Investment in Companies with Unique Business Models

It has been often observed in the market that companies that are in a unique business perform very well in the market in the long-run. These companies show a strong growth both in their toplines and bottomlines since they are a niche player in the market. Consequently, the stocks of such companies give handsome returns & their valuation commands a scarcity premium. These types of companies have characteristics like they have a first mover advantage or a technological edge over others etc. Therefore, investment in these types of companies proves to be a prudent investment. There are a few companies that have a unique business models. They are:

1. Nitin Fire Protection: It is a leading player in fire protection, safety, security and intelligent building management systems. It has interests in high pressure cylinders, fire extinguishers and fuel dispensers. The company has been in an expansion mode as the demand for each of its products is growing tremendously.

2. Everest Kanto Cylinders: It is Asia's leading manufacturer of high pressure seamless industrial/CNG cylinders and cascades with major share of domestic market and sizeable exports. The company has international presence with factories in Dubai and a plant in China. The global demand for CNG applications is set to increase on the back of a firm oil-price outlook. This is likely to benefit the company which derives about 68 per cent of its revenues from the CNG segment. Catering to demand from countries such as Malaysia, Thailand, Gulf countries and CIS nations, EKC appears well placed to tap the growth potential in the CNG space in overseas markets since it has the necessary approvals from its target countries. Interestingly, demand from the domestic market may also increase with the Supreme Court mandating the use of CNG as auto fuel for heavy vehicles in 28 highly polluted cities. The proposed extension of City Gas Distribution projects may offer an opportunity for growth.

3. Educomp Solutions: This is one of the rare educational content creation & delivery players in the market. The company has a strong order book for its online education solutions. During FY07, it signed on 2,819 Govt. schools as compared to 613 a year earlier. During the first quarter of FY08, it added 2,800 more schools. With such a high-paced client acquisition and low capital expenditure, company’s profitability is likely to leap frog this year.

4. GMR Infrastructure: It is a diversified infrastructure player across sectors such as power, roads and airports. After getting Hyderabad and New Delhi airports, the company has recently won contract to develop one at Istanbul, Turkey. It has strong operational partnerships with Malaysia Airports, Germany’s Fraport AG and Turkey’s Limak for its airport foray. Airport projects are usually high return business. So the company is likely to benefit.

5. Mic Electronics: It is one of the few players globally. It is in the light emitting diode (LED) business which a very few competitors across the world and the only listed player in India. Mic Electronics is aiming at a huge market of LED lighting for billboards and video walls for advertising, signaling systems and industrial lighting. Therefore this one holds lot of promise.

6. Bartronics: It has a first-mover advantage in the radio frequency identification (RFID) solutions & smart cards markets. The company is the largest smart card maker in India and it also provides a range of solutions comprising of the hardware and software required to automate inventory management and tracking for its various types of clients, which include retail chains, warehouses, manufacturing companies etc. Moreover, the company has reported very strong numbers year after year and maintained high profitability.