Right now there is no definite clarity on the timelines and other terms of that deal. RIB Software itself is in the process of being acquired by Schneider Electric for 1.4 billion euros. If Acqusition multiples are anything to go by the deal has been valued at EV/Revenue of ~5x and EV/EBITDA multiple of ~23x. You can read about it here.
Q2,2020 is when the acquisition will be complete and hopefully Softtech will see its products find more takers outside of India.
RIB Software itself has published very good results indicating that globally the AEC industry is growing well and hopefully India will also follow suit in adopting technology & SoftTech seems to be positioned well to capture that slice.
@bheeshma Can you please elaborate your view about the company in present scenario. As the company mainly deals in construction management and related infra project management, do you see this exposure as headwind as the present condition for infra and construction companies does not look good.
Housing is an evergreeen sector in my opinion - though it is prone to cycles. The co is in the business of providing an automated building permit solution along with other product offerings that are related to the construction sector. Its main clients are government bodies and its flagship offering AutoDCR is tightly integrated into the functioning of various departments.
Due to Covid - construction activity has definitely taken a hit with many developers pausing or deferring plans. However, the big developers are still launching projects and doing sales. HDFC annual report mentions a 14% growth in loan approvals for FY20 ( pre covid) - suggesting that demand was coming back before Covid hit.
As far a SoftTech - yearly results have been flat and however there has been a ~19% growth in the 6 monthly PBT. The trigger here would be the conversion of the debt extended by RIB software into equity. The negative is the sharp increase in receivables
In latest 31 march 2020 financial result it seems cash flow is squeezed due to very high receivables. If company has received the amount after government focus on releasing payments for increasing liquidity in system after covid scenario. Or they are stuck with high receivables as they are from state governments.
Debt also seems to be on higher trajectory. What are the possible reasons other than investment in subsidiaries?
Debt is because of the loan advanced by RIB software which is convertible to equity. RIB has itself been taken over by Schneider Electric. High receivables are is due to the nature of the sector, as far as I know they have made changes to their basic revenue model starting with the UP contract. Its early stages, however, SoftTech has a history of successful product development. Lets see!
Rulebuddy which was in beta has now been launched recently
They along with their investor RIB ITWO, have bid for projects in Singapore, Australia and US
Partnership with ESRI GIS ELA to offer its solutions
There is also a tieup with East India Udyog Ltd to strengthen their govt business, which is new info to me
Broadly, they have been making efforts through various means to break into the international markets of building permits, building management and audits through their products and tieups. Domestically, it’s pretty much steady state but with nifty tools like rule buddy they are creating an ecosystem amongst the community. To what extent it finds traction remains to be seen though
Softtech to acquire 15% stake in Singapore based Company, ‘Qi Square Private Limited’. Qi Square Private Limited, is engaged in the business of developing a digital platform for the built environment industry.
Some business developments, and opportunities from Annual report –
Global Collaboration and Market penetration –
– SoftTech is now qualified for participating in Singapore Govt. tenders and initiatives.
– Developments in the Malaysia Market continue to present opportunities and the company expects to get POC’s through and start generating revenue from the region during the year
– working on opportunities in Australia and Hong Kong.
– And company made significant inroads by partnering with world leaders in BIM (AutoDesk USA, Dassault Systemes France), GIS (ESRI USA), Construction project management systems (RIB Germany) to penetrate other markets.
Recently, the Airport Authority of India has selected SoftTech as its Development Service Partner for the No Objection Certificate Application System (NOCAS). This association charts a new roadmap in the field of permit issuance leveraging GIS and cloud technology for the aviation sector and opens door for opportunities in National Government to size-up the business operations.
After establishing independent products in AEC, and delivering great success stories, Company is moving towards providing a platform to connect all the stake holders (Government, Contractors, Builders , Architects and Consultants) and application products through a newly design platform named CIVIT (https://thecivit.com/). A global offering, CIVIT is all set to integrate the Construction industry players like never before.
