Tuesday, February 9, 2010

Stock Idea: Rolta India Limited

Rolta India Limited— BUY—180—INR
Sector — Software (Information Technology)
Regd.Off.— Rolta Tower A, MIDC, Andheri (E), Mumbai, M.H. - 400093
Listed — NSE, BSE.
Company overview—
Company was incorporated in the year 1989. Rolta's Indian customers include Ministry of Defense, police authorities, MTNL, ONGC, BSNL etc. Global customers include Verizon, Bell Canada, Saudi Telecom, Bahrain Telecom, British Telecom, and Hong Kong Telecom. Company has world class quality standards with certifications such as BS15000, BS7799, ISO9001:2000 and SEI CMM Level 5. Rolta International, a fully owned subsidiary at Huntsville, Alabama, US, works to digitize maps, develop software and create a geographical database for the customers of Intergraph. Rolta provides software/information technology based engineering and geospatial solutions and services to customers across the world and has executed projects in more than 35 countries. Rolta is headquartered in Mumbai and operates through a network of branch offices in India and seven subsidiaries located in USA, Canada, UK, The Netherlands, Germany, Saudi Arabia and UAE. Forbes Global had ranked Rolta among the 200 Best Companies in the World in October 2003. Rolta also continues to be rated amongst the leading Automated Mapping and Facilities Management software conversion service providers in the world. In the Engineering domain, Rolta enjoys around 80 per cent market share of the Plant Design Automation (PDA) segment in India. Rolta has a strategic partnership with Stone & Webster, Inc., USA one of the world's foremost engineering-construction companies, to provide high-quality cost-effective engineering, design and procurement services, related to power, refinery and petrochemical projects, worldwide. In April 2006, Rolta India has raised USD103.5 million through the issue of up to 18,482,143 Global Depository Receipts. Each GDR represent one underlying equity share in the Company. In last few years, Rolta has aggressively invested in people, technology & infrastructure to exploit & aggressively meet emerging opportunities. Rolta has now reached a critical mass of intellectual capital in the GeoSpatial, Engineering Design and eSolutions environments. Rolta continues to benefit from its strong technical first mover advantage in the rapidly evolving Information Technology Industry.
Products & services—
Company’s operations are structured into 3 strategic business groups, viz. Geo-Engineering, Engineering Design Automation and eSolutions. Rolta has pioneered CAD / CAM / GIS solutions in India. As customer requirements have evolved, the character of Rolta's solutions too has transformed from being pure design & engineering driven to encompassing a customer's comprehensive enterprise wide design & engineering needs that integrate into the organization's overall business process. There is a clear focus in being on top of the value chain. High value projects de-risk the company and build a progressively healthy bottom line. This overriding focus on its core competencies has enabled it to constantly add value to its customer base. Rolta enjoys more than 2/3 share of the GeoSpatial market i.e. applications like Photogram-metric Mapping, Aerial Triangulation, Digital Terrain Modeling, Ortho-photo creation, Image Interpretation etc.
Rolta has set up state-of-the-art Competency Center, equipped with infrastructure and facilities that match global standards. The resource pool at these Centers provides a combination of strategies, trends, ideas, experiences and proven methodologies. Company frequently undertakes research to enhance and develop additional products in its various lines of business. These efforts result in creation of specialized software toolkits, utilities and products, development of state-of-the-art techniques and processes, thereby enabling the company to meet specific customer requirements.
Rolta's positive Economic Value Added (EVA) is a clear indication that the company has met the expectations of the investors. Rolta is in business to provide an attractive return to its owners and its improvement over the years has reflected in the returns to them. Rolta's intangibles - off balance sheet strengths - possess a direct, financial correlation. Rolta delivers specialized solutions, which armour Rolta's reputation and brand. The strength and value of Rolta's brand indicates that the company's financial growth will continue to be consistent and sustainable.
Rolta enjoys trusting and long-standing partnerships with major technology companies that include global leaders like Intergraph (GeoSpatial Technology, Plant Design Automation), Z/I Imaging (Photogrammetry and Imaging), PTC (Mechanical Design Automation and Product Lifecycle Management), IBM, Microsoft, Oracle (eBusiness and eCommerce), Computer Associates (eSecurity and Network Management) and others.
At current market price, stock is trading at attractive valuation of 7.14 P/E multiple of its FY2011 estimated earnings par share. We recommend investors to buy "Rolta Limited" for medium to long-term investment horizon.
Source: Internet (Valuentes by Abhishek Jain)

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