Sarine’s FY13 results were in line. On a recurring basis, net profit rose 28% yoy. After factoring in the non-recurring income tax expense, net profit growth was still a respectable 15% yoy. Revenue growth was driven by the accelerated Galaxy penetration and usage during the year. Sarine delivered 15 Galaxy units in 4Q13 and a total 46 in FY13. There were 140 cumulative installed bases at end-FY13. A final DPS of 2.0 UScts was declared.
Another busy year ahead
The economic conditions in India, Sarine’s key market (77% of sales in FY13), appear more positive in FY14 as the Indian rupee has stabilised against the US dollar and the credit shortage has eased. Sarine’s Galaxy system remains the leading established product as its rivals struggle to demonstrate the reliability of their competing systems. Based on indicative customer queries, Sarine expects to accelerate the delivery of its Galaxy systems.
Maintain Add rating as another growth chapter unfolds for Sarine, likely driven by the new Sarine Light and Sarine Loupe products. The products may make stronger FY15 sales contributions as they adopt the recurring usage charge model. There will also be a significant software upgrade for Sarine’s products in FY14. Sarine is carrying out R&D efforts to create a platform for the efficient trading of polished diamonds and extending its product scope to cater to manufacturers of semi-precious gemstones. There is more good news for investors as Sarine raises its dividend policy to 2.0 UScts every six months from 1.5 UScts.