Listed Microcap- Frog Cellsat- Opportunity

I am holding this and was a bit concerned after the CEO left, some notes from latest concall on 16th May. I see they have got some new orders so will keep it for now.

Revenue and Financial Performance

• Frog Cellsat Limited (FCL) reported a 16.7% revenue growth in FY24, reaching INR 1,577.33 Mn compared to INR 1,351.89 Mn in FY23.

• Adjusted EBITDA stood at INR 218.53 Mn with a margin of 13.85%, while PAT was INR 155.19 Mn with a margin of 9.84%.

Operational Highlights

• FCL moved to a new state-of-the-art facility in Noida, centralizing and streamlining operations.

• Notable achievements in Q4 FY24 include welcoming new customers, concluding trials for interference mitigation systems, and adding seven new products to the portfolio.

• The company secured orders from key partners, resulting in a robust order book position of INR 610 Mn as of March 31, 2024.

Growth Opportunities and Strategies

• FCL sees a bright future with the industry undergoing a major CAPEX uptake and aims to contribute through its innovative products.

• The company plans to invest in a Surface Mount Technology (SMT) line for PCB assembly, diversifying into Manufacturing-as-a-Service beyond just telecom.

• FCL is entering the EMS (Electronic Manufacturing Services) industry with PCB assembly, but it will be an add-on business with lower margins compared to their current business.

• The company is looking at new initiatives like interference mitigation solutions and EMS services to reach the long-term revenue guidance of INR 500 crores in four years.

Key Customers and Market Share

• Approximately 70% of the company’s revenues come from mobile operators, with Airtel being the biggest customer in the telecom sector, followed by Tejas and Jio.

• Frog Cellsat Ltd estimates its industry share from the products it manufactures to be around 10% of the total $5 billion opportunity.

Management Changes and Recent Developments

• The outgoing CEO, Pankaj Gandhi, has left the company, and Konark Trivedi has taken over as the CEO again until a replacement is found.

• The recent substantial trading volumes in the stock market are likely due to investors picking up on the company’s growth potential from various initiatives and investments.

Product Development and Expansion

• Frog Cellsat Ltd introduced smart repeaters for smart meters, targeting areas with poor mobile signal, expanding their product offerings.

• The company expects substantial growth in the new products segment, particularly in smart repeaters for smart meters.

Order Book and Execution

• The company’s order book remains consistent at around INR 61 crores, with a steady execution timeline.

• Frog Cellsat Ltd expects to add to its deal pipeline as it executes the current order book.

• The company’s order book stood at INR 61 crores at the beginning of the year and continues to grow weekly.

Competitors

• The company’s competitors in the telecom industry include PROSE Technologies, HUBER & SUHNER, and RV Telecom.