Kernex Microsystems - BUY

Sector : Computers-Software Medium & Small

BSE/NSE: KERNEX
CMP (Rs): 75.40

Company Info:

• Kernex Microsystems India Ltd was incorporated on September 16, 1991 as a private limited company.
• The company was registered as 100% Export Oriented Unit with Software Technology Parks of India, Department of Electronics, Govt. of India, New Delhi.
• The company is engaged in the Manufacture and sale of Safety Systems like Anti-Collision Devices for Railways and Software Services.
• ISO 9001:2000 certified company with expertise in Software, Hardware development and Systems Integration.
• The company holds exclusive license for manufacturing, installation, commissioning and maintenance of anti-collision systems in India.
• The company is also an outsourced facility for the Konkan Railways Corporation Ltd for manufacture and supply of ACDs and related accessories. They are also a technology partner for the development and implementation of ADDs for Metro Sky-Bus Urban Transportation System, Advanced Railway Signal Systems and other safety systems. They hold the exclusive marketing rights of ACD systems all over the world except India.

Unique Selling Proposition (USP):
The company has expertise but had to wait for the right opportunity.
For years, the Railways has been a sector under government control. Very less efforts are made towards improving & modernising it.
With the onset of new regime in India and serious focus on Railway modernisation, a new dawn is setting for the companies into this segment.

Kernex is not a new player. It has worked with Konkan Railways ACD projects. So will definitely get a major share of the bigger pie.

Govt's initiative for introduction of enhanced versions of train like 'Bullet train' and 'Sky bus' will certainly create newer market for the company.

Financial performance:
Looking at new market opportunities and renewed HOPE of modernisation of Railways, company's poor financials in last 3-4 years should not be a real matter of concern.
Kernex's book value is Rs.102 which is almost 1.5 times of its current market price.

Target:
The company share may reach upto Rs.120 in a time horizon of 1 to 1.5 yrs.
For short term investors, expect the stock to reach upto Rs.90-95 post presentation of Railway Budget in Jul-14.