Pentafour's shopping list has 8 companies - 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?  

Pentafour's shopping list has 8 companies

Oct 27, 1999

According to news reports, Pentafour Software has identified eight global infotech (IT) firms for acquisition. Pentafour Software and Exports differentiates itself from its software peers on the basis of large exposure to high margin multimedia business. It has a competitive edge in multimedia due to its excellent track record and long term relationship with global multimedia companies. It is one of the few companies worldwide that can produce complete content for multimedia-based movies. Of the eight companies that the company has identified for takeover, three are based in Los Angeles, and the rest are spread over Australia, Singapore, Japan and London. The company may not stop at these companies and is on the lookout for more acquisitions. It has outlined a budget of US$ 100 m for acquisitions.

These acquisitions will strengthen Pentafour's multimedia, e-commerce and entertainment businesses. The companies that have been targeted for acquisition are strong either in pre/post film production or in e-commerce/e-business.

Funding for these acquisitions will come from internal sources (US$ 40 m) while the balance will come from tapping the markets (ADR issue). The impressive performance of its peers (Infosys, Satyam Infoway) has encouraged Pentafour to tap the ADR route. Moreover, as some of its acquisitions are in and around the US, an ADR issue makes sense.

Pentafour's acquisition spree marks a growing trend in the software segment, where companies are identifying global IT companies operating in niche areas, to boost their revenues. Domestic companies realise that they can not sustain growth at current level of operations, and are looking overseas for acquisitions.

By being closer to the markets, these companies will be able to service their clientele more efficiently. They will also be able to intensify their marketing efforts and can leverage on their partner's clientele to grow in global markets. Market view:
Pentafour's stock has been trading at a discount to its peers largely due to poor management perception. However, the management has taken several steps (corporate governance, improved disclosures) to correct that perception. Significant rise in 2QFY2000 net profit (up 67% year on year) is another factor that has gone in the company's way. Therefore, the stock has been rated as a 'BUY'.

Equitymaster requests your view! Post a comment on "Pentafour's shopping list has 8 companies". Click here!


More Views on News

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

Most Popular

India: Recovery Stalled by Vaccine Games? (The Honest Truth)

Apr 13, 2021

Ajit Dayal on how India's vaccine strategy will impact the markets.

4 Stocks to Make Your Portfolio Immune to the Second Covid Wave (Profit Hunter)

Apr 6, 2021

Rather than predicting the market, successful investing is more about preparing well and placing your bets accordingly.

An India Revival Stock I'm Bullish On... (Profit Hunter)

Apr 9, 2021

This could take India to the position of 3rd largest economy.

Why Did the Market Crash on Monday? (Fast Profits Daily)

Apr 13, 2021

In this video, I'll you what I think is the real reason behind yesterday's market crash.

A Unique Sector for Short-Term Profits (Fast Profits Daily)

Apr 12, 2021

This ignored sector could deliver big short-term profits.


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


Apr 16, 2021 (Close)