Telecom software drives Trigyn’s revenues - Views on News from Equitymaster

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Telecom software drives Trigyn’s revenues

Aug 10, 2000

Trigyn Technologies Ltd. (Formerly Leading Edge Systems Ltd.) held its analyst meet on 9th August 2000. We present a brief report of the meet. Trigyn Technologies Ltd. (TTL) was earlier a low profile software company engaged mainly in the client server technology. In December 1999, the company took a major strategic decision and acquired eCapital Solutions for Rs 9.5 bn, which is mainly engaged into the telecom software and product business. eCapital Solutions is now the wholly owned subsidiary of TTL.

In FY00, the company has developed two products called ‘eVector’ and ‘Apollo’, which it has hived off as a separate subsidiary. The rationale behind this is to minimise the risk of having a product in the main company. The other reason could be that the company could list its stock abroad, which will help in bringing foreign currency for acquisition purpose.

TTL has significant experience in developing software led mobile enabling solutions. The company’s indigenously developed product eVector provides a means to mobile enable the businesses or applications. It makes information from corporate applications and the Internet, available on mobile phones. This technology will assist the mobile, Internet, e-commerce market like banking, stock markets, portals and utilities. Mobile penetration is increasing at a very fast pace all over the world. As estimated by IBM the market for WAP is expected to grow by $30 bn by the year 2003 ($5 bn in 2001). This presents an immense potential to the company’s product.

During the 1QFY01 TTL’s profits increased by 17 % to Rs 35 m while sales witnessed a growth of 24% to Rs 201 m compared to corresponding previous quarter. The company has projected to increase its revenues by 100% to $ 40.2 m in FY01 compared to $20.2 m in FY00. The revenue driver would be its e-business, which currently contributes around 56% of its total revenues.

Although the telecom business contributed merely 10% to total revenues, it is expected to go up considerably in the current year. This is evidenced from the fact that during the 1QFY01, it added 18 new customers and 38% of them are added in telecom business. Hughes Software, a company in the similar business of communication software has much longer experience in the telecom software business than eCapital solutions. It has also proved its ability in telecom products business as can be judged from the 400% growth in products sales recorded by the company in 1QFY01 over the 1QFY00.

TTL in the past has not recorded growth equivalent to that recorded by other players in the IT sector. This was mainly because of its concentration on one particular technology, limited marketing ability and focus on one particular region i.e. US. Currently revenues from US account for around 77% of its total revenues. However, after the acquisition of eCapital Solutions, TTL has entered the high growing telecom software sector. It has also opened offices in UK and Germany and has plans to do so in some more European and Asian countries.

Geographical mix in 1QFY01
US 77.0%
UK 15.0%
Germany 6.0%
India 2.0%
Total 100.0%

TTL is currently valued at 44 times its 1QFY01 annualised earnings. The company aims to become the leader in the wireless and e-businesses and slot itself among the top ten in the industry. The valuations of the company in future will depend on the success of its products and its ability to establish a good brand name in telecom business.


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