Compulink Systems
Niche product player
Catering to service industries, the company’s products have good growth potential and seem to have reached the critical take-off stage
| Buy | Compulink Systems |
| BSE Code | 532688 |
| NSE Code | COMSYS |
| Bloomberg | COSL@IN |
| Reuter | CLKS.BO |
| 52-week High/Low | Rs 49/ Rs 18 |
| Current Price | Rs 44 (as on 9 January 2008) |
Compulink Systems promoted by professionals Mr Uday Kothari and Mr Vishwas Mahajan, is a niche IT company focused on providing IP based solutions in the Service Execution Management space. The portfolio of the offerings includes Whizible range of products, services based on the WHIZ framework and training & consulting services. The Company has subsidiaries each in USA, UK and Singapore. It also operates through Channel Partners in Middle East and Hong Kong.
The Whizible range of products includes i.e. Whizible ProjectByNet for mid-sized Service Centric Organizations in the IT services vertical and Whizible SEM for large sized Service centric Organizations in IT Services vertical, Whizible Engineering for engineering design organizations and Whizible 2007. The Whizible Suite includes various modules like e-Dashboard (provides an integrated view of the customer’s work environment)
Compulink is the ‘First to Market Partner’ for Microsoft and this product was launched in beginning of 2007 along with Microsoft’s Office Project 2007. This has been received favorably in US and European markets.
In the training & consulting services, the company has a product called Project Excellence Learning and Consultancy Services (PELCON). PELCON helps organizations adopt project management practices that will deliver better-managed projects. PELCON is a one-stop shop for Project Management Enabling Services. PELCON provides built-to-order, customized training products and enabling solutions in Project Management field from establishing Project Management Office in organizations, to conducting an across-the-board ‘Project Management Health Check’. PELCON is a recognized provider registered with the PMI Registered Education Provider Program (PMI R.E.P) - Global, offering comprehensive, continuing and higher education in the field of Project Management. PELCON has offerings in the e-learning arena – A comprehensive e-learning kit for Earned Value Management (EVM) and a learning tool to help understand and manage risk called Project Risk Management (PRM).
Currently, the company had more than 150 customers in 6 countries with total user base of more than 75,000. Some of the satisfied clients of the Company include Wipro, Accenture, ABB, ICICI Bank, Shinsei Bank, Nucleus Software, Cornell University, Northeastern University, John Deere, Otis ISRC, HCL, Mascon, as well as leading names in Asia Pacific such as Fujitsu, NCS and SCS.
Domestic revenues constituted 54% of the revenues for FY2007 (57% in FY2006). As of March 2007, the Company had an employee base of 177 people.
The Company had come with an IPO in December 2005 of Rs 21.23 crore at a price of Rs 60 to fund product development, international marketing, repayment of term loan and working capital needs. As of September 2007, the Company had utilized Rs 19.81 crore.
Favourable industry Scenario
Service is the largest and fastest growing segment of the economy world over. The key aspect of professional services is its ability to convert the skills and knowledge of its employees into value added ‘deliverables’. Globalization, Deregulation and Technological innovation has changed the way the Services Centric Organizations (SCO) around the globe function and compete. To compete and succeed in such competitive environment, SCO need tools that enable them to make better decisions, avoid costly mistakes due to lack of information, and give their customers, partners and employees a better insight into organizational performance. These pressing needs of SCO led to an emergence of new and powerful web-based application software called Services Execution Management (SEM). SEM aims to provide extended, integrated support for the functions involved in running a Services Delivery Organization. SEM is primarily composed of Project Management (PM) and Enterprise Resource Planning (ERP) capabilities. The focus of PSA is on resource management (or human capital) like time, knowledge, skills and business relationships, as opposed to simple task management. The company is one of the leading players in products space in these growing segments.
Turnaround Performance
For the quarter ended September 2007, on y-o-y basis, Compulink reported 68% growth in standalone sales at Rs 3.95 crore. Product revenues grew 108% at Rs 2.69 crore and services revenues grew 19% at Rs 1.26 crore. Operating margins stood at 17.7% with operating profits at Rs 70 lakh against operating loss of Rs 79 lakh in the corresponding quarter previous year. Other Income was up 36% at Rs 19 lakh with interest cost flat at Rs 6 lakh and depreciation charge down 11% at Rs 48 lakh. Tax charge for the quarter was Rs 1 lakh with PAT at Rs 34 lakh against loss of Rs 1.27 crore in the corresponding quarter previous year.
For the first half ended September 2007, on standalone basis, 48% rise in sales at Rs 7.64 crore with product revenues up 61% at Rs 5.12 crore and services revenues up 26% at Rs 2.52 crore. OPM stood at 16.9% with operating profits at Rs 1.29 crore against loss of Rs 1.49 crore in the corresponding period previous year. PAT for the period stood at Rs 56 lakh against loss of Rs 2.46 crore in the corresponding period previous year.
Valuation
For FY2008, we expect standalone revenues and net profit to be Rs 21.01 crore and Rs 5.53 crore. On current equity of Rs 10.37 crore, EPS works out to Rs 5.3. At the current price of Rs 44, PE works out to 8.3 times. Being a product-oriented company, the company’s profits can grow exponentially once the product revenues reach a critical scale, which seems to have happened in the current year.
| | 0503 (12) | 0603 (3) | 0703 (12) | 0803 (12P) |
| Sales | 12.86 | 9.43 | 14.73 | 21.01 |
| OPM (%) | 35.7 | -24.6 | 14.1 | 36.5 |
| OP | 4.59 | -2.32 | 2.07 | 7.66 |
| Other Income | 0.01 | 0.35 | 0.62 | 0.73 |
| PBIDT | 4.60 | -1.96 | 2.69 | 8.39 |
| Interest | 0.08 | 0.60 | 0.29 | 0.20 |
| PBDT | 4.53 | -2.56 | 2.40 | 8.19 |
| Depreciation | 0.67 | 1.88 | 2.16 | 1.91 |
| PBT | 3.85 | -4.44 | 0.24 | 6.28 |
| EO | 0.00 | 0.04 | 0.00 | 0.00 |
| PBT After EO | 3.85 | -4.48 | 0.24 | 6.28 |
| Tax | 0.25 | -0.25 | 0.13 | 0.75 |
| PAT | 3.60 | -4.23 | 0.11 | 5.53 |
| EPS | 3.5 | -4.1 | 0.1 | 5.3 |
| EPS on current equity of Rs 10.37 crore. | ||||
| Compulink Systems: Standalone Results |
| | 0709 (3) | 0609 (3) | Var. (%) | 0709 (6) | 0609 (6) | Var. (%) | 0703 (12) | 0603 (12) | Var. (%) |
| Sales | 3.95 | 2.35 | 68 | 7.64 | 5.18 | 48 | 14.73 | 9.43 | 56 |
| OPM (%) | 17.8 | -33.2 | | 16.9 | -28.9 | | 14.1 | -24.6 | |
| OP | 0.71 | -0.78 | LP | 1.29 | -1.50 | LP | 2.07 | -2.32 | LP |
| Other Income | 0.19 | 0.14 | 40 | 0.35 | 0.24 | 47 | 0.62 | 0.35 | 74 |
| PBIDT | 0.89 | -0.65 | LP | 1.64 | -1.26 | LP | 2.69 | -1.96 | LP |
| Interest | 0.06 | 0.06 | -8 | 0.10 | 0.09 | 6 | 0.29 | 0.60 | -51 |
| PBDT | 0.84 | -0.71 | LP | 1.54 | -1.35 | LP | 2.40 | -2.56 | LP |
| Depreciation | 0.48 | 0.54 | -12 | 0.95 | 1.08 | -12 | 2.16 | 1.88 | 15 |
| PBT | 0.36 | -1.25 | LP | 0.59 | -2.44 | LP | 0.24 | -4.44 | LP |
| EO | 0.00 | 0.00 | | 0.00 | 0.00 | | 0.00 | 0.04 | |
| PBT After EO | 0.36 | -1.25 | LP | 0.59 | -2.44 | LP | 0.24 | -4.48 | LP |
| Tax | 0.01 | 0.02 | -7 | 0.03 | 0.03 | 2 | 0.13 | -0.25 | PL |
| PAT | 0.34 | -1.27 | LP | 0.56 | -2.46 | LP | 0.11 | -4.23 | LP |
| EPS | # | # | | # | # | | 0.1 | | |
| # Not Annualized due to seasonality of business. Current equity of Rs 10.37 crore. | |||||||||
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