X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
3i Infotech: Transaction service business languish again - Views on News from Equitymaster
MidCapSelect
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  
  • Home
  • Outlook Arena
  • Apr 26, 2011 - 3i Infotech: Transaction service business languish again

3i Infotech: Transaction service business languish again
Apr 26, 2011

3i Infotech has announced the fourth quarter results of financial year 2010-2011 (4QFY11). The company has reported a 2.2% QoQ growth and 1.9% QoQ decline in sales and net profits respectively. Here is our analysis of the results.

Performance summary
  • Net sales grew by 2.2% QoQ in 4QFY11. For the year ended March 2011, sales grew by 5.0% YoY.
  • Operating margins remained flat during the quarter at 19.3% as compared to previous quarter (quarter ended December 2010, 3QFY11). For the full year FY11, operating margins remained almost flat as well at 19.6% as compared to last financial year FY10.
  • Net profit declined by 1.9% QoQ during the quarter. This was mainly driven by lower other income during the quarter. For the full year FY11 (year ended March 2011), net profits fell by 5.1% YoY. This was mainly due to higher depreciation and intesest costs, which offset the impact of growth in net sales.
  • Proposed a final dividend of Rs 1.5 per share (yield of 3.1%).

Consolidated financial performance: A snapshot...
(Rs m) 3QFY11 4QFY11 Change FY10 FY11 Change
Sales 6,378  6,516 2.2% 24,485 25,698 5.0%
Expenditure 5,147  5,256 2.1% 19,656 20,656 5.1%
Operating profit (EBITDA)  1,231  1,260 2.4%  4,829  5,041 4.4%
Operating profit margin (%) 19.3% 19.3%   19.7% 19.6%  
Other income 76 19 -75.5% 202  177 -12.3%
Depreciation 252 237 -5.9%  814  1,005 23.4%
Interest  412 423 2.7%  1,448  1,601 10.6%
Profit before tax 642 618 -3.8% 2,769  2,612 -5.7%
Tax  (1) (16)    110 76  
Profit before exceptional items and minority interest 644 634 -1.5% 2,660  2,536 -4.7%
Minority Interest 1 3   (1) 11  
Exceptional gain/(loss) - -   279 -  
Impact of discontinued business       2,605    
Profit after tax/(loss) 643 631 -1.9%  335  2,525 654.7%
Profit after tax/(loss) excl. exceptional items 643 631 -1.9%  2,661  2,525 -5.1%
Net profit margin (%)*# 10.1% 9.7%   10.9% 9.8%  
Total dividend on preference shares (paid & accrued, including tax)         74.10  
No. of shares (m) 191.9 191.9   168.8 192.0  
Diluted earnings per share (Rs)*#         12.8  
P/E ratio (x)*#         3.8  
*On a trailing 12-months basis; # Adjusting for exceptional items

What has driven performance in 4QFY11?
  • 3i Infotech recorded 2.2% QoQ growth in sales during the quarter. This was on account of a 4.7% QoQ growth in the IT solutions business segment. However, the Transaction services business once again languished and registered a decline of 4.1% QoQ.

    Segment wise revenue breakup
    (Rs m) 3QFY11 4QFY11 QoQ
    IT Solutions
    Revenue 4,543 4,756 4.7%
    Gross profit 2,073  2,182 5.3%
    Gross margins 45.6% 45.9%  
    Transaction service
    Revenue 1835 1760 -4.1%
    Gross profit 533 515 -3.5%
    Gross margins 29.1% 29.3%  

  • In terms of geographies, the Company registered growth from all the markets except Western Europe. Revenue from USA market (close to 50% of net sales) grew by just 1.8% QoQ. While revenues from South Asia (31% of net sales) grew by 8.5% QoQ. However revenues from Western Europe (5% of net sales) declined by 18.7% QoQ.

    Revenue Breakup
    (Rs m) 3QFY11 4QFY11 Change
    On basis of geography
    South Asia 1,873 2,032 8.5%
    Asia Pacific 342 349 2.0%
    USA  3,169 3,206 1.2%
    MEARC 594 604 1.8%
    Western Europe 400 325 -18.7%

  • 3i Infotech's operating margins remained flat sequentially at 19.3% during the quarter. This was on account of near flat operating costs (as percentage of total sales) as compared to previous quarter.

  • 3i Infotech's margin at net level declined by 0.4% QoQ during the quarter. This was mainly driven by lower other income during the quarter. For the full year FY11 (year ended March 2011), net profit margin was down by 1.1% YoY. This was mainly due to higher depreciation and intesest costs, which offset the impact of growth in net sales.

What to expect?
At the current price of Rs 45, the stock is trading at a multiple of 4.7 times of expected FY14 earnings (ResearchPro subscribers, kindly click here).

In the light of recent changes in the company, we recommend a 'Hold' View on the stock with a 3 years perspective.

To Read the Full Story, Subscribe or Sign In


Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

3I INFOTECH LTD. SHARE PRICE


Feb 23, 2018 10:27 AM

TRACK 3I INFOTECH LTD.

  • Track your investment in 3I INFOTECH LTD. with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

MORE ON 3I INFOTECH LTD.

3I INFOTECH LTD. - CMC LTD. COMPARISON

COMPARE 3I INFOTECH LTD. WITH

MARKET STATS