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MAKING MA RK
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Assessment
Excellent fundamentals Superior fundamentals Good fundamentals Moderate fundamentals Poor fundamentals
Assessment
Strong upside (>25% from CMP) Upside (10-25% from CMP) Align (+-10% from CMP) Downside (- 10-25% from CMP) Strong downside (<-25% from CMP)
Analyst Disclosure
Each member of the team involved in the preparation of the grading report, hereby affirms that there exists no conflict of interest that can bias the grading recommendation of the company.
Disclaimer:
This Company-commissioned CRISIL IER report is based on data publicly available or from sources considered reliable. CRISIL Ltd. (CRISIL) does not represent that it is accurate or complete and hence, it should not be relied upon as such. The data / report is subject to change without any prior notice. Opinions expressed herein are our current opinions as on the date of this report. Nothing in this report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The subscriber / user assume the entire risk of any use made of this data / report. CRISIL especially states that, it has no financial liability whatsoever, to the subscribers / users of this report. This report is for the personal information only of the authorised recipient in India only. This report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person especially outside India or published or copied in whole or in part, for any purpose.
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CFV MATRIX
Excellent Fundamentals
Omnitech Infosolutions Ltds (Omnitechs) Q3FY12 revenues and operating However, PAT was lower than expected due to high depreciation (on account of an increase in asset base as the company set up new offices) and high interest cost (because of higher debt and interest rates). Also, the tax rate increased to 35% vs. 26% in Q2FY12 as the company claimed MAT credit in Q2. We have broadly maintained earnings estimates for FY12 and FY13. While we remain positive on the business potential, the growth of Avensus in Europe remains a key monitorable given the uncertain macroeconomic environment. We maintain our fundamental grade of 3/5. Q3FY12 result analysis Revenues grew by 6.4% q-o-q (up ~49 % y-o-y) to Rs 1,309 mn. India revenue grew by 7.4% q-o-q to Rs 986 mn; the country remained the highest contributor to consolidated revenue. APAC revenue grew by ~46% q-o-q to Rs 72 mn. Europe revenue declined by ~6.7% q-o-q to Rs 142 mn due to lower revenue from Avensus, Europe since some projects got over. Fragile macro-economic conditions are also slowing down the companys European business. EBITDA margin increased by 94 bps q-o-q (down 710 bps y-o-y) to 25.6% mainly due to lower employee cost, which declined by 111 bps as a percentage of sales q-o-q. The employee headcount declined to 1,305 from 1,366 employees in Q2FY12 as the company optimised its resources for better efficiency. The company continued to incur losses at the EBITDA level in Avensus and the APAC region. Depreciation increased by 14% q-o-q (73% y-o-y) to Rs 109 mn and interest cost increased by 66% q-o-q (~240% y-o-y) to Rs 51 mn. Tax rate increased to 35%. As a result, PAT declined by 8.5% q-o-q (15.5% y-o-y) to Rs 127 mn. The company reported EPS of Rs 8.7. Valuations: Current market price has strong upside We continue to use the discounted cash flow method to value Omnitech and maintain the fair value of Rs 254 per share. Consequently, we retain the valuation grade of 5/5.
Fundamental Grade
profitability
were
broadly
in
line
with
5 4 3 2 1
Poor Fundamentals
Valuation Grade
Strong Downside Strong Upside
SHAREHOLDING PATTERN
100% 90% 80% 70% 60% 50% 40% 30% 54.9% 54.1% 54.1% 53.9% 0.0% 0.6% 3.6% 0.6% 6.2% 0.5% 8.0% 0.0% 44.5% 41.8% 39.2% 38.2%
KEY FORECAST
(Rs mn) Operating income EBITDA Adj PAT Adj EPS-Rs EPS growth (%) Dividend yield (%) RoCE (%) RoE (%) PE (x) P/BV (x) EV/EBITDA (x) FY09 1,718 528 344 26.2 34.3 3.2 33.9 32.3 5.3 1.5 4.2 FY10 2,185 678 381 27.5 5.0 0.7 28.0 25.8 5.0 1.1 3.6 FY11 3,470 1,078 518 37.4 36.0 2.0 30.2 26.3 3.7 0.9 2.8 FY12E 5,093 1,306 528 35.9 (4.1) 2.0 24.7 20.7 3.8 0.7 2.2 FY13E 6,100 1,492 637 42.6 18.8 2.1 25.3 19.9 3.2 0.6 1.7
20% 10% 0% Mar-11 Promote r Jun-11 FII Sep-11 DII Dec-11 Others
ANALYTICAL CONTACT
Chetan Majithia (Head) Kamna Motwani Suresh Guruprasad Client servicing desk +91 22 3342 3561 clientservicing@crisil.com chetanmajithia@crisil.com kmotwani@crisil.com sguruprasad@crisil.com
NM: Not meaningful; CMP: Current market price Source: Company, CRISIL Research estimate
CRISIL RESEARCH | 1
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y-o-y (%) 52.3 54.8 82 bps 103.7 382 bps 111.7 214 bps 20.4 -678 bps 66.0 7.2 165.4 (4.5) 285.2 (3.7) 41.9 (222.6) (7.8) (7.8) -701 bps (7.8)
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Business availability services remained main revenue contributor and grew at 8% q-o-q
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Jun-10 Mar-10 Mar-11 Dec-10 Jun-11 Dec-11 Sep-10 Sep-11
3% 23.1% 15.1% 21.1% 14.1% 23.1% 11.1% 21.6% 11.1% 25.6% 9.1% 25.0% 5.1%
3% 24.9% 6.0%
3% 24.3% 6.0%
61.8%
64.8%
65.8%
67.3%
65.3%
66.9%
66.1%
67.0%
Jun-10
Mar-10
Mar-11
Dec-09
Dec-10
Jun-11
5% 5% 7% 1% 4%
6% 5% 7% 1% 9%
8% 1% 7% 1% 10%
7% 1% 7% 1% 9%
6% 1% 8% 1% 10%
23%
23%
79%
74%
74%
76%
74%
73%
75%
75%
40% 30% 20% 10% 0% 51% 50% 45% 49% 42% 45% 46% 49%
Mar-10
Mar-11
Dec-10
India
Far East
Canada
Europe
Middle East
US
BFSI
IT-ITeS
Manufacturing
Services
Others
CRISIL RESEARCH | 2
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Dec-11
Sep-10
Sep-11
Jun-10
Jun-11
Dec-11
Sep-10
Sep-11
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... while PAT margin declined due to higher depreciation, interest and tax rate
(Rs mn)
17.7% 16.3%
20% 18% 16% 14% 12% 9.9% 11.3% 11.3% 9.7% 10% 8% 6% 4%
1,029
1,181
1,230
578
671
746
816
880
200 0
1,309
5% 0%
102
109
136
146
151
102
133
139
127
2% 0%
Dec-09
Dec-10
Dec-11
Mar-10
Sep-10
Mar-11
Sep-11
Jun-10
Jun-11
Mar-10
Mar-11
Dec-09
Dec-10
Revenue
PAT
02-May-11
25-May-11
Dec-11
Jun-10
Sep-10
Jun-11
Sep-11
14-Feb-11
10-Mar-11
01-Dec-10
27-Dec-10
20-Sep-10
23-Sep-11
04-Aug-11
29-Aug-11
05-Nov-10
May-09
May-10
May-11
Omnitech
NIFTY
16-Nov-11
Nov-08
Nov-09
Nov-10
Nov-11
Feb-09
Feb-10
Feb-11
Aug-09
Aug-10
Aug-11
Feb-12
12-Dec-11
Omnitech
-indexed to 100 Source: NSE, CRISIL Research Source: NSE, CRISIL Research
CRISIL RESEARCH | 3
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22-Feb-12
04-Jan-12
19-Jan-11
17-Jun-11
27-Jan-12
04-Apr-11
12-Jul-11
13-Oct-10
19-Oct-11
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The companys consolidated revenue is not significantly impacted by rupee depreciation as 75% of its revenue is derived from India. Note: We have not been provided data related to other income, tax rate and balance sheet items.
CRISIL RESEARCH | 4
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MAKING MA RK
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May-11
May-11
Feb-08
Feb-12
Feb-08
Mar-09
Mar-09
Sep-08
Sep-08
Dec-08
Dec-08
Aug-07
Aug-11
Aug-07
Nov-07
Nov-11
Nov-07
Aug-11
Omnitech
2x
4x
6x
8x
Omnitech
2x
4x
6x
P/E movement
(Times)
10 9 8 7 6 5 4 3 2 1 0 -1 std dev +1 std dev
May-11
Feb-08
Nov-11 Nov-11
Mar-09
Sep-08
Dec-08
Aug-07
Nov-07
Jan-10
Nov-07
Jan-11
Jun-08
Jun-09
May-11
Nov-11
Feb-08
Mar-09
Dec-08
Aug-07
Premium/Discount to NIFTY
Median
Aug-11
Sep-08
Feb-12
Oct-09
Oct-10
Apr-10
Median PE
* For detailed initiating coverage report please visit: www.ier.co.in CRISIL Independent Equity Research reports are also available on Bloomberg (CRI <go>) and Thomson Reuters.
CRISIL RESEARCH | 5
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Aug-11
Feb-12
Jan-10
Jul-10
Jan-11
Jun-08
Jun-09
Apr-10
Oct-09
Jul-10
Oct-10
Feb-12
Jul-10
Jan-10
Jan-11
Jan-10
Jul-10
Jan-11
Apr-10
Jun-08
Jun-09
Jun-08
Jun-09
Apr-10
Oct-09
Oct-10
Oct-09
Oct-10
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FINANCIALS
Income statement (Rs mn) Operating income EBITDA EBITDA margin Depreciation EBIT Interest Operating PBT Other income Exceptional inc/(exp) PBT Tax provision Minority interest PAT (Reported) Less: Exceptionals Adjusted PAT Ratios FY09 Growth Operating income (%) EBITDA (%) Adj PAT (%) Adj EPS (%) Profitability EBITDA margin (%) Adj PAT Margin (%) RoE (%) RoC E (%) RoIC (%) Valuations Price-earnings (x) Price-book (x) EV/EBITDA (x) EV/Sales (x) Dividend payout ratio (%) Dividend yield (%) B/S ratios Inventory days C reditors days Debtor days Working capital days Gross asset turnover (x) Net asset turnover (x) Sales/operating assets (x) C urrent ratio (x) Debt-equity (x) Net debt/equity (x) Interest coverage Per share FY09 Adj EPS (Rs) C EPS Book value Dividend (Rs) Actual o/s shares (mn) 26.2 32.2 93.9 1.2 13.1 FY10 27.5 38.8 124.3 1.1 13.9 FY11 37.4 55.4 159.9 2.7 13.9 FY12E 35.9 63.3 196.6 2.7 14.7 FY13E 42.6 73.7 234.5 3.0 14.9 44 16 125 112 2.5 3.2 2.7 5.7 0.3 0.1 11.8 70 23 88 130 1.8 2.3 2.1 3.7 0.3 0.2 11.3 66 53 91 103 1.9 2.3 2.1 2.7 0.5 0.5 13.2 52 38 88 97 2.1 2.9 2.6 3.0 0.4 0.3 5.5 51 35 88 105 2.0 3.3 3.2 2.9 0.2 0.2 9.9 Quarterly financials (Rs mn) Net Sales C hange (q-o-q) EBITDA C hange (q-o-q) EBITDA margin PAT Adj PAT C hange (q-o-q) Adj PAT margin Adj EPS Q3FY11 Q4FY11 Q1FY12 880 8% 288 9% 32.7% 151 151 3% 17.2% 10.9 1,029 17% 307 7% 29.8% 102 102 -32% 9.9% 7.4 1,181 15% 311 1% 26.4% 133 133 30% 11.3% 9.0 Q2FY12 1,230 4% 303 -3% 24.7% 139 139 5% 11.3% 9.5 Q3FY12 1,309 6% 335 10% 25.6% 127 127 -8% 9.7% 8.7 5.3 1.5 4.2 0.4 4.8 3.2 5.0 1.1 3.6 1.2 4.1 0.7 3.7 0.9 2.8 0.9 7.2 2.0 3.8 0.7 2.2 0.6 7.5 2.0 3.2 0.6 1.7 0.4 6.9 2.1 30.8 20.0 32.3 33.9 31.6 31.0 17.4 25.8 28.0 23.7 31.1 14.9 26.3 30.2 22.3 25.6 10.4 20.7 24.7 19.4 24.5 10.4 19.9 25.3 19.6 Cash flow (Rs mn) Pre-tax profit Total tax paid Depreciation Working capital changes Net cash from operations Cash from investments C apital expenditure Investments and others Net cash from investments Cash from financing Equity raised/(repaid) Debt raised/(repaid) Dividend (incl. tax) Others (incl extraordinaries) Net cash from financing C hange in cash position C losing cash 148 (18) 9 139 (20) 29 119 105 (18) 12 218 14 43 0 669 (44) 5 630 47 90 105 (26) (47) 112 145 52 187 27 (439) (52) (13) (477) (88) 110 (342) 84 (258) (763) 137 (626) (804) (5) (809) (432) 5 (427) (410) (410) FY09 431 (49) 80 (362) 99 FY10 485 (85) 157 (135) 422 FY11 767 (157) 249 (634) 225 FY12E 746 (316) 403 (499) 334 FY13E 942 (295) 464 (311) 799 30.1 50.1 34.3 34.3 27.2 28.3 10.7 5.0 58.8 59.0 36.0 36.0 46.8 21.1 1.9 (4.1) 19.8 14.3 20.6 18.8 FY10 FY11 FY12E FY13E FY09 1,718 528 30.8% 80 449 38 411 20 (15) 416 87 (0) 329 (15) 344 381 FY10 2,185 678 31.0% 157 521 46 475 10 485 109 (4) 381 FY11 3,470 1,078 31.1% 249 829 63 766 1 (0) 767 235 14 518 (0) 518 746 238 (20) 528 528 637 FY12E 5,093 1,306 25.6% 403 902 164 738 8 942 295 10 637 FY13E 6,100 1,492 24.5% 464 1,028 104 925 17 Balance Sheet (Rs mn) Liabilities Equity share capital Reserves Minorities Net worth C onvertible debt Other debt Total debt Deferred tax liability (net) Total liabilities Assets Net fixed assets C apital WIP Total fixed assets Investments Current assets Inventory Sundry debtors Loans and advances C ash & bank balance Marketable securities Total current assets Total current liabilities Net current assets Intangibles/Misc. expenditure Total assets 140 589 166 29 134 1,058 186 872 1,633 1,216 328 887 2,252 287 530 356 43 1,900 701 1,199 369 3,493 431 860 519 90 527 1,224 734 187 2,672 893 1,779 385 4,112 635 1,464 872 110 3,081 1,068 2,013 385 4,292 678 79 758 3 1,225 139 1,364 1 1,732 187 1,919 5 1,809 139 1,948 1,855 39 1,894 131 1,102 1,233 334 334 66 1,633 439 439 90 2,252 139 1,584 0 1,723 1,108 1,108 169 3,493 139 2,058 19 2,216 1,082 1,082 90 4,067 147 2,748 (1) 2,894 643 643 90 4,237 149 3,345 9 3,503 FY09 FY10 FY11 FY12E FY13E
Note: All ratios are computed on Adj PAT Source: Company, CRISIL Research estimate
CRISIL RESEARCH | 6
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Analytical Contacts
Tarun Bhatia Prasad Koparkar Chetan Majithia Jiju Vidyadharan Ajay D'Souza Ajay Srinivasan Sridhar C Manoj Mohta Sudhir Nair Director, Capital Markets Head, Industry & Customised Research Head, Equities Head, Funds & Fixed Income Research Head, Industry Research Head, Industry Research Head, Industry Research Head, Customised Research Head, Customised Research +91 (22) 3342 3226 +91 (22) 3342 3137 +91 (22) 3342 4148 +91 (22) 3342 8091 +91 (22) 3342 3567 +91 (22) 3342 3530 +91 (22) 3342 3546 +91 (22) 3342 3554 +91 (22) 3342 3526 tbhatia@crisil.com pkoparkar@crisil.com chetanmajithia@crisil.com jvidyadharan@crisil.com adsouza@crisil.com ajsrinivasan@crisil.com sridharc@crisil.com mmohta@crisil.com snair@crisil.com
Business Development
Vinaya Dongre Ashish Sethi Head, Industry & Customised Research Head, Capital Markets +91 (22) 33428025 +91 (22) 33428023 vdongre@crisil.com asethi@crisil.com
To know more about CRISIL IER, please contact our team members:
Ashish Sethi Head, Business Development Email : asethi@crisil.com I Phone : 9920807575 Sagar Sawarkar Senior Manager, Business Development Email : ssawarkar@crisil.com I Phone : 9821638322
Regional Contacts:
Ahmedabad / Mumbai Vishal Shah - Manager, Business Development Email : vishah@crisil.com I Phone : 9820598908 Bengaluru Gayathri Ananth Senior Manager, Business Development Email : gs@crisil.com I Phone : 9886498175 Chennai / Hyderabad Kaliprasad Ponnuru - Manager, Business Development Email : kponnuru@crisil.com I Phone : 9642004668 Delhi Arjun Gopalkrishnan - Manager, Business Development Email :agopalakrishnan@crisil.com I Phone : 9833364422 Kolkata Priyanka Agarwal - Manager, Business Development Email : priyagarwal@crisil.com I Phone : 9903060685 Mumbai / Pune Vivek Tandon - Manager, Business Development Email : vtandon@crisil.com I Phone : 9967714970
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Head Office: CRISIL House, Central Avenue, Hiranandani Business Park, Powai, Mumbai - 400 076 Phone : 91-22-3342 3000 Web: www.crisil.com Download reports from: www.ier.co.in
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