VisualSoft: Leveraging on existing technologies - Views on News from Equitymaster

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

  • MyStocks

MEMBER'S LOGINX

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

VisualSoft: Leveraging on existing technologies

Aug 28, 2000

VisualSoft Technologies Ltd. is often taken to be the benchmark for Indian information technology (IT) product companies. The company follows a de-risked business model harnessing the synergies of products, components and solutions. The company initially started from a client server product development model, which mainly involved back office technology and support service. After exploiting the Y2K and Euro booms, it has moved on to higher value added services/products. It adopted latest technologies like Java and with its packaged software products, addressed a host of solution areas like B2B technologies, net appliances, data storage and m-commerce

The optimal business mix and geographical mix has enabled the company to grow more than the industry growth rate. In the past 4 years, its revenues have grown at a CAGR (Compounded Annual Growth Rate) of 227% and profits at a CAGR of more than 300%.

Financials growing manifold
Year ended June (Rs m)FY97FY98FY99FY00CAGR
Total revenues20104299702227.0%
Total expenditure1569166383196.0%
Operating profit533129297289.0%
Depreciation161322178.0%
Interest0100 
Profit before tax428120297313.0%
Tax0028 
Profit after tax428116284306.0%
Key Ratios     
Operating profit margin25.4%32.5%43.6%43.6% 
Net profit margin21.4%27.7%39.4%41.8% 
Fully Diluted EPS (Rs)0.21.45.914.4 
CEPS (Rs)0.85.420.646.7 

Its products business has contributed 49% of its FY00 sales. Growing product revenues have further increased VisualSoft’s operating margins in 1QFY01 to 52% from 43.6% in FY00. The company’s product VisualSoft Web Project (WAP and ASP enabled product) and VisualSoft JBPro have established themselves as leaders in their segments. What’s noteworthy about Visualsoft is its flexibility to quickly adapt to new technologies. For instance, it did not have Java capability until a few months back. Now, the company has joined the top ten list of the Java Developer’s Journal.

Neither does VisualSoft lack on the marketing front also. It has tied up with 12 global software marketing and distribution companies to market its products. However such marketing tie-ups entail heavy costs. The company gets only 50% of the price of its products and the balance 50% goes to its channel partner.

Although the company has many successful products, it does not actually develop software for new applications. It concentrates more on complementing existing technologies. For example its latest product VisualSoft JBPro (Java product), builds add-ons around the language so that developers can use this more effectively. The company’s business model is to adapt a technology for a particular use. So instead of developing new products, the company’s R&D effort is directed towards developing new versions of existing products.

At the current market price of Rs 1,712 VisualSoft is trading at a P/E of 119 times its FY00 earnings and 60 times its FY01 projected earnings. During the year, the company has declared a bonus issue in the ratio 2:1. In the recent past the company’s valuations has been affected adversely due to concerns about its revenues, as it had to pay Rs 25 m as a final settlement to Danlaw Inc. USA for the services rendered by the later. Also Visualsoft does not own many IPRs since its products are not original innovations but improvisations of existing technologies. Nevertheless going by the demand potential and the current strength of the company, it should not have any problem growing at 100% over the next two years.

Equitymaster requests your view! Post a comment on "VisualSoft: Leveraging on existing technologies ". Click here!

  

More Views on News

Birlasoft Hits 52-week High as Company Signs AI Partnership (Views On News)

Jun 9, 2021

The stock has rallied 350% in the last year. Is there more steam left?

What's Behind the Rally in Wipro Shares? (Views On News)

May 31, 2021

Wipro shares outperforms TCS and Infosys over the past year. Is the rally justified?

Happiest Minds Q4 Results: Profit Grows Over Six-Fold; Company Eyes 20% Organic Growth in FY22 (Views On News)

May 14, 2021

Key takeaways from Happiest Minds Technologies Q4FY21 results.

L&T Technology Shares Fall After Q4 Results. What Should Investors Do? (Views On News)

May 5, 2021

Despite strong deal wins and a low base in FY21, a big turn-off for investors was the muted FY22 revenue growth guidance.

Tech Mahindra Shares Fall After Q4 Results. What Should Investors Do? (Views On News)

Apr 27, 2021

Tech Mahindra forecasts double digit growth driven by strong demand from clients.

More Views on News

Most Popular

Hotel Stocks Will Reward Investors (Fast Profits Daily)

Jun 8, 2021

This is why I'm bullish on the hotel and hospitality sector.

Don't Break These 5 Intraday Trading Rules (Fast Profits Daily)

Jun 1, 2021

To become a better intraday trader, follow these rules religiously.

Is the RBI's 'Bubble Talk' Signalling a Market Crash? (Profit Hunter)

May 31, 2021

Is the Indian central bank correct in warning you about a market crash?

Rs 2 Trillion Stimulus Coming to a Stock Market Near You (Profit Hunter)

Jun 2, 2021

Get ready to profit from a massive stimulus that you've never seen before.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

TRACK VISUALSOFT(I)

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

MARKET STATS