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TCSer
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Topic: Infinite Computer Solutions Cheap Midcap IT Stock Posted: 03/Feb/2010 at 7:27pm |
Infinite is Focused on telecom vertical
Has seen stupendous growth over the
last 18 months even when the general industry as well as the telecom
vertical were not doing well
Infinite Computer Solutions
(India), promoted by Sanjay Govil, is a global service provider of
infrastructure management, intellectual property (IP) leveraged
solutions and IT services, is significantly focused on the telecom
vertical. The telecom vertical contributed 59.4% of the revenue for
fiscal ended March 2009 (FY 2009) and 54.4% of the revenue in the first
half of FY 2010. The other focus industry verticals include media,
technology, manufacturing and healthcare.
Strengths
* The company has seen good growth over the last 18
months on the back of change in revenue mix. For FY 2009, the operating
revenue grew 44% over FY 2008 and for H1 FY 2010, the company reported
65% of FY 2009 revenue. The company has moved away from low margin
business to core higher margin business. In FY 2006, Application
Development & Maintenance (ADM) contributed 80% of revenue. This
has come down to 61% in FY 2009, whereas the share of remote
infrastructure management services increased from 6% to 8%, testing
services from 4% to 11%, and IP leverage services from 8% to 17%.
* The operating margins improved from 4.3% in FY 2007 to 11.9% in FY
2009 and further to 18% in H1 FY2010. The company, which was
predominantly an onsite company, has since seen the level of offshore
increase from 10% in FY 2006 to 25% in FY 2009 and further up to 32% in
H1 FY 2010. The share of non-linear revenue has also increased, thereby
boosting margins. The billing has changed towards fixed price and
revenue sharing from time & material (T&M). T&M has
decreased from 81% in FY 2006 to 51%, whereas fixed price has improved
from 19% to 43% and revenue sharing to 6%.
Today on listing day T Rowe Price the famous American investing giant
purchased nearly 18 Lacs shares@ 197 of Infinite Computer Solutions
from NSE n BSE.So the second litmus test of purchase by a big FII is
pased after the Ist litmus test of heavy oversubscription.They already
had purchased 3 lacs shares as anchor investors.Besides them Carlson
fund,Citi,Bharti axa,Reliance MF,Alden,CS & Lloyd George had
purchased nearly 17 lacs shares as anchor investors.
So its a potential
blue chip with expected EPS of 20 in march 2010 & 26 in March 2011
available very cheap.I bought some more shares in addition to the
allotment from IPO.
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TCSer
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Posted: 04/Feb/2010 at 2:15pm |
Making new highs in a falling market.
Valuations even now are damn attractive
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experteye
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Posted: 05/Feb/2010 at 3:09pm |
It is highly valued stocks. sure multibagger of future.1000 in due course of time, looking at long term fundamental of the company.
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more risk,more profit but have a vision before taking risk,itis all about investment in equities market.
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Jaishrikrishna
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Posted: 05/Feb/2010 at 4:20pm |
Originally posted by experteye
It is highly valued stocks. sure multibagger of future.1000 in due course of time, looking at long term fundamental of the company. |
So infinite computers will produce infinite money also.
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Don't Buy and Hold, Buy and Homework / Fish see the bait,but not the hook; Men see the profit, but not the peril.
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hit2710
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Posted: 05/Feb/2010 at 6:35pm |
Originally posted by TCSer
So its a potential blue chip with expected EPS of 20 in march 2010 & 26 in March 2011 available very cheap
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How does it stack up with industry leaders? I assume tulip tele is a big player here.
And how does this space compare with RIM with players like adsl and omnitech?
Omnitech seems to be available cheap and so also seems adsl
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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.
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TCSer
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Location: India
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Posted: 05/Feb/2010 at 6:48pm |
Infinite is a typical midcap software exporter having a turnover in range of 600 crores which is decent unlike other players mentioned by you which are mostly domestic players .Margins are much lower in domestic n moreover they are taxable as well.
This years profit will be in the range of 85 crores & next year maybe 130 crores implying even a higher EPS for next year The pedigree of the promoter Sanjay Govil n his team is a decent one.They are abunch of IITians & BITS Pilani.The company enjoys enviable longterm relationship with some of the best telecom cos like Verizon which is a big moat for them. BTW Infinite is also into domestic business to diversify in collaboration with Phoenix system n is expected to bag around 500 crore worth of order shortly in the power sector.
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TCSer
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Posted: 05/Feb/2010 at 6:50pm |
An Infinite IPO note by HDFC Securities
says, “The positives of the issue include company’s experienced
management and its demonstrated ability to retain key clients over a
long period of time, its efforts to diversify currently concentrated
client base and geographical presence, its growing presence in higher
margin businesses like infrastructure management services (8% of sales
- expected to grow to 24% of total IT services from 15% currently) and
IP development services, shift to fixed price contracts (from a low of
19% to 43%, rise in proportion of offshore business from 4% to about
25% over four year period and attractive return ratios. At the issue
price of Rs 155 – 165 on consolidated EPS of Rs 10.2 for FY 2009, the
P/E works out to 15.1 – 16.1 times. The company has seen a very robust
FY 2009 and first half of FY 2010, when the general industry trend was
negative to sluggish. Backed by growth in top 10 clients and change in
business model, the Company reported 43% growth in operating revenues
and 159% jump in net profit for FY2009, For H1FY2010, it has already
done 65% of FY2009 revenues and 82% of FY2009 net profit. On annualized
basis, FY 2010 diluted annualised consolidated EPS comes to Rs 16.9 and
P/E comes down to 9.1 – 9.7 times.”
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TCSer
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Posted: 05/Feb/2010 at 6:51pm |
Udayan noteThey
could have come at a better time for the market admittedly and then the
pop would have been bigger but it was heavily subscribed, they left a
lot on the table assuming they will do Rs 20 odd earnings per share.
The stock came at some 8 PE and you do not see too many IT companies
doing an initial public offering (IPO) at 8 PE. So they left a lot of
value on the table and they should be rewarded for it.
So
Rs 165 issue in all things being equal kind of a market they should
have been at Rs 200 plus because it’s a reasonably sized IT company, Rs
650-700 crore revenue, reasonable pedigree, 18-20% kind of margin so
there is no problem with the company as such it seems. So they should
have debuted at Rs 200 maybe they will but had they done it a fortnight
back, the listing it would have been a certainty to see Rs 200 plus on
the screen.
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