COMPUCOM SOFTWARE- A POTENTIAL MULTIBAGGER!

ABOUT:-

            Compucom software limited (CSL), is the leading software and education company. CSL offers quality services in software development, software consultancy, software products, web development & design, Internet/Intranet, E-governance, networking solutions, technical support, BPO, IT and training.

BRIEF ABOUT COMPANY:-

            Founded in 1990, in New Jersey, USA, Compucom Software is a multi-million dollar IT company that started its Indian operations in 1994.

Compucom Software is a public listed company on BSE (Bombay Stock Exchange) India. As a successful IT company, Compucom offers quality services in Software Development, Software Consultancy, Software Products, Web development & design, Internet/Intranet, E-Governance, Networking Solutions, round the clock maintenance (7 x 24), Technical support, BPO, Education and IT training. Compucom has a customer base spread across four continents. CSL provides fully equipped software development centers in Atlanta (USA), New Jersey (USA) and Jaipur (India).

The company is having over 40,000 sq. ft. office space. State-of-the-art hardware & software resources. High speed reliable Internet connectivity. Own campus style software training institute. Fully equipped data centers in India & USA.

Products and services offered by the company:

Products:

   1)    iCARE 

   2)    iOBTS

   3)    Educational Multimedia Pack

   4)    Comex

Services:

   1)    Software Design, development and maintenance

   2)    IT Training

   3)    Resource supplementation

   4)    e-Governance initiatives

   5)    BPO &Call centers

SHAREHOLDING PATTERN:-

             Promoters as on Sept 16 are holding 72.78% of the company’s shares. The company is having no pledged shares! The main promoter, SAMBHAV INFOTEC PRIVATE LTD. is holding is 25.15%. Highest holder among the public shareholders are the TRUSTS, holding 3.55% of the company’s holding.  DIIs holding stand at 0.02% (2DII holders)as of sept16.

Business segmentation:

(1) Software & E-Governance Services:

During the year, the Company focused on the areas where higher margin was available with low risk factors. The revenue generated from this segment during the Financial Year 2015-16 was Rs. 461.71 Lakhs as against Rs 456.51 Lakhs during the previous financial year. This reflects increase of 1.14 % i.e. Rs. 5.20 Lakhs. Profit earned from this segment amount to Rs. 223 Lakhs as compared to that of Rs. 159.71 Lakhs during the previous Financial Year, which has resulted in increase of 39.63% i.e. Rs. 63.29 Lakhs.

 (2) Learning Solutions:

During this year revenue from this segment is amounted to Rs. 4938.79 Lakhs against the previous year revenue of Rs. 4,605.43 Lakhs which shows an increase in revenue by 7.24% i.e.; Rs. 333.36 Lakhs.

Learning Solution Segment mainly comprises ICT Phase II, ICT Phase III, ICT Bihar, CALP II, Computer Aided Training Program and other projects. The Company has covered total 8,223 Govt. Schools and over 2 million learners under its educational Umbrella so far. The Company is also planning to leverage in-house software development and satellite based technology skills for expansion in school and coaching Business.

(3) Wind Power Generation:

The Company has installed two Wind power generation plants in Jaisalmer (Rajasthan) with capacity of 0.6 MW each, two at Sikar (Rajasthan) with capacity of 0.6 MW each & One Plant at Krishna (Andhra Pradesh) with capacity of 0.8 MW. Total wind power generation capacity is 3.2 MW. The operation and maintenance of all these wind power project has been out-sourced to M/s Wind World India (previously known as Enercon India Limited). During the year revenue generated from this segment amounted to Rs. 175.87 Lakhs as compared to Rs. 189.23 Lakhs during the previous year ended on March 31, 2015 which shows a decrease in the revenue by 7.06%i.e. Rs. 13.36 Lakhs due to lower generation of units. Profit earned from this segment amount to Rs. 54.29 Lakhs as compared to that of Rs. 61.99 Lakhs during the previous Financial Year, which has resulted a decrease of 12.42% i.e. Rs. 7.7 Lakhs.

4. Treasury Activities:

The revenue generated from this segment during the Financial Year 2015-16 was Rs. 185.19 Lakhs as against Rs. 267.91 Lakhs during the last financial year. During the year, the revenue generated from treasury operations has decreased by 30.88% i.e. Rs. 82.72 Lakhs.

 Subsidiaries:

During the year, the company had 2 subsidiaries as under:

(A) ITneer. Inc: It is a wholly owned subsidiary Company of Compucom Software Limited. It has earned total revenue of US$ 1,001,417 during the financial year 2015-16 as compared to US $ 9,57,720 in the previous financial year. This reflects a increase of approx. 4.56% i.e. US $ 43,697. The Company has earned profit of US$ 34,969 as compared to the Profit of US $ 22,547 in the previous financial year. The Company is operating out of its own premises in Atlanta, USA. It is headed by Promoter Director Mr. Ajay Kumar Surana.

(B) CSL Infomedia Pvt. Ltd: It is another subsidiary Company of Compucom Software Limited. It has earned total revenue of Rs. 567.11 Lakhs during the financial year 2015-16 as compared to Rs. 412.92 Lakhs in the previous financial year which shows an increase of 37.34% i.e. Rs. 154.19 Lakhs. The Company has earned Profit of Rs.105.67 Lakhs as compared to the loss of Rs. 34.06 Lakhs in the previous financial year. The Company is mainly operating in multimedia, Content Development, Education TV Segment and Satellite Education. The Company has two TV Channel one “JAN TV”, Satellite TV channel and “JAN TV PLUS” (an Infotainment Channel).Currently it is available on various cable networks across India and also available live on jantvplus.in.

Financials and future prospects:-

FINANCIALS:-

             The company this financial year posted an EPS of 0.97 vs 0.67 in FY 2014-15! The company is having a good financial trend reporting fab Q2(YoY), near 70% rise in EPS.

             Company’s operating profit per share is Rs3.51 against 3.34. The OPM, CPM & NPM stands at 46.87%, 37.87%, 12.98% against 47.87%, 37.60% and 8.99%!!! Even the ROCE increased to 10.87% against 10.62% while RONW touched 6.11% vs 4.49%!!!

Company has reduced debt. Stock is currently trading at 0.95 times its book value. Company has been maintaining a healthy dividend payout.

FUTURE PROSPECTS, ORDER BOOK AND EXPECTATIONS:-

The ORDER BOOK of the company as of now stands as under

   1)    CSL receives an order of E-governance qworth Rs. 3.92crores for Department of Labour (DOL) from Govt. of Rajasthan on OCT 21, 2015 for a period of 3 years.

   2)    The Company has been running successfully, ICT Project Phase III worth Rs. 158.50 Crore, for 1,373 Govt. Schools of Rajasthan. It has been commissioned in the month of Feb. 2014 and will be a five 5 year project on BOOT model.

 EXPECTATIONS: Approximately 2000-3000schools are expected to be added in the coming 2-3 years under ICT project.

Client list:-

1)    Indian Govt. NCR.

2)     Govt. of Rajasthan.

3)    Merck

4)    Saka Solutions

5)     Merill Lynch. etc

SWEET SPOTS:-

    1)    Company has been maintaining a healthy dividend payout.

    2)    The company can sell its Software division any time. If it happens then it will create huge value for this company.

    3)    Leadership in Information and Communication Technology (ICT) is expected to be maintained by the Company.

    4)    Company has reduced debt.

    5)    The order book of the Company in more than 150 Crores.

    6)    Modi Govt. Has vast Interest in Skilled Development and More focus on education. This company has already many projects from Govt. on education.

    7)    To reap benefits of Dig India (digitalization) this year.

    8)    Venture into timely cash generating projects like renewable energy sector, consumption based projects and projects related to digital India and skill India.
9)    Sarva Shiksha Abhiyan (SSA) provides further boost to the company's sales and revenue.

    10)   The company has been adjudged the best software exporter for many years by Software Technology Parks of India (STPI).

Hot spots:-

     1)    Trade receivables of the company is too high though they are mainly related to Govt. Schools of Rajasthan. These debtors are considered good and the company says they are realizable.

     2)    The company has a low ROE below 10% for last 3 years.

     3)    Company has delivered a poor growth for last few years.

     4)    Businesses mainly operate on BOOT basis and are capital- intensive. All projects would require large upfront investments.

   

RETURNS:-

               The company doesn’t have any LT1, LT2 etc. A straight target of 100 from CMP 15.5 in nextyearUodyeararUod

An exit call on COMPUSOFT. 




UPDATE 25th July, 2018 (CMP12.5):-

An EXIT CALL on COMPUSOFT. 

Disc:- All the info are based on the writer's own research/gathered from public domains. The writer of this Blog is neither any advisor nor related to any brokerage houses!! The writer might be himself invested in the stock after his own research so the views might be biased. One must do their own research before investing. The writer of this blog won't be held responsible for any of your profit/loss in your investment/trading career!