SSI – Global solutions - 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?  

SSI – Global solutions

Sep 19, 2000

SSI Ltd., one of India’s fastest growing companies providing software education and software development & consulting has announced the acquisition of AlbionOrion company, USA for Rs 2.9 bn. SSI proposes to use combination of cash (US$ 20 m) and stock (US$ 43.7 m) to pay for the acquisition. The transaction will lead to an equity dilution of about 5%. AlbionOrion is a company with strong domain expertise in telecom, insurance, health and human services. It provides high end IT solutions in Internet technologies, SCM (Supply Chain Management), CRM (Customer Relationship Management) and ERP systems. The company has a strong client base of Fortune 1,000 companies which includes BellSouth, 3M, American Express, Atlantic Mutual and DaimlerChrysler.

AlbionOrion’s sales revenues of $27 m for FY00 are expected to grow at about 30% in FY01. The company gets operating margins in the range of 35-40% and expects to grow its margin further in the current year. It has a healthy order pipeline of US$ 27 m as on date. The billing rates of the company are also comparatively on the higher side since it operates on a high end of value chain. Its onsite average billing rate of $115 per man-hour is expected to increase to $175 per hour, which reflects its strong position in the value chain. The acquisition is expected to significantly improve SSI’s revenue mix and add an impressive list of clients and set of core competencies to SSI.

SSI has a strong presence in the education business through its division SSI Education, which accounts for around 75% of its total revenues. It offers courses in high-end technologies including Java, e-commerce and client server technologies. While SSI Technologies, the software solution division focuses on e-commerce and web enabling of software products based on state of the art architecture. The income from this division have grown to Rs 474.2 m in FY00 (Rs 26 m in FY99) contributing 24% to total business. The acquisition of AlbionOrion will complement SSI Technologies business model with strong domain skills in telecom, banking, healthcare and insurance. It will also provide a platform for the company to move up the value chain by enhancing delivery capabilities. The acquisition is expected to add revenues of more than Rs 1.6 bn to its current revenues of Rs 2 bn.

Financial Performance
(Rs m)FY99FY00Change
Other Income27168530.4%
Operating Profit (EBDIT)317711124.4%
Interest 5635-37.6%
Profit before Tax226695207.3%
Profit after Tax181569215.1%
No. of Shares (m)11.912.8 
Key Ratios   
Operating profit margin 37.3%36.0% 
Net profit margin 21.3%28.8% 
Tax / PBT20.2%18.1% 
Diluted Earnings per share14.144.5 

At the current market price of Rs 2,623 SSI is available at a P/E multiple of 59 times its FY00 earnings. During the year ended June 2000, the company has successfully acquired companies lie Indigo International Inc., Agenda Netmarketing Pvt. Ltd. and Inndsoft Systekh Ltd. It has an established track record of making acquisitions that create significant value for the shareholders. Efficient deployment of cash (as on June 2000 cash balance of Rs 3.5 bn) will enable the company to improve its return on capital employed in time to come. This will also improve its current valuations.

Equitymaster requests your view! Post a comment on "SSI – Global solutions". Click here!


More Views on News

If You had Invested Rs 1 Lakh in TCS in 2011, this is how Much You Would have Today (Views On News)

Nov 30, 2021

Did TCS perform better than the market and its peers?

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.

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.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

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.

5 Indian Companies Embracing Blockchain Technology (Views On News)

Nov 23, 2021

Blockchain adoption in India was slow in the past. Now, the technology is being well received.


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


Dec 3, 2021 (Close)


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