ICICIdirect has maintained `Hold` on Opto Circuits with a price target of Rs 309 as against the current market price (CMP) of Rs 268 in its report dated Feb. 08, 2012. The broking house gave the following rationale:
The non-invasive (medical devices and consumables) segment witnessed robust growth of 56% to Rs 4.77 billion on the back of consolidation of Cardiac Science, newly owned tenders and restarted distribution of Powerheart AED in the Japanese market.
During the quarter, Opto Circuits received USFDA approval for wearable Holter cardiac monitor My Sense Heart. The company is planning to launch the device in the US market at the far end of FY12 and also in other geographies in FY13. It will also launch low cost AED in the US market in Q4FY12.
New product launches and tapping new geographies for existing products augurs well for the company to maintain the growth tempo. Commissioning of the Vizag and Malaysian facilities post approval will give further boost to the improved performance. Stretched working capital cycle, however, still remains a drag on the valuation. We expect sales, EBITDA and PAT to grow at a CAGR of 30%, 28% and 19%, respectively, during FY11-13E. We have valued the stock at 11x FY13E EPS of Rs 28.1. We maintain our `Buy` recommendation.
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