He isn't the only dreamer out there....
From SeethruEquity....
HydroPhi Technologies Group, Inc.
(OTCQB: HPTG, Target Price: $0.26)
We initiate coverage on HydroPhi Technologies Group, Inc. (“HPTG”) with a
price target of $0.26 per share. Founded in 2008, HydroPhi Technologies is
a developer of water-based, clean energy technology that delivers improved
fuel economy and reduced greenhouse gas emissions. The Company’s
technology is not a fuel cell although it employs fuel cell technology in the
HydroPlant system. The system utilizes distilled water for the production of
hydrogen and oxygen, which is then injected into the air intake of an engine
utilizing carbon-based fuels such as diesel, unleaded gasoline and natural
gas to provide fuel savings and reduced greenhouse gases. HPTG’s
flagship technology, (HydroPlant™) reduces vehicle operating costs by
improved fuel efficiency ranging from 12% to over 28%, while lowering
greenhouse gas emissions up to 60%. It provides fuel efficiency to a broad
spectrum of users, including logistics, trucking, marine and agriculture.
INVESTMENT HIGHLIGHTS
Growing demand for clean energy technology driven by high fuel cost
and global emission regulations
The adoption of clean energy technology in the functioning of internal
combustion engines will witness rapid implementation in coming years
driven primarily by the need to contain high fuel cost through improved fuel
efficiency and complying with global emission regulation which is getting
increasingly restrictitive across the globe. HPTG’s flagship technology,
HydroPlant™ can deliver 12% to over 28% fuel economy as well as 60%
lower greenhouse gas emissions. We believe in coming years HPTG’s
disruptive technology to get widespread acceptability due to its compelling
value proposition for users. To illustrate the carbon reduction potential of
HydroPlant™ technology, it is estimated that if the 240 million registered
vehicles in the U.S. were retro-fitted with HydroPlant™, net carbon
emissions could be reduced 183 MT-C/yr (million tons of carbon per year),
assuming an average of 5.1 MT-C/yr for light-passenger vehicles.
Large addressable diesel engine market across US, Europe and Asia
Logistics-based diesel engine market across Mexico, South and Central
America, Europe and Asia is grappling with the pressures of improving fuel
efficiency and the need to carefully control carbon emissions. HPTG
believes diesel engine used in transportation to be the single largest market
where it can capitalize in penetrating its HydroPlant™ technology in near
future. HydroPhi Technologies seeks to establish a presence in the
estimated $1.2 trillion domestic and international transportation logistics
market. The Company believes that its technology can generate 14-24% of
fuel savings in Class 8 trucks and 20-35% fuel savings in class 5-7 trucks.
The compelling value proposition offered by HPTG’s technology has the
potential to get the attention of various logistics players for its use in their
diesel engines.
Aggressive strategy for distribution of technology in US and Europe
The primary market for the Hydro Phi products initially will be the
transportation industry in Mexico and Europe, with a primary focus on the
trucking and buses. HPTG has envisaged a near term plan through which it
wants to integrate its technology in the class 8 engines of heavy duty trucks
operational in the U.S. and Europe. Considering the fact that there are 6mn
heavy duty trucks operational in the US and Europe, the potential for HPTG
to penetrate its disruptive technology across these markets is significant.
Initiate coverage with a price target of $0.26
Our analysis indicates a fair value estimate of $0.26 per share (detailed on
page 9), implying an upside of nearly 2,500% from the recent price of
$0.01. We view HydroPhi Technologies as a high-risk/high-reward
investment in the Technology / Clean Energy space
Stock Details (10/28/2014)
OTCQB: HPTG
Sector / Industry Technology / Clean Energy
Price target $0.26
Recent share price $0.01
Shares o/s (mn) 103.1
Market cap (in $mn) $ 1.0
52-week high/low $0.88 / 0.01
Source: Bloomberg, SeeThruEquity Research
Key Financials ($mn unless specified)
FY16E FY17E FY18E
Revenues 1.7 2.9 4.1
EBITDA (0.7) 0.2 1.0
EBIT (0.7) 0.2 1.0
Net income (0.9) 0.0 0.9
EPS ($) (0.01) 0.00 0.01
Source: SeeThruEquity Research
Key Ratios
FY16E FY17E FY18E
Gross margin (%) NA NA NA
Operating margin (%) (43.1) 7.8 25.2
EBITDA margin (%) (43.1) 7.8 25.2
Net margin (%) (53.7) 1.5 20.7
P/Revenue (x) 0.6 0.4 0.3
EV/EBITDA (x) (2.3) 7.6 1.7
EV/Revenue (x) 1.00 0.59 0.42
Source: SeeThruEquity Research
Share Price Performance ($, LTM)
Source: Bloo
Market Data 
Markets 
