Moneycontrol Bureau
Euphoric investors are buying shares of Infotech Enterprise, taking it up 5 percent intraday on Monday. Its wholly owned subsidiary, Infotech Enterprises America has signed a definitive agreement to acquire Softential.
"The acquisition strengthens Infotech's telecommunications business unit by adding 140 skilled global resources. By leveraging their combined and complementary strengths, Infotech and Softential will offer a scaled, cost-effective and globally delivered managed service proposition for customers to more efficiently plan, build and operate their network operations centres and data centres,” it said in a statement.
Krishna Bodanapu, President & COO, Infotech said Softential's 2013 revenue stands at USD 17-18 million. The price paid for the buyout includes 1.1 times of its 2013 revenue plus another performance-based payout component based on EBITDA over the 12 months. The company has USD 110 million in cash and part of it will be used to fund the acquisition, Bodanapu said.
Post the deal, Edelweiss has upgraded it to buy with a revised target price of Rs 397 per share.
Morgan Stanley believes that the acquisition will be accretive to earnings. “We see USD revenue growth of 18 percent and EPS growth of 20 percent for F2015. The stock is already trading at around 13x F2015e, which is higher than average (around 10x) and closer to peak (around15x) of the last five years, leaving limited room for any positive surprise,” it said.
At 11:58 hrs Infotech Enterprises was quoting at Rs 349.00, up Rs 6.60, or 1.93 percent on the BSE.
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