3i Infotech Ltd.
31st May, 2016 TABLE 1 ‐ MARKET DATA (STANDALONE) (As on 31st May, 2016)
NSE Code ‐ 3IINFOTECH NSE Market Price (₹) 3.85 NSE Market Cap. (₹ Cr.) 255.04
Sector ‐ IT ‐ Software Face Value (₹) 10.00 Equity (₹ Cr.) 640.80
52 week High/Low (₹) 6.65/ 2.80 Net worth (₹ Cr.) ‐284.86
Business Group ‐ ICICI TTM P/E N.A. Traded Volume (Shares) 12,30,575
Year of Incorporation ‐ 1993 TTM P/BV N.A. Traded Volume (lacs) 47.38
Source ‐ Capitaline
Corporate Office: COMPANY BACKGROUND
Tower No 5, 3rd to 6th Floor,
3i Infotech Ltd is a global Information Technology Company which provides technology solutions to over 1500 customers in more than 50 countries across 5 continents, spanning a range of verticals. The Company provides software products, IT services and Business Process Outsourcing (BPO) for a variety of industry verticals including Insurance, Banking, Capital Markets, Mutual Funds & Asset Management, Wealth Management, Government, Manufacturing and Retail.
The Company's solution and services include Managed IT Services, Application Software Development & Maintenance, Payment solutions, Business Intelligence, Document Imaging & Digitization, IT consulting and various Transaction Processing services. Their Global Delivery Model provides for the best resources to be drawn from their vast talent pool across the globe to offer optimal solutions.
The Company is one of the top four Indian software products companies. Their quality certifications include SEI CMMI Level 5 for Software business, ISO 9001:2000 for BPO, ISO/IEC 27001:2005 for Data Center Operations and ISO/IEC 20000‐1:2005 for Data Center Management Services. 3i Infotech Ltd was incorporated in the year 1993 with the name ICICI Investors Services Ltd. The Company was established with the principal mandate of servicing the ICICI Investor family by providing high quality service to shareholders, bond holder and other depositors. The Company was promoted by the ICICI Bank for their back office work but now they have become a global technology company. International Infotech Park, Vashi, Navi Mumbai – 400 703, Maharashtra Company Website: www.3i‐infotech.com TABLE 2 ‐ PRICE PERFORMANCE 30th May, 2016 29th May, 2015 30th May, 2014 % Change CAGR for 2 years 2016 vs 2015 2015 vs 2014 Price (₹) 3.95 2.90 9.00 36.21% ‐67.78% ‐33.75% Trading Volume (Shares) (yearly avg.) 24,77,260 22,02,620 9,35,426 12.47% 135.47% ‐ NSE Market Cap. (in ₹ Cr.) 253.12 176.11 515.8 43.73% ‐65.83% ‐29.92% Source ‐ Money Control
TABLE 3 ‐ FINANCIALS (₹ Cr.) 2015 2014 2013 % Change CAGR for 2 years 2015 vs 2014 2014 vs 2013 Net Worth ‐284.86 597.30 1,033.66 ‐147.69% ‐42.22% N.A. Current Assets 652.02 697.70 251.04 ‐6.55% 177.92% 61.16% Non‐Current Assets 3,071.33 3,791.29 3,752.00 ‐18.99% 1.05% ‐9.52% Total Assets 3,723.35 4,488.99 4,003.04 ‐17.06% 12.14% ‐3.56% Investments 1,610.23 2,278.77 2,216.42 ‐29.34% 2.81% ‐14.77% Finance Cost 194.69 300.22 284.10 ‐35.15% 5.67% ‐17.22% Long Term Liabilities 3,052.08 3,065.24 1,991.01 ‐0.43% 53.95% 23.81% Current Liabilities 922.63 826.45 978.37 11.64% ‐15.53% ‐2.89% Turnover 400.72 326.50 365.47 22.73% ‐10.66% 4.71%
Profit After Tax (PAT ‐ ₹ Cr.) ‐1,057.75 ‐440.22 ‐255.36 N.A. N.A. N.A. EPS (₹) ‐18.00 ‐8.00 ‐6.00 N.A. N.A. N.A.
Source ‐ Money Control/Annual Report
Discussion as per Company: During the FY 2014‐15: ‐
The Reserves and Surplus declined to ₹‐ 1,053 crores as at 31st March, 2015 from ₹41.91 crores in 31st March, 2014, majorly
due to impact of sale of subsidiaries and impairment as mentioned above. The net movement in the borrowings from ₹ 2,344.66 crores as at 31st March, 2014 to ₹ 2,025 crores as at 31st March, 2015 is due to repayments made out of sales
proceeds of subsidiaries. Deferred tax asset primarily comprises of deferred taxes on fixed assets and other expenses allowable on payments. The likelihood that the deferred tax asset will be recovered from future taxable income is assessed annually. Trade payables and other current liabilities consist of trade liabilities, short term provisions for employee benefits and other liabilities. The movement during the year is due to interest accrued and due on borrowings. Non‐current investments consist of unquoted / non‐trade long term investments. There is a decrease in long term loans & advances, the amount reduced from ₹ 214.14 crores as at 31st March, 2014 to ₹ 183.71 crores as at 31st March, 2015. Total receivables including unbilled revenue
reduced from ₹ 415.94 crores as at 31st March, 2014 to ₹ 355.07 crores as at 31st March, 2015.
During the FY 2013‐14: ‐
The Reserves and Surplus declined to ₹‐ 41.91 crores as at 31st March, 2014 from ₹ 278.03 crores in 31st March, 2013, due to
current year losses. The net movement in the borrowings from ₹ 2,151.36 crores as at 31st March, 2013 to ₹ 2,344.66 crores as at 31st March, 2014 is due to additional funding. Deferred tax asset primarily comprises of deferred taxed on fixed assets and other expenses allowable on payments. The likelihood that the deferred tax asset will be recovered from future taxable income is assessed annually. Trade payables and other current liabilities consist of trade liabilities, short term provisions for employee benefits and other liabilities. The movement during the year is substantially due to advance payments received from customers and interest accrued and due on borrowings. Non‐Current Investments consist of unquoted / non‐trade long term investments.
reduced from ₹ 292.13 Crores as at 31st March,2012 to ₹ 105.51 Crores as at 31stMarch, 2013 majorly due to the decrease in
capital advances and other advances. Total receivables including unbilled revenue amounted to ₹ 348.52 crores as at 31st
March, 2013 from ₹ 599.11 crores as at 31st March, 2012. The fall in trade receivables and unbilled revenue is due to provision made for doubtful debts / reversal of unbilled revenue during the current financial year and increased collection made during the year. AUDIT QUALIFICATIONS Audit Qualifications in last 3 years: The Auditors have not made any qualification in last three years. Response Comment Frequency of Qualifications The Auditors have not raised qualifications in last three years. Have the Auditors made any adverse remark in last 3 years? No ‐
Are the material accounts audited by the Principal
Auditors? Yes ‐
Do the financial statements include material unaudited
financial statements? No ‐ TABLE 4: BOARD PROFILE (As on 31st March, 2015) Regulatory Norms Company % of Independent Directors on the Board 33% 50% % of Promoter Directors on the Board ‐ 17% Number of Women Directors on the Board Atleast 1 1 Classification of Chairman of the Board ‐ Independent Director Is the post of Chairman and MD/CEO held by the same person? ‐ No Average attendance of Directors in the Board meetings (%) ‐ 100% Source ‐ Money Control/Annual Report
Composition of Board: As per Regulation 17(i)(b) of the Listing Regulations, 2015, the Company should have at least 33% Independent Directors as the Chairman of the Board is a Non‐Executive/ Independent Director. The Company has 50% of Independent Directors and hence, it meets the regulatory requirements.
Board Diversity: The Company has 6 directors out of which 5 are male and 1 is female.
TABLE 5 ‐ FINANCIAL RATIOS Ratios 2015 2014 2013 % Change 2015 vs 2014 2014 vs 2013 Turnover Ratios
Inventory Turnover N.A. N.A. N.A. N.A. N.A.
Debtors Turnover 0.70 0.54 3.75 30.15% ‐85.73% Fixed asset Turnover 0.13 0.09 0.10 51.50% ‐11.59% Current Asset Turnover 0.61 0.47 1.46 31.33% ‐67.86% Retur n Ratios
Operating Profit Margin ‐85.74% ‐128.00% ‐103.83% N.A. N.A.
Net Profit Margin ‐263.96% ‐134.83% ‐69.87% N.A. N.A.
Return on Assets (ROA) ‐28.41% ‐9.81% ‐6.38% N.A. N.A.
Return on Equity (ROE) N.A. ‐73.70% ‐24.70% N.A. N.A.
Return on Capital Employed (ROCE) N.A. N.A. N.A. N.A. N.A.
Liquidity
Ratios
Current Ratio 0.71 0.84 0.26 ‐16.29% 229.01%
Quick Ratio N.A. N.A. N.A. N.A. N.A.
Cash Ratio N.A. N.A. N.A. N.A. N.A.
Working Capital Turnover ratio N.A. N.A. N.A. N.A. N.A.
Solvenc
y
Ratios
Debt to equity ratio N.A. 3.76 1.90 N.A. 98.04%
Interest Coverage Ratio N.A. N.A. N.A. N.A. N.A.
Trading Ratios
Market Cap / Sales 0.68 0.84 0.75 ‐18.52% 11.94% Market Cap/ Net Worth N.A. 0.46 0.27 N.A. 73.06%
Market Cap/PAT N.A. N.A. N.A. N.A. N.A.
Market Cap/EBITDA 192.42 298.71 282.33 ‐35.58% 5.80% Trading Volume (shares) (avg. of 1 year) 30,42,272 17,84,924 7,45,228 70.44% 139.51% Trading Volume (shares) (high in 1 year) 2,19,89,638 1,57,32,337 58,19,850 39.77% 170.32% Trading Volume (shares) (low in 1 year) 1,70,240 1,49,265 68,440 14.05% 118.10% Ratio ‐ High/low trading volume 129.17 105.40 85.04 22.55% 23.95% Ratio ‐ High/average trading volume 7.23 8.81 7.81 ‐17.99% 12.86% Source ‐ Money Control
TABLE 6 (A): OWNERSHIP & MANAGEMENT RISKS
Mar' 2016 Mar' 2015 Mar' 2014 Comments
Shareh
o
lding
Promoter shareholding 4.77% 6.47% 6.82% Promoter shareholding decreased from 6.82% in Mar’ 2014 to 4.77% in Mar’ 2016 due to allotment of equity shares made towards conversion of FCCBs and sacrifice under CDR. The shareholding of public institution decreased from 55.22% to 33.16% and that of public others increased from 37.96% to 62.07% during the same period. The promoters have not pledged any shares Public ‐ Institutional shareholding 33.16% 52.06% 55.22% Public ‐ Others shareholding 62.07% 41.47% 37.96% Non Promoter Non Public Shareholding ‐ ‐ ‐ TABLE 6 (B): OWNERSHIP & MANAGEMENT RISKS Market Activity of Promoters The promoters have not sold/bought any shares in last three years Preferential issue to promoters No preferential issue of shares was made to the promoters in last three years Preferential issue to others The Company issued 14,44,747 equity shares and 1,69,70,618 equity shares to Standard Chartered and DBS Bank respectively under CDR Scheme in last three years. GDRs issued by the Company The Company did not issue and GDRs in last three years Issue of ESOPs/Issue of shares other than Preferential allotment During the FY 2014‐15 company issued 1,15,69,000 stock options under new plan (Plan 2014) Source ‐ Annual Report
Glossary
Equity: The equity shares capital of the Company Net Worth: The amount by which the Assets exceeds the liabilities excluding shareholders’ funds of the Company Turnover: The revenue earned from the operations of the Company EPS: Earning Per Share is net profit earned by the Company per share Profit After Tax Number of outstanding shares P/E ratio: It is the ratio of the Company’s share price to earnings per share of the Company / Price of each share Earnings per share Current Assets: Cash and other assets that are expected to be converted to cash in one year Fixed Assets: assets which are purchased for long‐term use and are not likely to be converted quickly into cash, such as land, buildings, and equipment Total Assets: Current Assets + Fixed Assets Investments: An investment is an asset or item that is purchased with the hope that it will generate income or appreciate in the future. Finance Cost: The Financing Cost (FC), also known as the Cost of Finances (COF), is the cost and interest and other charges incurred during the year in relation to borrowed money. Long Term Liabilities: Long‐term liabilities are liabilities with a maturity period of over one year. Current Liabilities: A company's debts or obligations that are due within one year. Inventory Turnover ratio: Inventory Turnover is a ratio showing how many times a company's inventory is sold and replaced over a period. Sales Turnover Inventory Debtors Turnover: Accounts receivable turnover is an efficiency ratio or activity ratio that measures how many times a business can turn its accounts receivable into cash during a period Sales Turnover Accounts recievables Fixed Asset Turnover: The fixed‐asset turnover ratio is a financial ratio of net sales to fixed assets Sales TurnoverOperating Profit Margin: Operating margin is a measurement of what proportion of a Company’s revenue is left over after paying for variable costs of production such as wages, raw materials etc. It can be calculated by dividing a Company’s operating income (also known as “operating profit”) during a given period by its sales during the same period. Operating profit Sales Turnover Net Profit Margin: Net profit margin is the percentage of revenue left after all expenses have been deducted from sales Net profit Sales Turnover Return on Assets: ROA tells you what earnings were generated from invested capital (assets) Net profit Total Assets Return on equity/net worth: return on equity (ROE) is the amount of net income returned as a percentage of shareholders’ equity. Net profit Net worth Return on Capital Employed: Return on capital employed (ROCE) is a financial ratio that measures a company's profitability and the efficiency with which its capital is employed. Net profit Total Debt Equity share capital Current ratio: The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities. Current Assets Current Liabilities Quick ratio: The quick ratio is a measure of how well a Company can meet its short term financial liabilities. Current Assets Inventories Current Liabilities Cash ratio: The ratio of the liquid assets of a Company to its current liabilities.
Current Assets Inventories Account Recievables
Current Liabilities
Working Capital Turnover ratio: The working capital turnover ratio is also referred to as net sales to working capital. It indicates a Company's effectiveness in using its working capital.
Current Assets Current Liabilities
Debt to Equity ratio: The debt‐to‐equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets.
Interest Coverage ratio: The Interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a Company can pay interest on outstanding debt.
Market Cap/Sales ratio: Market Cap/sales ratio, Price–sales ratio, P/S ratio, or PSR, is a valuation metric for stocks. It is calculated by dividing the company's market cap by the revenue in the most recent year; or, equivalently, divide the per‐share stock price by the per‐share revenue. / Market Cap/ Net Worth ratio: It is a valuation ratio calculated by dividing Company’s market cap to net worth. / Market Cap/ PAT ratio: It is a valuation ratio calculated by dividing Company’s market cap to net profit. / Market Cap/ EBITDA ratio: It is a valuation ratio calculated by dividing Company’s market cap to EBITDA. / Trading Volume (shares) (avg. of 1 year): Average number of shares/day traded in 1 year Trading volume (shares) (high in 1 year): Highest number of shares/day traded in 1 year Trading volume (shares) (minimum in 1 year): Lowest number of shares traded on any one day in 1 year
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