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TVSE-The Keyboard to Printing gains.

Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=1047
Printed Date: 20/Apr/2025 at 10:40pm


Topic: TVSE-The Keyboard to Printing gains.
Posted By: jstk
Subject: TVSE-The Keyboard to Printing gains.
Date Posted: 02/Jul/2007 at 5:40pm

TVS Electronics Ltd ( http://www.tvse.com/ - 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 ( http://www.modular-infotech/ - 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.

The company has paid of Rs.18 cr debt from the funds it got from the CMS business sale.

The Nandabakkam , Chennai property development has not started and one gets the feeling that the company may be looking at selling it to a 3rd party instead of developing it itself.
 
if one considers the Management pedigree ,recent initiatives to hive off the contract manufacturing business, value unlocking from development / sale of idle property, leadership in focus businesses & expected growth in the user industries, the stock appears very attractive from the point of patient investors in under valued stocks.
jayendra


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If you buy for a non-value reason, you will end up selling for a non-value reason.


Replies:
Posted By: xbox
Date Posted: 02/Jul/2007 at 5:33am
Good story but thats it!!! Contract manufacturing that to in electronics space is wafer thin margin business. Please avoid such sector.

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Don't bet on pig after all bull & bear in circle.

Posted By: basant
Date Posted: 02/Jul/2007 at 8:16am
AT one point a few years back the chat man was strongly recommending TVSE. Company has done nothing since those days of 2001.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: jstk
Date Posted: 14/Aug/2007 at 12:44pm
 
Notice given by the company to BSE/NSE last evening:
 
TVS Electronics Ltd has informed BSE that the Board of Directors of the Company at its meeting held on August 13, 2007, inter alia, has considered the following proposal for restructuring the Company's businesses and unanimously approved the following transfers of investments as a composite package.

(a) 1,48,40,000 equity shares of Rs 10/- each representing 35.85% of the equity share capital of TVS Finance and Services Ltd at Rs 10/- per share for a total consideration of Rs 14.84 crores to TVS Investments Ltd, the Holding Company of TVS Electronics Ltd.

(a) 50,000 equity shares of Rs 10/- each representing 100% of the equity share capital of TVS-E Servicetec Ltd at Rs 10/- per share aggregating to Rs 0.05 crore to TVS Investment Ltd and the buyer would discharge the amount of Rs 5.50 crores due to the Company by the said TVS-E Servicetec Ltd pursuant to transfer of business.

(c) 50,000 equity shares of Rs 10/- each representing 100% of the equity share capital of Sravanaa Properties Ltd at Rs 10/- per share aggregating to Rs 0.05 crores to TVS Investments Ltd or to any of its wholly-owned subsidiaries and the buyer would discharge the amount of Rs 45.50 crores due to the Company by the said Sravanaa Properties Ltd.

2. The Board of Directors in the same meeting has also unanimously approved the following proposals:

a) Transfer of certain properties of the Company which are considered as non core assets to two separate wholly owned subsidiaries of the Company to be formed for the purpose at a price not less than the book value of the said properties.

b) The promoter Company - TVS Investments Ltd has consented to waive their right to proposed preferential offer of 36,00,000 warrants convertible into equal number of Equity Shares at Rs 48.50 per warrant which was approved by the shareholders of the Company in the Extraordinary General Meeting held on March 28, 2007. Since then, the Company has raised funds through sale of Contract manufacturing Services Business and also proposes to raise further funds through the transfer of the above said investments/assets. The funds that would be available would be sufficient to meet the long term fund requirements of the Company. The Board of Directors therefore, approved the proposal not to give effect to the preferential offer of warrants approved by the Shareholders on March 28, 2007.


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If you buy for a non-value reason, you will end up selling for a non-value reason.

Posted By: India_Bull
Date Posted: 14/Aug/2007 at 1:45am
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...

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India_Bull forever Bull !
www.kapilcomedynights.com

Posted By: basant
Date Posted: 14/Aug/2007 at 9:48am
During 2001-03 when chatlal was a big proponent of this stock. I think RJ also had a stake at that time which he later liquidated.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


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