HIT ENT(ACCENTIA TECH)

Accentia Technologies
Attractively valued

BSE ticker code 531897
NSE ticker code Not listed
Major activity IT Enabled services/BPO
Director Kirit R Kanakiya
Equity capital Rs 4.68 crore
52-week high/low Rs 121/38 (FV Rs 10)
CMP Rs 121
Mkt capitalisation Rs 56.63 crore
Recommendation Buy

Accentia Technologies Ltd, a company dealing in end-to- (BPM) solutions for healthcare, financial and insurance sectors. The company’s prospects are quite promising and valuations are attractive. Indeed this is good investment bet.
Just Consider:
f Accentia has, in its fold, some of the big corporate brands in the USA and UK as its clients and the list is fast expanding. The company is into healthcare BPO with its integrated focus on medical transcription, coding, billing and insurance claims offers complete gamut of integrated value chain of a health care BPO. The company also has web-enabled modules to impart training in Healthcare BPO practice to the aspirants of BPO jobs. This segment has good growth potential.
f Accentia is present in both the software and BPO segments. The onsite-offshore model along with innovative technological advancements for a strategic solution to the customer concerns make the company stands out in the market. Its products division Iridium-Tech is one the premier application software products. This augurs well for the steady growth of the company.
f The current promoters, who have acquired this company in end FY06, have been in the healthcare BPO segment since 1998. They have incorporated 2 companies: Geosoft Technologies for the healthcare BPO operations and later Iridium Technologies for the healthcare BPO product. The 2 companies have been merged into Accentia Technologies, which has acquired in March 2007, Asscent Infoserve, which is in similar business. With the merger, the promoters’ stake would increase to 51% from the current level of 30%.
f The company is now close to acquiring 3 US companies: another in billing collection, the third one in billing ASP and one in transcription BPO with a size of about US$ 8 million. The 3 acquisitions should be through within 2007. The 3 companies would add about US$ 10 million to the revenues of the company with margins of 25%. In July 2007, the company also signed agreements to acquire US-based G.S.R. Physicians Billing Service Inc. and GSR Systems Inc. The acquisitions would add $2.5 million to the company’s revenue in 2007.
f Financially, the company has been growing fast and yet been out of investors’ eyes largely due to its mediocre standalone results. However, it has been registering eye-popping consolidated results, which are hard to ignore. In FY 2007, it registered sales and net profit of Rs 33.50 crore and Rs 7.25 crore respectively. On an equity of Rs 4.68 crore, EPS works out to Rs 15.5. In fiscal year 2007-08, it can register consolidated EPS of Rs 25. The share price trades at Rs 120. P/E is just around 3. Though the equity would rise going forward, the company’s topline as well as bottom line would leap frog due to the recent acquisitions. Investors can take advantage of valuation and add the scrip to their portfolio for small to medium term returns. n