Hope you are doing well.
Recently, I came across a stock by the name of D Link India. I think even you might be aware of the brand as it's a leading wi-fi router seller in India.
While going through the details, I was pleasantly surprised by the performance as the company has been performing well over the past few years and is cash rich.
Below, we have shared notes from the Jun'22 CRISIL credit report of the company. Hope you find the details useful in your search of investment opportunities.
Before that, a few days back we released our New Stock Recommendation for Alpha and Alpha + Members
It's a minerals processing company, largest in its segment, has captive raw material sources, grown PAT by ~300% in the last few years, de-leveraging balance sheet, 2nd generation promoters and available at around ~7 times post-tax earnings
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D Link India - Notes from Jun'22 CRISIL credit rating report
- About - Incorporated in 2008, D-Link is a step-down subsidiary of D-Link Corporation. The company markets networking products of the parent and procures from third-party vendors
- D-Link is the market leader in switches and wireless local area network (WLAN) products, with a significant market share
- The product profile comprises network switches, wireless local area networks, routers, modems, storage devices, copper and fibre cables and cameras. In 2010, D-Link began marketing structured cabling products procured from third-party vendors
- In fiscal 2019, the company introduced a series of high-end products for its enterprise business, including unmanaged long-term Power over Ethernet (PoE)/PoE plus switches; new generation layer 3 stackable managed switches with advance hardware and software enhancements for better performance, flexibility and ease of management; and industrial grade switches
- D-Link mainly operates in the home and small and medium enterprise segments of the networking industry, where profitability is lower than that in the institutional sales segment.
- The latter is dominated by Cisco India and other new entrants in the industry. Profitability in the retail segment is constrained by intense competition and commoditized products
- About parent company - D-Link Corporation, founded in 1986, is a multinational company that designs, markets and manufactures networking equipment and has presence across over 100 countries
- Performance - The operating performance of D-Link improved, as reflected in 26% revenue growth in fiscal 2022 compared with the previous fiscal, backed by pent-up demand for information technology hardware products following the Covid-19 pandemic. The company benefitted from opening of commercial offices and easing logistics
- D-Link maintains a healthy liquidity position, as reflected in cash and equivalents of Rs 135 crore as on March 31, 2022
- The company’s revenue is expected to grow steadily at 10% per annum, with the operating margin remaining stable at ~6% over the medium term
- The company continues to face challenges related raw material supply and pricing pressure on account of global chip shortage, exacerbated by geopolitical issues between China and Taiwan as well as the Russia-Ukraine war
- Copper, the key input for manufacturing cables, is an open market commodity traded globally on exchanges, leading to volatility in its prices
- Fluctuations in currency also impact profitability, as the company imports about 30% of its traded products
- D-Link hedges currency exposure up to 70% of the total exposure by entering into forward contracts
- Complete and immediate passing on of cost increases is difficult given the competitive pressure—the company experiences a lag of 45-60 days in passing on price hikes
Disclaimer: This is not a recommendation to buy/sell D Link India. The securities quoted are for illustration only and are not recommendatory.
SEBI Research Analyst Registration No. INH100001690
Research Analyst Details
Name: Ekansh Mittal Email Id: [email protected] Ph: +91 727 5050062
Details of Associate: Not Applicable
Analyst Certification: The Analyst certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.
Address - 7, Panch Ratan, 7/128, Swaroop Nagar, Kanpur - 208002, Contact No. - +91-7275050062
Compliance Officer - Mr. Ekansh Mittal, +91-9818866676, ekansh@
Grievance Redressal - Mittal Consulting, grievances@
“Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors”.
“Investment in securities market are subject to market risks. Read all the related documents carefully before investing.”
The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision
This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Ekansh Mittal/Mittal Consulting/Katalyst Wealth is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Ekansh Mittal or any of its affiliates or employees 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. Neither Ekansh Mittal, nor its employees, agents nor representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. Ekansh Mittal/Mittal Consulting or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement.
The recipients of this report should rely on their own investigations. Ekansh Mittal/Mittal Consulting and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in this report. Mittal Consulting has incorporated adequate disclosures in this document. This should, however, not be treated as endorsement of the views expressed in the report.
We submit that no material disciplinary action has been taken on Ekansh Mittal by any regulatory authority impacting Equity Research Analysis.
Disclaimer: You can access it here - LINK
Whether the research analyst or research entity or his associate or his relative has any financial interest in the subject company/companies and the nature of such financial interest – No
Whether the research analyst or research entity or his associates or his relatives have actual/beneficial ownership of 1% or more securities of the subject company (at the end of the month immediately preceding the date of publication of the research report or date of the public appearance) – No
Whether the research analyst or research entity or his associate or his relative has any other material conflict of interest at the time of publication of the research report or at the time of public appearance – No
Whether it or its associates have received any compensation from the subject company in the past twelve months – No
Whether it or its associates have managed or co-managed public offering of securities for the subject company in the past 12 months – No
Whether it or its associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No
Whether it or its associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No
Whether the subject company is or was a client during twelve months preceding the date of distribution of the research report and the types of services provided – No
Whether the research analyst has served as an officer, director or employee of the subject company – No
Whether the research analyst or research entity has been engaged in market making activity for the subject company – No