Omnitech Infosol

By Research Desk
about 14 years ago
Omnitech Infosol

Omnitech Infosolutions is entering the capital market on 19th July 2007 with an issue size of Rs.35 crores in the band of Rs.90 to Rs.105 per share.


The company has transformed itself into IT solutions and Technology Services Company from a third party service provider and computer assembly. Obviously software is more paying then hardware. The IT services and products of the company mainly include business availability services, business continuity services, system integration solutions and framework solutions and products.


The financial performance of the company has shown vast improvement, more especially in its bottomline in FY 06 and FY 07. For FY 07 total income was at Rs.77.80 crores, PBT of Rs.13.49 crores and PAT of Rs.12.18 crores on equity of Rs.9.41 crores resulting in an EPS of Rs.12.94. With preferential allotment of 4 lakh shares having made in June 07 at Rs.100 per share, equity of the company rose to Rs.9.81 crores.


The company has estimated fund requirement of Rs.37 crores of which Rs.19.50 crores is for acquisitions and strategic investments. Rs.14 crores is for enhancing existing facilities and for setting up new technology centres to increase current facilities from 220 seats to 570 seats. The company in the past have delayed payment of service tax as also delayed in payment of balance land cost to MIDC of Rs.1.63 crores for allotment of land at Hinjawad in Pune. The cash flow of the company is quite under strain with book debt of Rs.25.36 crores as 31-03-07 on total income of Rs.77.80 crores for FY 07. Even the debt of the company was high at Rs.9.54 crores and sundry  creditors of Rs.6.78 crores.


Maybe, to tide over the financial crunch, this issue has been planned. No doubt, the transformation of the company has been good with improvement in financial performance, but is it sustainable and scalable? Tax liability which was at about 7% for FY 07 would also rise in the coming years. If acquisitions does not get materialized, the company plans to set up new technology centre which would have longer gestation.


The company is an average kind of IT service provider, where many other similar stocks are available in the secondary market. Investment can give mediocre return with a longer time horizon.

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