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.
Sunday, March 7, 2010
Wednesday, March 3, 2010
Sterlite Technologies
Saw an announcement on BSE regarding this stock having a stock split as well as giving a bonus. The record date is 10th of March 2009. This lead me to look at its numbers and ultimately led me to its website. And what I read and understood convinced me as to why Anil Agarwal is so successful. He is trying to straddle across 2 of the hottest sectors of tommorrow i.e. Telecom infrastructure and power transmission. The site also contains some research reports and of them there is one by Antique issued on September 17, 2009 mentioning a target of Rs 385. Now that target has already been achieved. What I would request all of you is to go through the entire report to understand the opportunity that we are staring at in the form of Sterlite Technologies. And mind you this is just talking about earnings growth. If there is a PE rerating as well then I need not say what the result will be. (Research report)
The report is just so well written that I think writing anymore about Sterlite will be like reinventing the wheel. Thought I soudl share it with all of you.
I am invested and I hope you take that decision soon. Would love to hear your comments so that we could all benefit. Happy investing.
The report is just so well written that I think writing anymore about Sterlite will be like reinventing the wheel. Thought I soudl share it with all of you.
I am invested and I hope you take that decision soon. Would love to hear your comments so that we could all benefit. Happy investing.
Sunday, February 21, 2010
Interesting Development for Bharati shipyard.
Have you looked at the anouncement dated 19th February 2010 by Great offshore. Here is the link for you (Great offshore). I will come to what it means in a moment. But before that let me give you the background.
Bharati Shipyard is one of my favorites stocks. I bought it first at Rs 700 way back in 2007. It was then the darling of the stock markets and FIIs like Goldman Sachs had invested in the company. Subsequently the value of this stock fell to Rs 50 levels in March 2009. However the financial performance remained unchanged. What changed was that the orders stopped coming and hence the stock continued to languish at sub Rs 100 levels until lady luck struck. After a bidding war it acquired Great offshore which to my mind was the greatest thing to happen to this stock. Not many of us small investors still realise the implications of the deal. The large amount of debt on Bharati's books is what concerns us and that is probably due to what "the analysts" tell us on TV.
But let me lead you to what is actually happening. If you look at the shareholding patterns for the months of September 09 and December 09 there is something noticeable which has happened. The holding of "Shareholders belonging to the category "Public" and holding more than 1% of the Total No. of Shares" has increased from 21.57% to 24.45% which is about a 3% increase. About 39% is still held by the promoters. Which means 63% of the shareholding is with pretty strong hands with about 10% holding still with insurance companies.
Now the interesting bit. We all know that the problem with Bharati is the orders having dried up. But times they are a changing. It should soon be getting orders and thats what the first line of this post means. Great offshore board has decided "To seek the approval of the Company in general meeting to raise funds not exceeding Rs 1750 crores in the from of equity shares, bonds or debentures, or other securities to augment the resources of the Company to provide for offering broad spectrum of services to upstream oil & gas producers to carry out exploration and production activities.". This decision comes just after a month of Bharati shipyard acquiring Great offshore.
So how is Great offshore going to do so. By expanding capacity and who better than Bharati shipyard to do so. So grab your share of Bharati shipyard before it gets those orders and the announcement flashes on bse and Bharati Shipyard hits upper circuit.
However this is no insider information and hence I might be wrong. Please do your due diligence before investing.
Points to note: Read somewhere on the internet that Bharati shipyard is due to get Rs 1000 crores as subsidy payment. If this is true then what happens to the debt on its books is very easy to guess.
N:B: Am working on the projected financials for Bharati shipyard.......will post them soon. Till then happy investing.
Bharati Shipyard is one of my favorites stocks. I bought it first at Rs 700 way back in 2007. It was then the darling of the stock markets and FIIs like Goldman Sachs had invested in the company. Subsequently the value of this stock fell to Rs 50 levels in March 2009. However the financial performance remained unchanged. What changed was that the orders stopped coming and hence the stock continued to languish at sub Rs 100 levels until lady luck struck. After a bidding war it acquired Great offshore which to my mind was the greatest thing to happen to this stock. Not many of us small investors still realise the implications of the deal. The large amount of debt on Bharati's books is what concerns us and that is probably due to what "the analysts" tell us on TV.
But let me lead you to what is actually happening. If you look at the shareholding patterns for the months of September 09 and December 09 there is something noticeable which has happened. The holding of "Shareholders belonging to the category "Public" and holding more than 1% of the Total No. of Shares" has increased from 21.57% to 24.45% which is about a 3% increase. About 39% is still held by the promoters. Which means 63% of the shareholding is with pretty strong hands with about 10% holding still with insurance companies.
Now the interesting bit. We all know that the problem with Bharati is the orders having dried up. But times they are a changing. It should soon be getting orders and thats what the first line of this post means. Great offshore board has decided "To seek the approval of the Company in general meeting to raise funds not exceeding Rs 1750 crores in the from of equity shares, bonds or debentures, or other securities to augment the resources of the Company to provide for offering broad spectrum of services to upstream oil & gas producers to carry out exploration and production activities.". This decision comes just after a month of Bharati shipyard acquiring Great offshore.
So how is Great offshore going to do so. By expanding capacity and who better than Bharati shipyard to do so. So grab your share of Bharati shipyard before it gets those orders and the announcement flashes on bse and Bharati Shipyard hits upper circuit.
However this is no insider information and hence I might be wrong. Please do your due diligence before investing.
Points to note: Read somewhere on the internet that Bharati shipyard is due to get Rs 1000 crores as subsidy payment. If this is true then what happens to the debt on its books is very easy to guess.
N:B: Am working on the projected financials for Bharati shipyard.......will post them soon. Till then happy investing.
Friday, February 19, 2010
some clarification for my friends
I seem to be getting a lot of mails/ comments regarding the fact that the stocks that I am putting on the blog being already been adviced by some other web portal.
However let me clarify that its only coincidental. I am not a subscriber to any paid website. My analysis is purely my perspective based on what I happen to see on BSE announcements or read in the newspapers. And this is not my full time job. I think any of you or rather many of you can have the same ideas just by having a look at the announcements which are there in the public domain. My posts will infact coincide with date of announcements.
Also with so many people now being focussed on the equity market, it should not be impossible for more than a couple of people to have the same idea. And just like any other investor I have the right to be wrong.
For example in case of Sumeet industries if somebody had a look at their Sept 2009 results announcements it was more than apparent what it was doing and what was its financials going to look like in future. I dont think it needed any expert analysis. The opportunity was crying out to be taken.
One of my friends recently sent me a mail saying that I had copied my last post on Sakthi sugar from one of the websites. To this I only want all of you to go thru my previous posts on the blog. I think I like Sakthi sugar for quite a long time now. And while I still think its a great buy the website mentioned thinks that there is some hanky panky going around in the company. Also the website is writing from the perspective of the global banks who had invested whilst my post is largely on how the FCCB conversion has benefitted Sakthi sugar.
Anyways to cut the long story short, investing in any stock is a call to be taken by an individual as the risks / rewards will both accrue to him. So I leave it to the readers to decide upon which website/ blog they wish to visit / not visti and what stocks they want to invest in or not. But yes please do proper due diligence before you decide to invest.
For the record I am a Chartered Accountant by profession and working in one of India's largest corporates for the past 5 odd years.
Maybe the advice of paid websites are more relevant in today's times. Still your comments are always welcome.
Happy investing.
However let me clarify that its only coincidental. I am not a subscriber to any paid website. My analysis is purely my perspective based on what I happen to see on BSE announcements or read in the newspapers. And this is not my full time job. I think any of you or rather many of you can have the same ideas just by having a look at the announcements which are there in the public domain. My posts will infact coincide with date of announcements.
Also with so many people now being focussed on the equity market, it should not be impossible for more than a couple of people to have the same idea. And just like any other investor I have the right to be wrong.
For example in case of Sumeet industries if somebody had a look at their Sept 2009 results announcements it was more than apparent what it was doing and what was its financials going to look like in future. I dont think it needed any expert analysis. The opportunity was crying out to be taken.
One of my friends recently sent me a mail saying that I had copied my last post on Sakthi sugar from one of the websites. To this I only want all of you to go thru my previous posts on the blog. I think I like Sakthi sugar for quite a long time now. And while I still think its a great buy the website mentioned thinks that there is some hanky panky going around in the company. Also the website is writing from the perspective of the global banks who had invested whilst my post is largely on how the FCCB conversion has benefitted Sakthi sugar.
Anyways to cut the long story short, investing in any stock is a call to be taken by an individual as the risks / rewards will both accrue to him. So I leave it to the readers to decide upon which website/ blog they wish to visit / not visti and what stocks they want to invest in or not. But yes please do proper due diligence before you decide to invest.
For the record I am a Chartered Accountant by profession and working in one of India's largest corporates for the past 5 odd years.
Maybe the advice of paid websites are more relevant in today's times. Still your comments are always welcome.
Happy investing.
Thursday, February 18, 2010
FCCB conversion by Sakthi sugar (Rs 95 crore profit)
Issue of share worth Rs 10 and get Rs 200 worth of debt extinguished. What does this mean? It means a neat profit of Rs 190 per share. My calculations say they have issued about 50 lac shares which would take the issued number of shares to about 4 crores. This also means that Sakthi sugar has made a profit of Rs 190 X 50 lac shares = Rs 95 crores as profit. Depending on the accounting policy chosen Sakthi sugar may decide to show it in the P&L or its share premium account. But I hope you will agree with me that it is indeed a profit.
I would not comment any further on the sugar cycle because the jury is out on that one. It time now to just watch and see how it pans out. However we do have Rs 95 crores as profit (whether shown in P&L or not is a separate issue).
What is also does is reduce the debt by Rs 100 crores. So the debt should stand at Rs 1000 crores.
Now I have seen a lot of comments as to why the investors did such a transaction with Sakthi sugar. But no one seems to be looking at the benefits that Sakthi sugar got ou of this transaction. Who cares if Goldman Sachs lost money.
Now if this is what is the harbinger for the future then it should be great for Sakthi sugar. This is because in 2006 it had issued FCCBs for $50 million or Rs 250 crores. Out of that Rs 100 crores has been converted and if the rest of it is also converted in the same manner then there is likely to be another profit of approx Rs 143 crores and debt reduction of Rs 150 crores. This then takes the debt down to Rs 850 crores.
Assuming an average EBITDA (free cash flow) of Rs 140 crores (which may vary to a degree of Rs 40 crores plus or minus) the entire debt could be paid off in about 7 years.
And amidst all this what we are forgetting is that the debt which was taken up wasnt burnt in a bonfire. Yes, some of it was lost through operations but a lot of it was invested in places like Europe in the Auto ancilliary business. All of us seems to have forgotten the Europe bit. There is still a lot of assets which could be liquidated and that could reduce the debt.
And by the way I am reasonably sure that Sakthi sugar is going to post a profit of atleast Rs 50 to 55 crores for quarter ended December 09.
So its time now for all of us to wait for the results and for me to wait for your comments.
I would not comment any further on the sugar cycle because the jury is out on that one. It time now to just watch and see how it pans out. However we do have Rs 95 crores as profit (whether shown in P&L or not is a separate issue).
What is also does is reduce the debt by Rs 100 crores. So the debt should stand at Rs 1000 crores.
Now I have seen a lot of comments as to why the investors did such a transaction with Sakthi sugar. But no one seems to be looking at the benefits that Sakthi sugar got ou of this transaction. Who cares if Goldman Sachs lost money.
Now if this is what is the harbinger for the future then it should be great for Sakthi sugar. This is because in 2006 it had issued FCCBs for $50 million or Rs 250 crores. Out of that Rs 100 crores has been converted and if the rest of it is also converted in the same manner then there is likely to be another profit of approx Rs 143 crores and debt reduction of Rs 150 crores. This then takes the debt down to Rs 850 crores.
Assuming an average EBITDA (free cash flow) of Rs 140 crores (which may vary to a degree of Rs 40 crores plus or minus) the entire debt could be paid off in about 7 years.
And amidst all this what we are forgetting is that the debt which was taken up wasnt burnt in a bonfire. Yes, some of it was lost through operations but a lot of it was invested in places like Europe in the Auto ancilliary business. All of us seems to have forgotten the Europe bit. There is still a lot of assets which could be liquidated and that could reduce the debt.
And by the way I am reasonably sure that Sakthi sugar is going to post a profit of atleast Rs 50 to 55 crores for quarter ended December 09.
So its time now for all of us to wait for the results and for me to wait for your comments.
Sunday, February 7, 2010
Sturdy Industries ( BSE code - 530611)
The investment idea for February is a company called Sturdy Industries Limited. A stock with market cap of around 20 crores. Its part of the Chemiplast group of companies which deals in Plastics, Aluminium and building materials. From the look of it the businesses that it is into looks very unexciting and you are actually right if you think so. So let me lead you what I found interesting.
I am sure all of you must have heard of micro irrigation and the only company in India which is into micro irrigation, which is Jain irrigation. All of you will agree that micro irrigation is a great idea and you would like to hold shares in Jain irrigation. However, you do not do so because of the fact that its shares are overpriced. The PE of jain irrigation is at around 33.
Sturdy industries is in the same business or is going to be in it. We dont know much about it because this business is with its sgroup companies whereas what we see results for is platics, aluminium etc. However, the company now seems to be taking serious attempt at expansion of its micro irrigation business alongwith other businesses. Along with merger of the businesses it is also planning to expand its micro irrigation capacity from 13,000 TPA in 2008-09 to 43,000 TPA in 2011 by setting up a plant capacity of 30,000 MTPA in Baddi.
This is apart from the other expansions that the company is envisaging. Since there is no pint in copying what is already there on the internet I am putting in links for couple of pages which you should read to understand what we are talking about.
Website - Sturdy Industries
Chairman's speech - FY200809
And to top it the various announcements on BSE could also be an interesting read. I am sure once you have done all of this you will be convinced about the power of this idea.
There is really no point in looking at what the financial position except the fact that during the 9 months ended 31st December 2009 the company made a PAT of Rs 4.45 crores translating into an EPS of 1.1. That means a PE of around 4.5. Yes, thats how undervalued this stock is. And mind you that the EPS is still to be annualised.
The other good thing about the investment is that the promoter's holding as on 31st December 2009 is 43% and it is only likely to go up with the merger of the group companies which are private limited companies.
Its a multimulti bagger and hence no targets. And if you do make money remember you heard it first on my blog because surprisingly nobody seems to be tracking this one. Do let me know if I am wrong in what I am thinking.
NB: My work keeps me very busy these days and hence I might not be able to reply to you messages promptly but would still appreciate all of you commenting on my posts.
Happy investing.
I am sure all of you must have heard of micro irrigation and the only company in India which is into micro irrigation, which is Jain irrigation. All of you will agree that micro irrigation is a great idea and you would like to hold shares in Jain irrigation. However, you do not do so because of the fact that its shares are overpriced. The PE of jain irrigation is at around 33.
Sturdy industries is in the same business or is going to be in it. We dont know much about it because this business is with its sgroup companies whereas what we see results for is platics, aluminium etc. However, the company now seems to be taking serious attempt at expansion of its micro irrigation business alongwith other businesses. Along with merger of the businesses it is also planning to expand its micro irrigation capacity from 13,000 TPA in 2008-09 to 43,000 TPA in 2011 by setting up a plant capacity of 30,000 MTPA in Baddi.
This is apart from the other expansions that the company is envisaging. Since there is no pint in copying what is already there on the internet I am putting in links for couple of pages which you should read to understand what we are talking about.
Website - Sturdy Industries
Chairman's speech - FY200809
And to top it the various announcements on BSE could also be an interesting read. I am sure once you have done all of this you will be convinced about the power of this idea.
There is really no point in looking at what the financial position except the fact that during the 9 months ended 31st December 2009 the company made a PAT of Rs 4.45 crores translating into an EPS of 1.1. That means a PE of around 4.5. Yes, thats how undervalued this stock is. And mind you that the EPS is still to be annualised.
The other good thing about the investment is that the promoter's holding as on 31st December 2009 is 43% and it is only likely to go up with the merger of the group companies which are private limited companies.
Its a multimulti bagger and hence no targets. And if you do make money remember you heard it first on my blog because surprisingly nobody seems to be tracking this one. Do let me know if I am wrong in what I am thinking.
NB: My work keeps me very busy these days and hence I might not be able to reply to you messages promptly but would still appreciate all of you commenting on my posts.
Happy investing.
Sugar sector updates
Just to recap Sakthi sugar has been battered in the recent falls. However, I think it is still a fundamentally sound idea which the market will probably recognise around March 10. when the current crushing season ends. The shortage is for real and no matter what the government does the price of sugar is not going to fall in a hurry. Add to this the fact that for next season India will be going in with absolutely no buffer stock as well as a demand of around 25 million tonnes (assuming a 10 percent increase in usage over demand of 23 million tonnes in 2009-10).
Some of the research reports are also talking about the shortage being more than envisaged and hence raw sugar imports would gain momentum in the period after the current crushing season is over.
Some other pointers are what the corporates are doing. Shree Renuka is still lokking to buy our companies in Brazil. It is also looking to still buy Balrampur Chini. Simbhaoli is setting up a refinery which would get completed in 2011. Isnt it strange that corporates are looking to enhance capacity when we all think that the sugar story is over for now.
The fact is sugar story is far from over. Sugar cycles in the past had significantly impaired the balance sheets of corporates. However, what this year has done is repair them. So from next year onwards the sugar companies will operated with far less debt. Add to this the fact that the sugar consumption is not going to go down. The cola companies, the biscuit companies all want to increase sales and so the sugar consumption is only likely to go up.
Markets as usual take a short term view so we must bide our time. Sakthi sugar is a great turnaround story. Remain invested.
Some of the research reports are also talking about the shortage being more than envisaged and hence raw sugar imports would gain momentum in the period after the current crushing season is over.
Some other pointers are what the corporates are doing. Shree Renuka is still lokking to buy our companies in Brazil. It is also looking to still buy Balrampur Chini. Simbhaoli is setting up a refinery which would get completed in 2011. Isnt it strange that corporates are looking to enhance capacity when we all think that the sugar story is over for now.
The fact is sugar story is far from over. Sugar cycles in the past had significantly impaired the balance sheets of corporates. However, what this year has done is repair them. So from next year onwards the sugar companies will operated with far less debt. Add to this the fact that the sugar consumption is not going to go down. The cola companies, the biscuit companies all want to increase sales and so the sugar consumption is only likely to go up.
Markets as usual take a short term view so we must bide our time. Sakthi sugar is a great turnaround story. Remain invested.
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