 2004 to $624m in 2008.This is as per the IDC report published in 2004.

 

The Radicati Group’s research, estimates that the number of instant messaging accounts in use by end of 2005 was 867 million  and should grow to ~1.2bn by 2009. The total number of mobile phone users are estimated to grow from 1.4bn in 2004 to 2bn in 2007. It is estimated that there were 200m PDA users in 2005. These PDA users would be the target customers for Mundu in this segment (estimated market size of ~US $2.6bn).

 

The other big players in the instant messaging space are Yahoo, AOL (AOL+ICQ) and MSN.

 

The company recently launched Mundu Radio which offers free access to unlimited music or broadcast content of choice to its users from any part of the world on their mobile devices. Mundu Radio operates on mobile phones with internet connection (GPRS - CDMA and GSM) and there is no need to carry any other device for this service.

 

The company is excited with the Mundu Speak launch and has planned a series of innovative marketing exercises during fiscal 2007 to make the product a great success. The company will continue to launch a series of new hardware and software solutions in key focus areas during fiscal 2007. 

 
The company was awarded the prestigious Red Herring World Small Cap 100 award that recognizes technology innovation amongst other criterion. The company was also recognized as one of the Fast 500' companies in Asia Pacific for the third consecutive year by Deloitte, Touche and Tohomatsu. 

The management is able and quite competent. One of the better known VC’s in India holds over 1% stake in this company.

 

Conclusion: Being a technology company I am unable to understand the intricacies of the business model but going by an over all feeling that I got when I talked to some of the software experts this company should make it very big and if this product is able to roll out the way the company expects it to the stock should certainly do no less. Over all it is compelling investment at this price.

 

PS: Members who can understand this business model are requested to provide further views on this company.The website www.mundu.com states that India times got over 6 million downloads of this messenger service.

I share the same feeling. Did get a chance to find out that Mundu Radio is free right now but they could monetise it very soon. Our tech members could provide further information on this one.

Dear Sir,

I bought this stock ( small quantity in last year). I am not still able to understand what they actually do. They are very very poor in providing information to the share holders. There website is rarely updated. One more thing, they are constantly liquidating there holdings in the market, so though they are showing 100% topline growth bottomline is not improving at the same pace.

I may be wrong but frankly speaking i am still not able to understand their  revenue model, how they make money. its a hazy picture( in my eyes).Mundu can be big, but how big its not clear to me. So i logged off from the counter.

Yes RJ have sold his holdings but i believe Prof mankekar still holds his holdings.

thanks

Hi Basantjee

Edited by chic_1978 - 17/Oct/2006 at 6:05pm