Cadsys (India) Limited - GIS Mapping co. focused on US

Cadsys (India) Limited.
Market Cap: 136 crores.
Incorporated in 1989, Cadsys Ltd undertakes GIS (Geographic information system) Mapping, engineering design, CAD services and project management support in the fields of telecommunications, gas, and electric and software development.

Company listed back in 2017 on NSE Emerge.
Company incorporated Apex Advanced Technology LLC in 2016 to cater the US market (100% Subsidiary). They acquired the GIS business of Apex CoVantage LLC and their total investment stood at US$19 million.

Subsequently in October 2021, they diluted their stake in Apex subsidiary to 64% by raising equity to FVLCRUM an US based PE fund, for 2.85 Million $. (Giving valuation to Apex of approx. 60 cr INR at $1=INR 75) With these funds they acquired IRISH Towers. (attached Screenshot)

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On Friday’s board meeting, Cadsys further diluted their stake to 52%, raising almost 12% equity for Rs. 29.27 cr. giving Apex LLC the valuation of 250 cr INR. (60 cr to 250 cr valuation in 2 Years) to the same PE Fund.

On Consolidated level, Apex contributes to more than 95% of their revenues.

Investor Presentation 2022:

Investor Presentation 2023:

Company also have other Subsidiaries which do not impact consolidated level much.

Clientele:
Comcast, Bowker, AT&T, NBN co, Google Fiber, Verizon, Silcar, Century Link, BGE, Allegheny Power, Mid American Energy, Conective.

Other Points:

As per AR company has 63 Million $ orders still pending to complete.

Company started serving orders in its subsidiary a year ago and now has impressive sales with the order book expected to be completed within 2 years.

Promoters holding is 47.7%.
Company issued warrants at 50 Rs. per share and in a ratio where their current holding remains the same.

CRISIL Rating on standalone business upgraded from BB+/Stable to BB+/Positive for short term instruments.
Related Party includes remuneration/professional services of approx 2 cr in FY 23.

EPFO search for employees:
Apr 21 - 165
Apr 22 - 215
Apr 23 - 361
Aug 23 - 403

Financials:

Risks:

  1. Company started seeing stress in FY 2019-20 amidst sales focusing purely in Apex Tech LLC and following Covid H2 FY 23 was the first half year of profits for the company.

  2. Company’s Operating Cash Flows are negative to a big extent with major contribution of increase in Trade Receivables for both previous FYs.

  3. The company has 2.2 cr worth of receivables due for more than 3 years and they are also writing it off little by little every year.

  1. Debt:
    The most troublesome part.

The company’s debt is in a ballooning stage.
From financials it can be seen that Company raises Long Term loans for servicing Capex as well as Working Capital. Almost all Long-Term loans are unsecured and all of those unsecured are raised from outside India’s financial Institutions. Current maturity is only 9% of long term debt indicating recently acquired debt/moratorium period or 8-10 years tenure loans.

  1. The books also show Goodwill payable to extent of 7.1 cr and a goodwill of 53 Crores (Irish Towers acquisition).

Ratios:

This thread seems to be discussing more on Apex Advance Technologies LLC rather than Cadsys itself, but their standalone Domestic business is quite miniscule on consolidated basis.

Disc: Current exposure is 3.96% in the Equity Portfolio.

3 Likes


A fire at their premises. Company saying operations not much effected and fortunately no one dead.

A fire is still a fire. H2 FY 24 may see a dent somewhere in other expenses and small damaged write-offs.


No quarterly compliance and no board meeting intimation yet.
Fire might or might not have affected their primary operations, but administrative side is seeing impact.

As of now the results looks delayed.

Board meeting was held without intimation to the exchange.

H1 Result:

PL:


Spike in all heads led to profit reduction vis-a-vis H2 FY 23. Company remained profitable and comparison YoY gives astronomical figures.

BS:

Minority Stake more than the current equity of the holding company.
Overall Debt has increased.


Trade Receivables are spiraling out of control.


Horrible Operating cash flows, story continues from previous half.

Another matter is the Receipt from Investing Activities of Consolidated Cash Flow.
The amount invested in Apex is supposed to 30 cr, how the company arrived at this adjustment only the management knows.


More adjustment in Minority Interest to arrive in H2.

Conclusion:
Ok results with deteriorating balance sheet but increasing orders.
The company posted profit in current half which may receive positive response from the markets considering this:

I came across this company in the latest quarterly result page. In the first stage of screening, it failed:

  1. If it has many US clients, how difficult it is to acquire Indian clients in 6 years? I see no Indian clients
  2. No tailwinds in this sector currently

I’ll add it in watch list & monitor quarterly results to see if there’s any interesting development.