Glodyne Technoserve is a leading IT Services company, headquartered in Mumbai, India with presence across India and US. It offers technology led business solutions across two SBU’s i.e. Technology Infrastructure Management Services (Technology IMS) and Application Software Services
If we dejargonise IMS it would simply mean the following
It is like asking a company to take care of its business, whilst Glodyne would take care of the IT infrastructure of the company. Now we all know that IT infrastructure is evolving very fast and thus upgradation needs to happen equally fast. And it is here that lies a huge opportunity for Glodyne in its Infrastructure IMS space. 70% of Glodyne’s Revenues come from the IMS space only. To understand the kind of opportunity that IMS presents to companies like Glodyne let me give you the links to a Mckinsey / Nasscom study on IMS. Mckinsey paper.
The study claims that the $524 billion IMS industry soon could become as important as the ADM and BPO industries that have dominated the rise of offshoring since some years. Out of this $524 billion, the study pegs the global addressable market for IMS to be in the range of $96-104 billion. Taking out the $7 billion that is already being addressed by vendors and captives in the low-cost locations like India, the unaddressed market pie works out to $89-97 billion. With an opportunity of 70-75 percent of infrastructure management roles available for offshoring, IMS as an industry could realize $26-28 billion of the global opportunity by 2013, and India is strongly positioned to capture $13-15 billion of the global opportunity. See article in silicon india. (Article)
Now if this makes you convinced of what the opportunity that lies in front of Glodyne the next question which would arise is how capable is Glodyne in doing this. The answer to this would lie in both the past (i.e. the financial performance) and the future (as in what its plans are or rather appear to be)
From FY05 to Fy09 Revenues grew at a CAGR of 46.4 % and Profits Grew at a CAGR of 71.3 %. Amazingly its Return on Equity is 67.1%. Phenomenal is all I can say. This also means that the company is not just about promises. It is also delivering on its promises.
Now about the future. For this we must look at the important developments happening at Glodyne.
In March 2007 Glodyne Technoserve acquired a 100% stake in an all cash deal of $4.75 Million in LGI inc.Tocated in Virginia.
In October 2007 Glodyne acquired Front Office Technologies situated in New York in an all cash deal of $3.34 Million.
Recent Indian Acquistions
In July 2009 it acquired Broadllyne Technologies Limited ("Broadllyne"), a Application Managed Service Provider Company based in India in the education space through a Scheme of Amalgamation / Arrangement. Though the company may be a small one, the opportunity that it can get to Glodyne is huge. Broadllyne has around 170 clients mostly schools and colleges.
In October 2009 it entered into an arrangement with M/s. Compulink Systems Limited for merger with itself. This company is into the project management space.
In addition to that the above Glodyne is also trying to get into the e-governance space in India. It has already been selected by the State government of Bihar and Maharastra to provide tech support for NREGS programme in the states.
So what does this mean.
a) The company is slowly but surely scaling up to grab the the opportunity that IMS presents in the mature markets like US.
b) Simultaneously it is also trying to tap the huge opportunity that India presents in sectors like egovernance and education apart from the IMS business in India. Mind you that in times to come, as the India growth story unfolds India would present quite a substantial opportunity in the IMS business as well.
Sure it has completion in the form of the IT biggies like HCL and Wipro but the pie itself is so large that there is space for everyone. Plus the best part about Glodyne is that its got a headstart in the e-governance space over its peers.
And the best part is that all this is currently available at a PE of about 14 when the industry PE is about 20.
It light of the discussion above I don’t think I would like to take the risk of trying to project the future earnings or share price of this company. Not because I cant but because I am sure even with my best guess I would end up underestimating the earnings.
So that is all about Glodyne.
But hang on, the title to this post says Compulink and I am talking about Glodyne. Yes, my friend that is where the fun is. Since you are a subscriber to my blog (or would like to be one by subscribing through feedburner) I can show you a way to buy Glodyne’s shares at a 14% discount. That’s because the swap ratio between Compulink and Glodyne has been fixed at 19:1. Check out the prices and do the maths. Yes, thats right, at the closing prices on BSE of both on 5th March 2010, if you buy 19 shares of Compulink your cost will only be Rs 547 whilst the price of 1 Glodyne share is Rs 637. So buy Compulink before it hits that upper circuit.
Let me know if my exuberance is unjustified. Till then happy investing.
And yes pls do post your comments. I might not be able to reply but they are invaluable for me.
No comments:
Post a Comment