Omnitech Infosolutions Ltd. (OISL)

Stock Opportunities
1

Starting a new thread for Omnitech.

The firm has a 5 year CAGR of 38% with a aggressive management and a niche in the area of Business Availability and Continuity services. It has just recently concluded a European Acquisition and has plans to enter the PC servicing sector in the future.

Business Profile
Omnitech Infosolutions Ltd. (OISL) started as a partnership firm in 1987 by Mr. Atul Hemani and Mr. Avinash Pitale and later got incorporated in 1990 as OISL. OISL is a technology services and solutions provider company in the Business Availability and Business Continuity space. OISL is ISO 9001:2008, committed to empowering global business and industry with leadingedge software and world-class support. Since its inception 23 years ago, the company has evolved into a Managed Service Provider par excellence, with competencies related to Business Continuity and Availability. Today, the company has 1000+ Service Network locations across India. The Business Availability services (BAS) include Infrastructure Management, Remote Infrastructure Management, Application Management (including Software Development) and Performance Management (including Software Testing) services whereas Business Continuity Services (BCS) include Disaster Recovery Consulting and Management, Workplace Recovery and Data Vaulting Services.
Through alliances with world leaders like IBM, Borland, TASSC, CA, VERITAS, Cisco, Microsoft, Oracle, HP, Citrix, APC, and Intel, OISL has been in a position to deliver contemporary solutions every time right at the customers doorstep.

2

Yes, we should try to dig in more on this one. As I don’t understand much of the IT stocks hence I have been ignoring this space. But the way the nos are, the stock looks quite undervalued.

May be IT guys on this forum can help.

Regards,

Ayush

3

Worries:

Negative cashflows.

Positives:

High CAGR (38.56% for 5 yrs)

D/E 0.26 – reduced from 0.53 to 0.26 in 5 years

ROCE 25.24%

Interest Cover - 14 times ( scope for further acquisitions )

4

One of the three major players in the RIMS space.

Allied Digital and Glodyne Techno are the other two.

Yeah - Allied Digital.

Now you know why this sector (RIMS sector I mean) has been beaten down inspite of good business outlook.

Therefore the funda is to evaluate the management and then the numbers. I honestly don’t know how to evaluate the former other than to look at div. payouts.

If anybody has any insight into any of these managements, do share. The business potential is good in this sector. It might be a good chance to pick these up at current bargain prices, only if we can somehow ascertain the thing about managements.

5

I know someone who works there closely with the top management.

The management plans for the next fiscal are

1). QIP of 300 cr

2). Warrents @ 300-350 to a party ( talks in progress )

3). More acquisitions

(1) and (2) will help bring in capital which can be used for (3) without impacting the capital structure.

Also, the synergies with the European acquisition will show profits from next fiscal.

6

Hi Nirmal,

If the mgmt is much aggressive on only raising capital and issuing share, then we better be cautious on such cos. For eg - look at Allied Digital…stock has crashed badly and I smell cooked nos etc there.

So the foremost thing is - are the nos genuine? Is the business actual and generates cash? Are there competitive advantages for stability and growth of current earnings?

Thanks & Regards,

Ayush

2 Likes
7

Ayush - valid concerns. They will need to be addressed for sure. Let me try and find out. But as far as I know, the business is real, niche and Rakesh Jhunjunwala had purchased a stake in the firm. I am not able to comfirm if he has taken a exit or is still holding on.

8

Here is what I put up earlier on Omnitech just to lend continuity to the thread.

OMNITECH INFOSOLUTIONS A COMPANY WHICH IS MAINLY INTO BUSINESS AVAILABILITY SERVICES âINFRASTRUCTURE MANAGEMENT SERVICES AND APPLICATION MANAGEMENT AS WELL AS BUSINESS CONTINUITY SERVICESâDISASTER RECOVERY ETC.


SHARE CAPITAL IS 13.86 CRORES AND DEBT AS ON SEP 2010 IS 94 CRORES.


MARKET CAP AT CMP OF AROUND 210 IS 291 CRORES.


YEAR

06

07

08

09

10

CAGR

H1FY 11

SALES

54

77

131

171

216

41.44%

145

NP

6.25

12.18

25.57

33.1

39.39

58.46%

27.47

EPS

10.13

13.29

21.54

25.19

29.57

30.71%

18.4

NPM

12

16

19

19

18

Div

10%

10%

12%

12%

15%

HIGHER MARGINS ARE EXPECTED TO BE MAINTAINED DUE TO INCREASING CONTRIBUTION FROM IMS AND DISASTER RECOVERY DIVISIONS. IT ALSO AIMS TO LAUNCH CLOUD BASED SERVICES.

CURRENTLY THE INTERNATIONAL REVENUES ARE AROUND 20% OF TOTAL REVENUES WHICH THE MANAGEMENT AIMS TO RAISE TO AROUND 50% BY FY 13.

CAPEX OF AROUND 100 CRORES IS EXPECTED TILL FY 12 WHICH IS TO BE MET FROM INTERNAL ACCRUALS.

MANAGEMENT EXPECTS TO GROW BY AROUND 30-35% IN TERMS OF REVENUES FOR FY 11 AND BASED ON HALF YEARLY RESULTS THIS SEEMS ACHIEVABLE.

9

This stock now has a mcap of only 4.2cr now. What is more important is the learning that mindless expansion by issuing equity is a big red flag. Learning a lot through these old posts by seasoned VP investors. The best kind of education. Thanks all