Logix Microsystem (LGXM IN, CMP INR 206, MCap INR 1.76 bn, Not Rated)
We met the management of Logix Microsystem recently. Key takeaways are:
Background
Established in 1993 as a software services firm, Logix Microsystems has transformed itself into a niche software solutions company with 86% of its 9MFY07 revenues coming from products under the Izmocars brand name. Its three business verticals include:
Software distribution and professional services together contributed ~25% and ~14% of total revenues in FY06 and 9MFY07 respectively. The company has consciously de-focused itself from these low margin businesses.
The company initiated Izmocars in 2002 offering custom designed websites, lead generation tools, customer communication & response tracking solutions, and online marketing tools to automotive dealers and OEMs across the US. The company has significantly expanded its client base of 12 dealers in its first year of operations to 600 dealers at present. The management aims to empanel 3000 dealers, i.e. 11% of total auto dealers in the US, with itself by end of FY08. Average revenue has increased from USD 6,000 per dealer in FY05 to USD 9,000 currently. This 50% increase in average revenue per dealer can be attributed to auxiliary products like Rainmaker (online marketing tool aimed at increasing traffic to the dealer's web sites) offered to its dealers. Products offered under Izmocars are as under:
Acquisitions
Financials & outlook
|
FY07 |
FY08 |
Sales (INR mn) |
330 |
600 |
Net Profit (INR mn) |
100 |
180 |