Taksheel Solutions was founded in 1999 and provides IT solutions and services to companies engaged in the wealth management business. It aims to garner up to Rs 82.5 crore via an issue of 5.5 million fresh equity shares.
Of these proceeds, the company plans to deploy Rs 22 crore towards acquiring US-based companies (or assets) to strengthen its wealth management portfolio. Another Rs 18 crore will be used to set up development centres at Warangal and Hyderabad. The remaining funds will be used for working capital and other corporate purposes.
The company plans to enter the telecom space to sustain further growth. Revenue from here will start pouring in this financial year. It also plans to diversify into the Asia Pacific markets, but these will take time to fructify.
| BRISK GROWTH | |||
| In Rs crore | FY09 | FY10 | FY11 |
| Sales | 33.20 | 49.50 | 147.26 |
| Ebitda margin (%) | 3.09 | 26.09 | 20.12 |
| Profit After Tax | 2.40 | 8.09 | 27.42 |
| Source: Company RHP | |||
| ISSUE DETAILS | |
| Price (Rs) | 130-150 |
| Size (Rs crore) | 71.5-82.5 |
| Opened on | 29th September |
| Closes on | 4th October |
| CARE ratings | 2/5 |
Taksheel derives about 71 per cent of revenues from a single vertical of wealth management services, which exposes it to sector-specific risks. Further, it derives over 85 per cent revenues from its top 10 clients, all of whom are based in the US. Given the weakening macroeconomic scenario in the US,growth could be hit if the demand scenario worsens. Taksheel is majorly dependent on onsite revenues, which could come under pressure as the US adopts increasingly protectionist norms. The company’s debtor days, though came down in FY11, while still high at 98 days, as against the average creditors’ collection days at 18. This could hit its cash flows adversely.
With the addition of six new clients in FY11 alone, Taksheel’s top line has grown three-folds over FY10. At the price band of Rs 130-Rs 150, the post-issue price-earnings (P/E) for FY11 works out to 10.4 to 12 times. This is way higher than 7.9 times for its larger peer, Nucleus Software. After assuming a 30 per cent growth in FY12 earnings, its P/E stands at 7.9-9.2 times. Considering the high client and revenues concentration, along with higher valuations, investors can skip the offer.