DP Money Watch - Datamatics Technologies, The Underdog To Watch Out For In ‘008

December 29, 2007 by Ashok
Filed under Financial Markets

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Datamatics Technologies Ltd (DTL ), a pioneer in providing BPO and KPO solutions was incorporated in 1975 by Dr. Lalit Kanodia who is widely known as the founder of the Indian IT Industry. Even before Dr. Kanodia got his Ph.D. from MIT he was selected as a member of the team that developed and designed the first two multi-user operating systems (CTSS & MULTICS), which were precursors to UNIX. His pioneering streak continued and, in 1967, Dr. Kanodia founded and headed Tata Consultancy Services. History was created again when he founded Datamatics in 1975. Today Datamatics is ranked by NASSCOM as the 12th largest BPO company.

With several innovations to its credit, Datamatics had the distinction of establishing the first satellite link from India to the USA in 1989 and boasts of having initiated the “off-shore software factory” concept. The company has executed over 1100 projects in 58 countries for some of the world’s largest organizations, including five of the top ten Fortune 500 companies. Today, its employee strength is over 1600, spread across the multiple continents. Datamatics Technologies operates in the following domains:

Document Processing
Finance and Accounting
Content Management
Consulting Practice

Datamatics Technologies Limited made an initial public offer in April 2004. The issue was subscribed 27 times, and the shares listed on BSE and NSE on May 7, 2004, at a premium of 77% i.e. at Rs. 195 as compared to the issue price of Rs. 110. But today the share is available at 50 % of its IPO price.

Company’s Financials are given below:

Type	UnAudited	UnAudited	Audited
Period Ending	30 Sep 07	30 Jun 07	31 Mar 07
No Of Months	3	3	3
Description	Value(Rs. million)
Net Sales / Interest Earned / Operating Income	134.03	127.11	177.77
Other Income	21.61	21.56	16.48
Total Income	155.64	148.67	194.25
Expenditure	-119.99	-119.09	-121.78
Operating Profit	35.65	29.58	72.47
Profit Before Depreciation and Tax	35.65	29.58	72.47
Depreciation	-10.88	-10.68	-10.13
Profit before Tax	24.77	18.90	62.34
Tax	-4.35	-3.02	-5.00
Net Profit	20.42	15.88	57.34
Equity Capital	203.58	203.58	203.58
Reserves	2,223.50	2,203.07	2,187.20
Basic And Diluted EPS after Extraordinary item	-	0.39	1.41
Basic EPS after Extraordinary items	0.50	-	-
Diluted EPS after Extraordinary items	0.50	-	-
Nos. of Shares - Public	12,748,381	12,743,131	12,743,131
Percent of Shares-Public	31.31	31.03	31.30
Operating Profit Margin	26.60	23.27	40.77
Net Profit Margin	15.24	12.49	32.26
Cash EPS	0.77	-	-

Financials reproduced from BseIndia

Although the top line is showing a steady growth YOY, but the margins during the last 4 quarters have declined, probably because of Rupee appreciation. However, considering that the company is DEBT FREE and is sitting on cash worth Rs. 55 per share ( same as its CMP ), the company’s financial performance is expected to improve, as 2008 and future years are going to be years of Knowledge Management where DTL has competitive edge over its rivals.

Buy at CMP of Rs. 50 is recommended with atleast one year HOLD.

This report has been prepared solely for information purposes and the information contained herein may not be deemed to be an investment advice. Such information is impersonal and not tailored to the investment needs of any specific person. The information contained herein is not a complete analysis of every material fact representing any company, industry or security. The views expressed may change. While the information contained herein has been obtained from sources believed to be reliable, no responsibility (or liability) is accepted for the accuracy of its contents. Investors are advised to satisfy themselves before making any investments and should consult with and rely upon their own advisors whether and how to use such information in making any investment decision.

Tags: datamatics, tcs, unix, multics, lalit, bpo, kpo, dividend, profit, stocks, equity, buy

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