Telecom and logistics are the sectors that are benefitting from rising activity in the Indian economy. The availability of opportunities attracts many new players to these segments and calls for existing ones to expand.
Business
Chennai based Dhanus Technologies (DTL) is one such player operating in three segments – telecards, fleet tracking solutions along with BPO, and software services. Telecards are aimed at those Indians who travel and live abroad and intend to call home. The fleet tracking solutions, to start with, is aimed at logistics players having larger fleets and taxi operators in metro cities. This is at the pilot stage and can be a growth driver for the company. DTL?s software team specialises in building software applications in IP Telephony, IVR applications, Custom CRM applications, and web-based Business Process Applications.
Financials
The company has posted a growth in its revenues from Rs 0.31 crore in FY 2002-2003 to Rs 90.46 crore, depicting a CAGR of 310% on a standalone basis. For the same period of time, the company posted an increase in net profit from Rs 0.04 crore to Rs 24.59 crore, connoting a CAGR of 382% on a standalone basis.
Objectives of the issue
The company intends to acquire some properties to be used as its offices. Further it wants to use the funds to purchase equipment for the ITES and fleet tracking business. Some of the issue proceeds will be utilised towards setting up of sales and support offices throughout the country.
Outlook
The company is being valued at 22.66 to 23.87 times its EPS, for the year ended June 30, 2007 on its fully diluted equity, which appears stretched. The company is banking big on the fleet tracking system, niche segments in BPO, and high growth software business. The fleet tracking business may bring in huge growth in the initial years. The presence of eminent names like Reliance AMC as shareholders of the company as an outcome of pre-IPO placement, imbibe confidence about the future of the company.
However investors must further note that though the company operates in high growth businesses like fleet tracking and BPO, there are hardly entry barriers and this may amount to erosion of margins, which currently are looking very attractive. Maintaining the high growth rates in future will be the real challenge. Promoter holding will be diluted to 21.37% post the issue. Investors with a high-risk appetite may consider subscribing the issue.
