CRISIL assigns valuations grade of 4/5 to Helios & Matheson

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26 Aug, 2025 12:21

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Helios and Matheson Information Technology Ltd’s (Helios’) Q3FY14 (financial year-ending September) revenues were in line and margins were above CRISIL Research’s expectations. Consolidated dollar revenues grew 4.5% q-o-q to US$34.6 mn as expected but revenue growth in rupee terms was only 1.5% q-o-q owing to appreciation of the rupee during April-June. EBITDA margin expanded by 21 bps q-o-q to 22.7%. PAT was flat q-o-q at ?165 mn as improvement in EBITDA was offset by higher depreciation charges. The company expects a healthy deal pipeline over the next two years. Accordingly, we expect Helios’ revenues (in dollar terms) to grow moderately at a two-year CAGR of 11% to US$167 mn by FY16. We have raised our earnings estimates for FY14 and FY15. We maintain the fundamental grade of 3/5.Receivables (debtors + unbilled) increased by ?448 mn resulting in 125 DSO (days of sales outstanding) compared with 106 in Q2FY14. The increase in working capital was partly funded by additional short-term borrowing of ~?248 mn, rest being funded by cash in hand and internal accruals. The company’s fixed assets increased by ~?17mn largely due to capitalisation of investment to the tune of ?12 mn in building the SMAC (Social, Mobility, Analytics and Cloud) framework. 

We have raised our earnings estimates for FY14 and FY15. Due to the increase in receivables, the working capital cycle has also been stretched. As a result, our discounted cash flow (DCF)-based fair value estimate for Helios has been maintained at ?114 per share. The fair value implies P/E multiples of 4.5x FY14E and 3.9x FY15E EPS. At the current market price of ?93, the valuation grade is 4/5.

isclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.

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