Mcap helps Indian software companies grow - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Mcap helps Indian software companies grow

Mar 10, 2000

Cyberspace Infosys, a Mumbai based infotech company, is planning to acquire three US based software companies which have a combined revenues of $ 20 million (Rs 880 million). Cyberspace concentrates on software services such as customer relationship management and enterprise resource planning. The company had a turnover of over Rs 90 m for the year ended June 1999 and has reported a turnover of Rs 120 million in the first half of FY 2001.

It’s basically the market capitalisation of the software companies in India that is helping the Indian companies to bid for US companies. The market capitalisation of Cyberspace Infosys comes to over Rs 15 bn almost six times the companies expected turnover for the FY 2001.

The takeover of the US based companies if it were to go through would add a further Rs 880 million to the turnover of the company. This not only gives their turnover a big jump but also gives them access to the clients of the companies they have taken over. However, the price at which the US companies are taken over would be critical to the payback period.

This deal, if it were to go through, is in line with a recent deal that another software company Subex entered into. Subex brought over a US software company which has a turnover of $ 6 million (approx. Rs 264 m) when its own turnover is around Rs 50 m. This also gave it the clients such as AT & T and Lucent. Subex funded the deal through a private placement and Cyberspace plans to do the same.

Market View:
The stock has had a good run in the recent software rally and currently quotes at a earnings multiple of 226 of FY 99 earnings. Perhaps the only gray area is the de–rating of the sector itself, which could hit the valuation in the future.

Equitymaster requests your view! Post a comment on "Mcap helps Indian software companies grow". Click here!


More Views on News

India's Top 4 IT Companies are Struggling. Here's Why... (Views On News)

Oct 22, 2021

As attrition rates are unbelievably high, top Indian IT companies are going for big-ticket raises, and much more hiring this year.

Infosys had an Exceptional Quarter Buoyed by Huge Deal Wins. Revenue Guidance Boosts Stock (Views On News)

Oct 14, 2021

Infosys raised its forecast for annual revenue growth to 16.5-17.5% from the earlier 14-16%, predicted in July 2021.

Info Edge: The Anatomy of an Indian Internet Behemoth (Views On News)

Oct 2, 2021

Info Edge is very popular in the Indian startup ecosystem due to its active participation in funding events.

This Indian Company is Tapping into the Huge Autonomous Driving Opportunity (Views On News)

Sep 14, 2021

Despite many challenges, Indian companies and startups have not shied away from entering this space.

4 Indian Companies in the Exploding Drone Market (Views On News)

Sep 1, 2021

The futuristic drone industry in India holds immense promise now that the government has come out with new rules.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

How to Hit Rs 100 Crore Wealth in Your Lifetime (Equitymaster Wealth)

Nov 15, 2021

This is how you can achieve the ambitious goal of a net worth of Rs 100 crore.

Don't Sell these Stocks if the Market Falls (Profit Hunter)

Nov 17, 2021

These are the 3 types of stocks that you should not sell in a market crash.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Nov 26, 2021 (Close)