Business of the Company
The company is engaged in IT solutions and services to its customers the bulk of which are based in the USA. Prithvi Information was promoted by Ms. V Madhavi based out of the US and Mr. V Satish Kumar based in India in the year 1998. The company has been ranked 19 amongst the top 20 software exporters in India for the year 2003. For a small company this size one plus is that they are not dependent on any single client for a big chunk of their revenues and the largest client just contributes 4% of revenues. Another interesting thing though a negative is that the company unlike most Indian IT companies generate 90% of its revenues onsite. Onsite revenues are the revenues which are generated when work is done at the premises of the client. While the revenue per capita is higher onsite so is the expense, as is common knowledge that it is cheaper to do work in India. As a result of this the company is not as profitable as other Indian IT companies. The plus is that the management wants to change this ratio and so if things go right in future one can expect greater profitability.
Financials
The company is a debt free company which had loans worth Rs. 93.65 lakhs in the last fiscal but has no debt in the fiscal 2005. The turnover of the company has risen steadily from Rs. 26.6 crores in 2001 to 305.4 crores in the last fiscal. However the profit after tax has not grown so steadily, it was Rs.8.01 crores in the fiscal 2001 at a percentage of 30.4 on the turnover and has become Rs.28.84 crores last fiscal which is a percentage of just 9.45% of turnover in the latest fiscal. The cause of this is the rise in the Administrative and general expenditure which has risen from Rs.18.31 crores in 2001 to 276 crores in the last fiscal. The EPS last fiscal has been Rs. 47.21 and the Return on Net worth has been 28.59%.
Object of the Issue
The issue is being floated to raise money to set up an offshore delivery centre the estimated expense for which is 91 crore rupees.
Key Risk
A peculiar thing about the hiring of the employees of the company is that the company procures most of its manpower through vendor agreements with the people working for them not being the employees. The company does not have any long term contract with such vendors.
Conclusion
While the Prithvi Information has grown its topline at a decent pace the bottomline has not grown at an equally good pace. This is because majopirt of the revenues come from onsite work done, however when Prithvi Information is able to execute a larger part of its business in India this will be taken care of. The issue is priced between Rs.250 and Rs.270 which translates into a P/E of 5.3 and 5.8 at the higher and lower end. This is a fairly decent price and investors can look into investing in the IPO.
The table below lists other stocks in this section
which also belong to the I.T. Sector.
I.T.
The following table shows the upcoming IPO that have been covered under this
section and their status. You can click on any of these to read more about them.
