SSI – Global solutions - 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?  

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) FY99 FY00 Change
Sales 849 1,975 132.5%
Other Income 27 168 530.4%
Operating Profit (EBDIT) 317 711 124.4%
Interest 56 35 -37.6%
Depreciation 61 149 143.7%
Profit before Tax 226 695 207.3%
Tax 46 126 176.6%
Profit after Tax 181 569 215.1%
No. of Shares (m) 11.9 12.8  
Key Ratios      
Operating profit margin 37.3% 36.0%  
Net profit margin 21.3% 28.8%  
Tax / PBT 20.2% 18.1%  
Diluted Earnings per share 14.1 44.5  

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

Sorry! There are no related views on news for this company/sector.

Most Popular

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

My Top Stock to Buy in this Market Selloff (Profit Hunter)

Sep 22, 2020

The recent correction offers a great opportunity to buy this high conviction smallcap stock.

Can the Nifty Fall to 10,200? (Fast Profits Daily)

Sep 24, 2020

The Nifty has reached an important support level today. If it breaks then we could see further downside.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

PVP VENTURES SHARE PRICE


Oct 29, 2019 (Close)

TRACK PVP VENTURES

  • 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

MARKET STATS