Bartronics India Ltd: A Leading Provider of Identification and Data Capture Solutions

What do they do?

Bartronics started by offering barcode-based solutions and has become a leader in India for various AIDC technologies. They can create and use tools like:

• Barcodes: You’ve probably seen these on products at the store. They allow for quick scanning and identification.
• Biometrics: This uses physical features like fingerprints or facial recognition for security purposes.
• RFID (Radio Frequency Identification): These are tiny chips that can be attached to items and tracked wirelessly.
• Smart Cards: These are secure cards with embedded chips that can hold information and be used for various purposes.

Their Services

Bartronics offers a wide range of services in different sectors using these technologies

Internet of Things (IoT): This refers to connecting devices to the internet. Bartronics offers IoT solutions for various purposes, like tracking employees’ attendance, controlling access to buildings, or managing assets.

Government Services: Bartronics helps the government run programs more smoothly. They are involved in programs related to healthcare which is Rashtriya Swasthya Bima Yojna and food distribution [EPDS]

Banking: They help banks with projects like including more people in the financial system and setting up authorised agents to offer basic banking services.

Restructuring:

Bartronics has undergone some changes recently. They faced financial challenges and went through a restructuring process in 2019. Bartronics India, the company listed on both the Bombay Stock Exchange (BSE) and National Stock Exchange of India (NSE), underwent a resolution process under the Insolvency and Bankruptcy Code (IBC) in 2023. Kinex India Private Limited emerged as the successful resolution applicant and acquired Bartronics India in May 2023. Following the acquisition, Kinex India restructured Bartronics India’s operations and ensured its financial stability.

Financial Snapshot: [Last year]

• Compounded Profit growth: 108%
• Stock Price CAGR: 69%
• Return on Equity: 8%
• Borrowings: 0
• Assets: 29.74 cr.

Current Scenario:

• Kinex India sells 4.43% stake in Bartronics via an Offer for Sale (OFS), which received a full subscription, indicating strong investor interest in Bartronics India.
• A major positive is Bartronics’ debt-free status. In March’22 they had debt of 1155 cr.
• In March’23 there ROCE is -0.30% while in March’24 it is 3.74%
• Debtor Days reduced to 3.36 from 15.73 days.
• Promoters’ Holding also increased to 90% in March’24.

Recommendations:

• Strong historical performance with 108% compounded profit growth and 69% CAGR in stock price.
• Return on equity of 8% indicates efficient use of shareholder capital.
• Debt-free company, is a major positive, which indicates less liability.
• The recent OFS for Bartronics received full subscription, indicating strong investor interest in the company.
• Bartronics’ turnaround is impressive, with ROCE turning positive from -0.30% to 3.74% in a year.
• Improved working capital management is evident by the significant reduction in debtor days.
• Increased promoter holding to 90% demonstrates confidence in the company’s future.

Investment Recommendation:

Considering Bartronics’ positive turnaround, the company appears to be on a good growth trajectory. The debt-free status, improved profitability, working capital management, and increased promoter holding further strengthen the investment case.

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