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Incorporated in 1983, Blue Star Infotech Limited (BSIL) is engaged in developing information technology (IT) solutions for enterprises and building software products for independent software vendors in India, North America, Europe and Asia-Pacific. The company provides product development services, enterprise resource planning (ERP) solutions, travel technology solutions and testing services. Exports contributed ~81% of total revenues in FY10.
KEY HIGHLIGHTS
Major revenues come from North American market BSIL is a global provider of product development services, ERP solutions, travel technology solutions and testing services. North America continued to be the largest contributor to the companys revenue and profits, with a ~49% share, followed by Europe at ~18%. Asia-Pacific contributed ~8% and rest contributed ~26%. Exports contributed ~81% of total revenues in FY10. Strategic alliances in place The company has developed links with international multinational companies to ensure access to technology. Also, through its strategic partner programme, the company seeks to forge alliances with product companies in value-added resale, implementation of and support for their products. It has alliances with Microsoft, Oracle, HewlettPackard, PlatformLab, Amdocs, SAS, Kentico and Sitecore. iPhone app iRoadGenie launched In February 2011, the company launched its iRoadGenie travel application for the iPhone. The application helps users search for points of interest based on their current location. Such points of interest could be nearby sightseeing locations, leisure/ amusement parks, golf courses, cinemas, restaurants, pubs, shopping malls, gas stations, ATMs, hospitals, pharmacies, hotels etc. The application also helps in providing detailed directions to destinations, view pictures of top tourist destinations and enables reservation/ booking requests.
Mar-08 1,456.3 6.0 49.1 3.4 4.9 11.8 1.0 10.4 8.4 4.7
Mar-09 1,564.0 17.5 155.5 9.9 15.6 3.0 0.7 40.3 24.6 1.3
Mar-10 1,337.8 12.4 137.8 10.3 13.8 7.5 1.3 22.1 18.8 5.6
KEY RISKS
Foreign exchange fluctuations exports contributed ~81% to total revenues in FY10 Intense competition from domestic and international players
Promoter 55%
1-m 7 10
3-m -23 3
12-m -13 12
-8 11
COMPETITIVE POSITION
Peer Comparison
Revenue (Rs mn) EBITDA ma rgins (%) PAT (Rs mn) PAT ma rgins (%) Gea ring (x) EPS (Rs /s ha re) PE (x) P/BV (x) RoCE (%) RoE (%) EV/EBITDA (x)
n.m: Not meaningful
Blue Star Infotech Limited Mar-10 1,337.8 12.4 137.8 10.3 13.8 7.5 1.3 22.1 18.8 5.6
Panoramic universal Ltd Mar-10 1,334.2 44.9 378.6 28.4 0.8 29.2 0.6 0.1 14.6 21.4 2.7
Teledata Technology Solutions Ltd Mar-10 2,322.1 9.2 169.1 7.3 0.4 0.3 244.9 18.7 11.1 11.6 189.3
Take Solutions Ltd Mar-10 3,553.6 17.1 363.1 10.2 0.2 3.0 11.4 2.0 20.7 17.9 6.6
FINANCIAL PROFILE
Economic downturn affects top line and bottom line in FY10
Key Financial Indicators Units Revenue Rs mi ll ion Rs mi ll ion Per cent Per cent Per cent Times Per cent Per cent EBITDA ma rgins Per cent PAT PAT ma rgins EBITDA growth PAT growth Gea ring RoCE RoE
Mar-08
1,456.3 6.0 49.1 3.4 21.0 -40.6 -45.9 0.0 10.4 8.4
Mar-09
1,564.0 17.5 155.5 9.9 7.4 212.4 217.0 0.0 40.3 24.6
Mar-10
1,337.8 12.4 137.8 10.3 -14.5 -39.6 -11.4 0.0 22.1 18.8
On a consolidated basis, BSILs revenues declined 14.5% to Rs 1.3 bn in FY10 from Rs 1.5 bn in FY09. The global recession continued to dominate the economic scenario for IT companies as well as other industries for a large part of FY10. As a result of market volatility, plummeting demand and uncertain economic climate, sales volumes in the US and Europe declined significantly. Exports fell ~21% year-on-year. However, the company maintained its domestic sales volume in FY10. EBITDA margin dropped ~510 basis points to 12.4% in FY10 from 17.5% in FY09, mainly on account of increase in employee and operating costs as a percentage of sales. Lower operating profit, coupled with higher tax expenses, led to ~11.4% decline in PAT. The company reported profit of Rs 138 mn in FY10, down from Rs 156 mn in FY09.
INDUSTRY PROFILE
IT services Indian IT services revenues are estimated to be around $34 billion in 2009-10, registering a CAGR of 20 per cent from 2004-05 to 2009-10. During the same period, IT services exports, which accounted for 80 per cent of the revenues, are estimated to have grown at a CAGR of 22 per cent to $27 billion in 2009-10. The industry is highly dependent on the US and UK markets, which contribute to around 75 per cent of export revenues. With IT services deriving a large portion of its revenues from exports, the sector`s profitability is highly correlated to foreign exchange movements. An appreciating rupee is thus a key risk factor. Also, as human resource is the main input in IT services, issues related to non-availability of skilled labor, attrition and wage inflation would also impact Indian IT players.
Cash flow from investing activities Equity raised/(repaid) Debt raised/(repaid) Dividend (incl. tax) Others (incl extraordinaries)
Cash flow from financing activities Change in cash position Opening cash Closing cash
n.m : Not meaningful;
QUARTERLY RESULTS
Profit and loss account (Rs million) No of Months Revenue EBITDA Interes t Depreci a tion PBT PAT Dec-10 3 321.0 35.7 5.9 26.8 21.4 100.0 11.1 1.8 8.3 6.7 % of Rev Dec-09 % of Rev 3 346.2 52.3 5.6 46.7 43.3 100.0 15.1 1.6 13.5 12.5 Sep-10 3 321.2 29.8 5.7 20.7 15.3 100.0 9.3 1.8 6.5 4.8 % of Rev Dec-10 % of Rev 9 977.4 124.5 17.0 101.1 84.8 100.0 12.7 1.7 10.3 8.7 Dec-09 9 1,033.4 136.6 17.2 119.4 110.2 100.0 13.2 1.7 11.6 10.7 % of Rev
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Shareholding Pattern (Per cent) Mar 2010 Jun 2010 Promote r 55.4 55.4 FII 0.1 0.1 DII 3.6 3.6 Others 40.9 40.9
Board of Directors Director Name Suneel Mohan Advani (Mr.) As hok Mohan Advani (Mr.) Praka sh Gurunath Hebalkar (Dr.) Na res h Kumar Ma lhotra (Mr.) Sures h Nars appa Ta lwar (Mr.) Sa nja y Nanik Vas wa ni (Mr.) Sunil Bhatia (Mr.) K.P.T. Kutty (Mr.)
Designation Chairma n & Ma naging Director, Promoter-Director Vice Chairman, Promoter-Director Non-Executive Director Non-Executive Director Non-Executive Director Promoter-Director Managing Director Director
Additional Disclosure This report has been sponsored by NSE - Investor Protection Fund Trust (NSEIPFT). Disclaimer This 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. CRISIL is not responsible for any errors and especially states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this report. For information please contact 'Client Servicing' at +91-22-33423561, or via e-mail: clientservicing@crisil.com.
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Rs/share 10 9 8 7 6 5 4 3 2 1 0
EPS
Per cent 25 20 15 10 5 0
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Rs mn 100 80 60 40 20 0
CRISILCompanyQuarterlyUpdatel09Dec2011
Toplinedecreasedbyamarginal~0.5%yearonyear to~Rs302mninQ2FY12,largelyonaccountof declineinrevenuefromtheexportbusinessdueto adversemacroeconomicfactors.Exportrevenue declined~20%yoywhiledomesticrevenuejumped ~50%,partiallyoffsettinglowerexports. EBITDAmarginimprovedto10.7%inQ2FY12from 9.8%inQ2FY11owingtofavourableexchangerate movementandlowerprofessionalcharges,traveland conveyanceexpenses.PATincreased~11%yoyto ~Rs17mn,largelyduetohigheroperatingprofitand absenceofexceptionalexpenseswhichwerepresent inQ2FY11.
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Top line declined ~9% year-on-year to ~Rs 291 mn in Q1FY12, largely due to extended customer acquisition cycle and lower realisations, led by intense competition in the US and UK markets.
EBITDA margin slumped to 1.7% in Q1FY12 from 18.4% in Q1FY11, on account of higher employee expenses, professional fees, cost of products/ licenses and other operating expenses. The company recorded net loss of Rs 5 mn in Q1FY12 against net profit of Rs 48 mn in Q1FY11, largely due to lower operating profit and increase in depreciation charges.
Shareholding pattern
Additional Disclosure
This report has been sponsored by NSE - Investor Protection Fund Trust (NSEIPFT).
Disclaimer
This 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. CRISIL is not responsible for any errors and especially states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this report. For information please contact 'Client Servicing' at +9122-33423561, or via e-mail: clientservicing@crisil.com.