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TCSer
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Quote TCSer Replybullet 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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Quote TCSer Replybullet 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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Quote experteye Replybullet Posted: 05/Feb/2010 at 3:09pm
It is highly valued stocks. sure multibagger of future.1000 in due course of time,Wink looking at long term fundamental of the company.
more risk,more profit but have a vision before taking risk,itis all about investment in equities market.
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Quote Jaishrikrishna Replybullet 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,Wink looking at long term fundamental of the company.


So infinite computers will produce infinite money also.
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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Quote hit2710 Replybullet 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


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

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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Quote TCSer Replybullet 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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Quote TCSer Replybullet 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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Quote TCSer Replybullet Posted: 05/Feb/2010 at 6:51pm
Udayan note

They 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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