ALLSEC Technology - BPO turnaround story


(Satya Prakash) #102

Any guess why it’s revenue is down?
I was thinking that due to doMo, call center work will be more. But result is not proven that.

Is it of any concern that QoQ revenue is down or we can ignore it?
YoY Revenue is up. Profit YoY is also good.


(Rohit Ojha) #103

I guess numbers are not bad. We need to see whether this is a one time thing or a trend. Standalone revenue looks decent and degrowth is on consol basis.

I am pretty new to IT sector but if you look at major IT companies, the results are analysed from a Q-o-Q perspective. For companies that have most exposure to other countries, focus is q-o-q growth in constant currency terms.
Coming to Allsec, maybe we can give it some more leeway since it is more of a turnaround story with cheap valuations and decision should not be based on just 1 quarter.


(chetanb) #104

wont this company be impacted due to H1B visa restrictions?


(Mridul) #105

If anyone can answer these questions -

  1. What is the reason for de-growth in their consolidated revenue and pat on q o q basis? Pressure on foreign subsidiary operations due to INR depreciation?

  2. Future plans to move on this higher yearly base i.e. where is next set of growth going to come from? New clients? Acquisitions? Plans to utilize cash? Dividends?

  3. They are growing at tremendous pace on standalone basis. What is contributing towards this healthy growth? Is this sustainable?

  4. How much MAT credit they are still left with? When are they going to start paying full tax? This will have a big impact on their PAT margins.

  5. What are these 69 cr of current investments?

This is a very good story. But we need to assess whether this growth is sustainable. Stock is priced cheap without doubt at 7.9 trailing p/e. Discount cash and investments, it is even more cheaper.

Technically, stock has broken major support levels around 334-350. Head and shoulder target looks to be close to 260-275…with market at highs, and allsec stock being weak, it can fall more due to absence of any strong triggers in near term with overall market correction.


(Mridul) #106

Found a few more clients for Allsec HRO -

Epsilon
https://www.allsechro.com/epsilon/Common/web_Signon.aspx

Is this Amazon?
https://www.allsechro.com/amazonlogin/Common/web_signon.aspx

Mondelez International -
https://www.allsechro.com/Payrollonline/SmartLogic/Contact.htm

Retreat Capital (probably Allsec has acquired this company back in 2011…not clear)
https://www.allsechro.com/Retreat/Common/web_Signon.aspx

Probably these clients have hired Allsec HRO just for their India offices …may be not. Not sure.


(Sunnytv) #107

It would be great to have a follow up note on the previous discussion on the technicals as the prices seem to have corrected.


(barasia) #108

From what I understand, none of their employees are on H1B visas.


(chetanb) #109

Thanks. And what about Trump’s backlash against outsourcing. As bulk of business is coming from USA. Will its US customers continue to outsource their processes to Allsec despite Trump’s attempts?


(barasia) #110

Not entirely sure, but they have a branch in Dallas as well. Maybe they are handling all American business in that office. Even if they are outsourcing these operations to India or Manila, I wonder how Trump would affect that.


(Mridul) #111

Guys…anyone attending AGM on 10th Aug? Have a bunch of questions…


(amberjain2001) #112

How are the results expected this time. With Dollor weakening and Trump’s impact impact on its margins?


(Mridul) #113

Just posting a rough tech chart with support and resistance levels…still earning technicals, so correct me if i am wrong. Allsec, if breaks 336, could trigger a fresh rally, though trend reversal can only be confirmed if it breaches 350-360 and sustains. On the contrary, if it breaks sliding support line around 300-305, next support level is around 265-270.


(Bheeshma Sanghani) #114

That failed h&s that we were all excited about finally turned out to be a proper h&s just with two right shoulders. That setup the downtrend that allsec is in right now and its a solid one. However all trends end eventually and if the trend line gets breached and there are couple of higher lows above it then its would be a positive development


(Pratyush Mittal) #115

Notes from AGM

Three main segments of company:
BPO: offshore and domestic
Global HRO: Strong growth. increased our offering and added geographies.
AML:

  • onshore in US
    • Major customers are large banks in US
    • Sales cycles are long
    • Growth can be substantial
    • Done onsite in US - so no major impact of political uncertainty

About losses in past:
It was the customers that were facing problems in their businesses. The problems were never Allsec’s delivery.

2 major turning points:

  • HR business: we are 2nd position in India. ADP are global giant. They are not as large in India. We are bigger than ADP in India
  • Offshore business of Standard Chartered for Anti Money Laundering.

About AML Business:

  • It is a process outsourcing business
  • Have around 250 employees dedicated to it in US
  • High customer concentration
  • Has been a major growth contributor over last 2 years
  • It is linear, i.e. would require more employees for more revenue
  • The contracts are 1 to 3 year contracts
  • If contracts are not renewed, then it can bring back old revenues. We can’t pre-empt this.
  • In talk with various other banks for such process outsourcing.

About Subsidiaries:

  • No subsidiary is focused on any particular thing.
  • Subsidiaries are structured to take advantage of various tax-benefits (primarily on why using Retreat for AML).
  • All the past acquisitions have been successful with full recovery.
  • Mortgage business acquired through Retreat is ended.

HRO Business:

  • There has been a 40% growth in this.
  • This is mostly domestic business. Hope to explore new territories.
  • Customers such as Accenture, Kotak, HSBC.
  • Very positive about it.
  • It is non-linear, i.e. it won’t require as many employees for increase in revenue.

On Attrition:

  • Almost no attrition in middle and senior management.

Others:

  • Margins should be similar. Not much increase, nor decrease expected. Depends on contracts too.
  • Too early to plan about cash deployments and allocations. Much of the profits have come over last 1 year.
  • Will try to start investor conferences soon.

(vinaytp) #116

Hi All,

Interesting discussion…
Why the company has not declared any dividend so far even after turnaround ?

Even latest annual report says following words even after turnaround…Looks like below statement is Copy Paste from previous year annual report.

Dividend
The Board of Directors of your Company does not
recommend any dividend for the Financial Year 2016-
17 in view of the accumulated losses.

Thanks,
Vinaya

Disc : Not Invested yet


(ffaizan) #117

They are yet to makeover their loss from previous years. I hope if the good performance continues they can think of it this year.


(Raj) #118

Found a month old article on web about Allsec. No connection with today’s price surge. :smile:

Regards,
Raj


(Alphin) #119

I have read the same news last year also. Seems to be more about marketing by the company than some development…


(Raj) #120

Q2 result out.

Seems growth coming back.

Regards,
Raj


(Raj) #121

September presentation also out.