KRChoksey Institutional Research is also available on Bloomberg KRCS<GO>, Thomson Reuters, Factset and Capital IQ 26

th
September, 2014

India Equity Institutional Research | Information Technology Management Meet Note


Accelya Kale Solutions Ltd. Rs.705

Outlook for FY15E looks more promising than FY14 BUY

We met Accelyas top management - Mr. Vipul Jain- CEO & MD and
Mr. Gurudas Shenoy- CFO to understand the business prospects
and growth outlook for FY15E. The key takeaways from the meet
are as follows:-

New version of flagship product REVEREA looks promising
The company has launched new version of its flagship product called
REVERA NEXT. The management is confident that new version places the
company relatively in better position in comparison to competitors.
Moreover, they have come out with a solution specially customized for
low-cost carriers, which provides new avenue for growth, going forward.
Currently the company is primarily dependent on traditional airliners for
majority portion of its revenue.

Outlook for FY15E looks better than FY14 on back of new version
launch and healthy deal pipeline
The management expects revenue (in absolute terms) in first and second
quarter of FY15E will be more or less in-line with Q4 FY14 i.e. Rs.73 crore.
However, on positive note, they expect traction to pick up from third
quarter onwards supported by ramp up of recently acquired clients such
as Hawaiian Airlines-the largest carrier in Hawaii, Bangkok Airways, GoAir-
second largest passenger airline in India, Flybe- Europes largest
independent regional airline and Garuda Indonesia. Considering the same,
we expect revenue growth in FY15E to be mid-single digit (in US Dollar
terms) on yoy basis.

Whereas on back of high exit rate and spurt in demand on launch of new
version of its flagship product REVERA, we expect mid-teen revenue
growth in FY16E.

High dividend payout will continue going forward
The management has committed that it will continue to maintain high
dividend payout ratio i.e. ~80% plus. Considering, the companys growth
outlook and capex plan for FY15E, we expect, the company will declare
dividend of at-least Rs.50/ share in FY15E.

Valuation View: -
Considering, the companys leadership position globally in its focus area
i.e. solutions for revenue booking in case of airline industry and high
dividend payout ratio, we believe the company should trade at premium
valuation to mid-tier Indian IT companies. Taking the same into account,
we assign multiple of 12 times its FY16E EPS of Rs.71.9 and recommend
BUY on the stock with price target of Rs.862 per share.

Key Financial (Rs. Crore)
Particulars FY13 FY14 FY15E FY16E
Net Revenue (Rs. in crore) 304 301 316 364
EBITDA Margin (%) 44.3% 40.4% 41.8% 47.5%
Adj. Net profit Margin (%) 27.8% 23.4% 25.5% 29.5%
EPS 56.5 47.2 53.8 71.9
P/E (x) 12.5 14.9 13.1 9.8
EV/EBITDA 7.3 8.2 7.5 5.6
Source: Company data, KRChoksey Research.

Target Price(Rs): 862

Potential upside: 22%


Previous TP : Rs 766
Market Data
Shares outs (Cr) 1.49
EquityCap
(Rs. Cr) 14.93
Mkt Cap (Rs. Cr) 1054
52 Wk H/L (Rs.) 835/541
Face Value (Rs.) 10
Bloomberg Code KALE IN


Market Info:
SENSEX 26,626
NIFTY 7,968

Price Performance
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Accelya Kale Sensex


Share Holding pattern (%)
Particulars Jun-14 Mar-14 chg
Promoters 74.66 74.66 0
FIIs 0.78 0.82 -0.04
DII 0.07 0.02 0.05
Others 25.49 24.50 -0.01
Total 100 100
Source: BSE


Analyst:
Hardik R Shah
hardik.r.shah@krchoksey.com
91-22-6696 5572

www.krchoksey.com
91-22-6696 5555
91-22-6691 9569

Accelya Kale Solutions Ltd.
2 KRChoksey - Institutional Research

Profit And Loss - Consolidated [INR-Crore]
DESCRIPTION Jun 2012 Jun 2013 Jun 2014 Jun 2015E Jun 2016E
Net Sales 219 304 301 316 364
Employee Cost 97 111 121 120 124
Operating Expenses 62 58 59 64 67
Operating Profit (Excl OI) 60 134 122 132 173
EBITDA Margin (in %) 27.6% 44.3% 40.4% 41.8% 47.5%
Other Income 8 5 5 2 3
Forex gain/ (loss) -4 0 0 0
Interest 1 1 0 0 0
Depreciation 8 12 12 14 16
Profit Before Tax 60 123 113 120 160
Provision for Tax 20 39 43 40 53
Profit After Tax 41 84 70 80 107
Minority Interest 0 0 0 0 0
Consolidated Net Profit 41 84 70 80 107
EPS (In Rs) 27.3 56.5 47.2 53.8 71.9


Balance Sheet - Consolidated - [INR-Crore]
DESCRIPTION Jun 2012 Jun 2013 Jun 2014 Jun 2015E Jun 2016E
Share Capital 14.9 14.9 14.9 14.9 14.9
Share Warrants & Out-standings - - - - -
Total Reserves 122.6 87.0 94.6 85.4 103.1
Shareholder's Funds 137.5 101.9 109.5 100.3 118.0
Minority Interest

Secured Loans 0.1 - - - -
Deferred Tax Assets / Liabilities (6.7) (7.9) (5.6) (7.9) (7.9)
Other Long Term Liabilities 1.0 1.5 1.6 2.5 2.5
Long Term Provisions 8.0 12.4 4.6 20.0 20.0
Total Non-Current Liabilities 2.4 6.0 0.7 14.6 14.6
Total Current Liabilities 51.4 114.4 100.4 101.9 101.9
Total Liabilities 191.3 222.3 210.6 216.8 234.6
Gross Block 131.7 142.8 160.7 168.7 176.7
Less: Accumulated Depreciation 63.0 68.4 80.6 94.3 110.0
Net Block 68.7 74.4 80.1 74.4 66.7
Capital Work in Progress 2.8 - - - -
Intangible assets under development - 1.9 - - -
Long Term Loans & Advances 7.4 10.9 10.8 11.9 13.1
Other Non Current Assets 0.3 0.2 0.1 0.2 0.2
Current Assets Loans & Advances

Currents Investments 37.6 34.2 35.0 35.0
Sundry Debtors 31.8 33.4 38.1 34.7 40.1
Cash and Bank 40.0 34.5
23.0 34.3 49.1
Other Current Assets 29.5 26.9 18.4 26.3 30.4
Short Term Loans and Advances 10.8 2.5 6.0 - -
Total Current Assets 112.1 134.9 119.7 130.3 154.6
Total Assets 191.3 222.3 210.6 216.8 234.6

Accelya Kale Solutions Ltd.
3 KRChoksey - Institutional Research

Ratios
Particulars Jun 2012 Jun 2013 Jun 2014 Jun 2015E Jun 2016E
Profitability Ratios

EBITDA Margin 27.6% 44.3% 40.4% 41.8% 47.5%
Net Profit Margin 18.6% 27.8% 23.4% 25.5% 29.5%
ROCE 37.9% 120.7% 100.0% 117.8% 133.4%
RONW 29.5% 82.9% 64.3% 80.2% 91.0%
Per Share Data
EPS (INR) 27.3 56.5 47.2 53.8 71.9
P/E 25.8 12.5 14.9 13.1 9.8
BV Per Share (INR) 92.5 68.2 73.3 67.1 79.0
EV/EBITDA 16.8 7.3 8.2 7.5 5.6
Adj.Growth Ratios

Revenue (%) 23.7% 38.8% -0.9% 4.9% 15.4%
EBITDA (%) 74.5% 123.0% -9.5% 8.3% 31.3%
Net profit (%) 141.7% 108.0% -16.5% 14.1% 33.5%




CashFlow- Consolidated - [INR-Crore]
DESCRIPTION Jun 2012 Jun 2013 Jun 2014 Jun 2015E Jun 2016E
Profit Before Tax 59.5 123.1 129.1 120.1 160.3
Adjustment 10.9 9.9 7.9 11.8 12.8
Changes In working Capital 4.9 16.2 -11.9 15.9 -10.6
Trade & Other receivables -3.4 2.4 -4.7 3.4 -5.4
Loans & Advances 7.4 4.0 -3.5 6.0 0.0
Trade & Other payables 9.9 7.1 -19.3 15.4 0.0
LT loans & Advances 0.1 -1.1 -1.2
Others -9.0 2.6 15.6 -7.9 -4.1
Cash Flow after changes in Working Capital 75.3 149.2 125.2 147.7 162.5
Tax Paid -13.2 -35.0 -43.0 -39.6 -52.9
Cash From Operating Activities 62.1 114.2 82.2 108.1 109.6
Cash Flow from Investing Activities -23.1 -37.8 -7.8 -6.4 -4.6
Purchase of Fixed Assets -23.9 -15.3 -16.0 -8.0 -8.0
Other Investment Activities 0.8 -22.5 8.2 1.6 3.4
Cash from Financing Activities -55.5 -70.2 -86.2 -90.2 -90.2
Issue of Equity Share Capital

Buy Back of Equity Shares Capital -13.0
Equity Dividend Paid -28.4 -69.6 -85.7 -89.7 -89.7
Other Financial Activities -14.1 -0.6 -0.5 -0.5 -0.5
Net Cash Inflow / Outflow -3.6 6.1 -11.7 11.5 14.8
Opening Cash & Cash Equivalents 18.4 14.7 20.6 8.9 20.4
Effect of Foreign Exchange Fluctuations -0.1 -0.2 0.0 0.0 0.0
Closing Cash & Cash Equivalent 14.7 20.6 8.9 20.4 35.2





Accelya Kale Solutions Ltd.
4 KRChoksey - Institutional Research




Rajiv Choksey Director rajiv.choksey@krchoksey.com +91-22-6696 5555
Anuj Choksey Head-Institutional Equities anuj.choksey@krchoksey.com +91-22-6696 5500
Accelya Kale Solutions Ltd.



CMP (Rs) TP (Rs) Recomm.
26-Sep-14 705 862 BUY
8-Aug-14 640 766 BUY

Rating Legend
Our Rating Upside
Buy More than 15%
Accumulate 5% - 15%
Hold 0 5%
Reduce -5% 0
Sell Less than -5%

Disclaimer:
This publication has been prepared solely for information purpose and does not constitute a solicitation to any person to buy or
sell a security. While the information contained therein has been obtained from sources believed to be reliable, investors are
advised to satisfy themselves before making any investments. Kisan Ratilal Choksey Shares & Sec Pvt Ltd., does not bear any
responsibility for the authentication of the information contained in the reports and consequently, is not liable for any decisions
taken based on the same. Further, KRC Research Reports only provide information updates and analysis. All opinion for buying
and selling are available to investors when they are registered clients of KRC Investment Advisory Services. As per SEBI
requirements it is stated that, Kisan Ratilal Choksey Shares & Sec Pvt Ltd., and/or individuals thereof may have positions in
securities referred herein and may make purchases or sale thereof while this report is in circulation.




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Registered Office:
1102, Stock Exchange Tower, Dalal Street, Fort, Mumbai 400 001.
Phone: 91-22-6633 5000; Fax: 91-22-6633 8060.

Corporate Office:
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Phone: 91-22-6696 5555; Fax: 91-22-6691 9576.