Pick of the Week

Geodesic Ltd

BSE Code: 503699

CMP: Rs.99.55

Face Value: Rs.2

52-Week High/Low: Rs.158.65/ Rs.38.50

Price/Book: 1.50

P/E: 4.99

EPS: Rs.19.94

Dividend Yield: 1.61%

Introduction: Geodesic Ltd established inthe year 1999, operates in a niche area of developing various innovative products in the information, communication and entertainment space. Geodesic's product t-list is versatile and all-encompassing when it comes to offering choice of communication and collaboration solutions to its users, whether it is the inherently simple hand-held Simputer to web-based mobile & wireless applications to the intricately complex Spyder applications.

Geodesic's mix of innovative products and high performance solutions has driven the company to profit right from its first year. Focusing its inventive capabilities across all aspects of communication and collaboration the company is widely recognized for its pioneering universal instant messaging system.

Geodesic is all set to contribute significantly to the wave of Convergence by launching innovative world class products such as the Geodesic IP phone that operates across different platforms of landlines, mobile phones & desktops/laptops that will work on all prevailing internet connections and will help users save 75-80 % on long distance calls.

Geodesic's talented staff of more than 400 employees ensures innovation, utility and ease of use. The combination of a highly competent team and state-of-the-art tools enhance the development of future-proof, useful business solutions.

Geodesic has offices in UK, Sweden, Mauritius, Germany and Hong Kong. It provides solutions and services to the following segments:

• Enterprise---SMB, BFSI, Large Business, System Integrators, Govt. etc.
• Portals and Publishers
• Handset manufacturers and Telecom Operators
• Retail Business.

Its products include a communication stack (Email/IM/ VOIP/ SMS), Customer Alignment and Relationship management and the entertainment stack including Internet Radio. Geodesic Ltd also builds E-governance solutions based on its GeoAmida (Geodesic’s Hand held Computer).

Shareholding Pattern: The promoters hold 22.74 % while the general public holds 77.26% of the shares of the company.

Shareholding belonging to the category "Public" and holding more than 1% of the Total No.of Shares
Sl. No.	Name of the Shareholder	No. of Shares	Shares as % of Total No. of Shares
1	Sloane Robinson Llp A/C Sr Global (Mauritius Class C -International)	6,941,726	7.53
2	Genesis Indian Investment Company Ltd General Sub Fund	5,636,742	6.11
3	Tree Line Asia Master Fund (Singapore) Pte Ltd	5,576,957	6.05
4	Deutsche Secuririies Mauritius Ltd	3,838,171	4.16
5	Morgan Stanley Investment Management Inc A/C Morgan Stanley India Investment Fund Inc	955,459	1.04
6	Indea Capital PTE Ltd A/C Indea Absolute Return Fund	1,000,000	1.08
7	Carlson Fund Equity - Asian Small Cap	3,050,000	3.31
8	Genesis Asset Managers Llp A/C Smaller Companies Portfolio Of The Genesis Emerging Markets Opportunities Fund Ltd.	2,431,603	2.64
9	Sloane Robinson Llp A/C Sr Global (Mauritius) Ltd (Class B Asia)	2,493,168	2.70
10	College Retirement Equities Fund - Global Equity Account	1,971,502	2.14
11	Banque Degroof Laxembourg Sa A/C Asia Pacific Performance Sicav	1,436,595	1.56
12	Shinsei Uti India Fund (Mauritius) Ltd	1,746,892	1.89
13	Ward Ferry Management Limited A/C Wf Asian Smaller Companies Fund Ltd.	2,457,000	2.66
14	College Retirement Equities Fund - Stock Account	1,312,500	1.42
15	Ward Ferry Management Limited A/C Wf India Reconnaissance Fund Ltd	1,183,000	1.28
16	Fidelity Funds - Pacific Fund	924,441	1.00
17	Payash Securities Pvt Ltd	1,194,727	1.30
	Total	44,150,483	47.88

Financials: Geodesic Ltd reported revenue of Rs.154.4 Cr in Q2FY10, which is flat as compared to the same quarter previous year. It has managed to report a marginal rise in revenues despite revising its licensing prices downwards for the enterprise segment. Geodesic issued fewer licenses of Mundu IM and Radio to the OEM/ODM segment owing to the drop in smart phone shipments.

Its net profit for the 2^nd quarter, FY10 declined by 24% at Rs.57.03 Cr as compared to the quarter ended Sept 30, 2008. The EPS for Q2FY10 came out to be Rs.6.18 as against Rs.8.12 in the same period previous year. Dividend at 40% (Re.0.80 per share) on the face value of equity share is declared by the shareholders in the AGM held on 29-09-09 and paid on 20-10-09.

Triggers:

• Geodesic's mix of innovative products and high performance solutions has driven the company to profit right from its first year. Company was awarded the Inaugural Red Herring Small Cap 100 award and is one of the only Indian companies to be included in the Red Herring Small Cap 100 list. Geodesic is a traded on India's major Stock Exchanges, the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
• The Company is focusing its inventive capabilities across all aspects of communication and collaboration. Their areas of specialty include RDBMS, networking applications, web technologies (including interface designing and Interactivity) and security protocols. Company is widely recognized for its pioneering universal instant messaging system (www.mundu.com). The Mundu products successfully combine AIM, Google Talk, ICQ, MSN, Mundu and Yahoo with deep content collaboration across the Internet, wireless devices and platforms.
• All Geodesic products are complimentary to each other. Each product can be used independently but also seamlessly integrates with all other products. Geodesic customers can begin with a single product that fulfills their requirements and as their requirements change or increase; additional products from the Geodesic suite can easily be incorporated. Geodesic was the first in the world to introduce an 'Information Slider' that changed the way people shared and collaborated information.
• The Mundu SMS launched its International SMS Service in India, Australia, Singapore, Philippines, South Africa, UAE, and UK. Mundu SMS will reach out to more than 100 countries during the financial year.
• It announced plans to launch Filmorbit—a portal dedicated to the India Entertainment and Media industry in India. The portal would use Mundu Entertainment stake as a means to deliver deep interlinked content. Moreover, Mundu Radio has been rated as one of the top 10 popular applications on the Nokia OVI store.
• Forbes Magazine listed Geodesic in the top 200 under a billion companies. The company signed a deal with Entel PCS, Chile’s largest mobile operator to provide windows live instant messaging service to its mobile subscribers.
• A UK based Financial Service Company acting as an exchange for C2C, C2B and B2B multi-currency transaction signed a trial order for the company’s GeoAmida hand held device.
• The company signed deals with Orissa Capital Bank B S C, Bahrain, Business India Group and a major Korean Investment Bank to provide financial service solutions including CRM and integrated communications over web.
• During the last quarter the Chandamama launched interactive children friendly portals in Kannada, Marathi, Telegu, Tamil and Hindi, with a host of features, making browsing exciting and enjoyable for readers.

Valuation and Chart Check:

The Geodesic Ltd’s business model is based on a recurring revenue stream. The nature of the products and the business promotes returning customers and all Geodesic products are created with this model in mind.

The charts however are not giving an immediate buy signal, but the same cannot be denied in the middle of the week. Both the slow and fast oscillators are highly oversold and a bounce can be expected at any time. A bounce from the temporary bottom formed should be used to accumulate. A short term target of Rs.XXXX, cannot be ruled out in the next 3 to 4 months time frame. The medium to long term investors should buy the scrip with a SL of Rs.XX.

Note: The stock was recommended to the Paid Groups (Premium and Quickie) on the last Sunday (8th November, 2009).