The growth in automation of private and public sector banks has set the banking automation division rolling. Aplab is also engaged in the area of fuel dispensing terminals used at pump stations. The management says that during FY 07 it will introduce Multi product dispensers (MPDs) and turn key solution products for Retail Outlet Automation. 
 
The company’s profitability is adversely affected on account of increasing prices of fuel, electricity and metals like Copper, Steel and Aluminum. The management hopes to counter this by reducing the working capital requirements.

During Fy 06 there was an expansion in operating margin by 180 bps to 11.42% from 9.62%. Over the last four years the company has maintained a compounded annual growth rate of 18.5% During this period all the five ratios Net Profit margin, Gross Profit margin, Operating margins, RoCE and RoE have shown significant improvement. The company’s EPS increase in this four year period has not reflected in the price but its PE has declined. The financials appear to be very robust and a few noteworthy points are:

1)      The growth in ATM’s is going to take India  by storm. Whether it is the PSU bank or the http://www.theequitydesk.com/forum/forum_posts.asp?TID=247 - emerging retail bank.  everyone would like to put up an ATM machine across the length and breadth of the country.

2)      The four year growth rate at 18.5% annualized appeared very low to me. My sense is that ATM’s would have grown at more then that. The company is not a pure ATM manufacturer and that is why the slower growth rate. Over the next few years the petrol pump business should also grow leading to higher rates of growth for the company.

3)      The net profit margin at 4.54% is low  this margin has nevertheless grown 11 times in the last 4 years.

The company is run by Mr. P.S. Deodhar a scientist He is the only non-American recipient of the IEEE Award the "Engineering Manager of the Year" in 1990.

The company looks interesting.