Twin Cities Infotech

Twin Cities Infotech Limited

Issue Opens : 14th Sept., 2000 Issue Price: Rs. 10 /- per share (FV - Rs.10/-) Issue Size: 14,10,000 shares amounting to Rs.141 lakhs Registrars to the Issue: Sindhu Corporate Services Pvt. Ltd	Issue Closes: 20th Sept., 2000 Minimum Application: 200 shares @ Rs.5/- each Post-issue promoter’s stake: 14.62% Lead Managers: Aryaman Financial Services Ltd.
Recommendation : Average

Listing on: Hyderabad and Ahmedabad Stock Exchanges

Executive Summary

Click Here to Read the Analysis

Business

Industry Scenario

Financials

Project Analysis

Critical Success Factors

Competitive Position

Market Scenario

Recommendation

Business

Twin Cities Infotech Ltd (TCIL) was incorporated as a private limited company in July, 1995 with the object of providing specialized training in Software such as Oracle, Java and ERP training. The Company was converted into public in February 2000 for setting up a software development center.

The company started with a focus on on-site services and web-enabled technology-related projects. The company is currently working on several projects for offshore development for the various customers in USA - projects and Consultancy on Web-Based Technologies platforms. Application areas covered include developing web-based products, portals, Internet sites and product development.

The company has focussed its business on the following:

Off shore Software Development Services
Web enabled Business/E-commerce
Product Development

Twin Cities is promoted by Prakash Kanyadara, Ravi Chandra Bobba, Shukur Mohammed, Sambasiva Rao Bhashyam and Venkateswarulu. Mr.Prakash is a BE in Computer Science & Engineering has over 4-5 years experience in Software Design and Development. Mr.Ravi Chandra Bobba is a BE in Electronics and Communication Engineer. He has pursued Master of Information Systems at Victoria University of Technology, MCSE Microsoft NT 4.0, Melbourne, Australia. Shukur Mohammed is a Canadian Citizen and an engineer in Computer Science. Sambasiva Rao Bhashyam is a graduate in Commerce with over 17 years of experience in Finance and Administrative activities. Venkateswarlu I, a Commerce graduate and Master of Finance, has over 1 ½ year experience in TATA Finance.

Top

Industry Scenario

There are innumerable companies that are into the business of providing software training. The business pays off well in terms of remuneration, but these companies are not so popular on the bourses. Only the leading players like NIIT and Aptech are in demand. Software training companies that are supported by product development have larger chances of success and survival.

Top

Financials

Twin Cities has been making profits for the last four years. The profit grew from Rs.0.7 lakhs in FY97 to Rs.22.37 lakhs in FY2000. For the current year (FY2001), the company has estimated its total income to touch Rs.344 lakhs and the net profit at Rs.42 lakhs. By FY2003, the same is projected at Rs.812.53 lakhs and Rs.198.84 lakhs respectively.

Financial Performance(in Rs. lakhs)
Particulars (in Rs. lakhs)	31/03/96	31/03/97	31/03/98	31/03/99	31/03/2000
Total Income	17.4	54.48	55.95	49.84	74.81
Net Profit	(1.88)	0.69	0.67	0.65	22.37
EPS (Rs.)	-	-	0.46	0.45	15.28
RONW (%)	-	-	6.7	6.5	15.27

Top

Project Analysis

The Present issue of equity shares is being made :

To fund the cost of proposed project of software development and to set up infrastructure facilities in related areas.
To set up an overseas office.
To meet the expenses of the present issue.

Fund Requirements
Interiors including Furniture & Fixtures	50.00
Plant & Machinery	207.73
Misc. Fixed Assets	35.29
Vehicles	16.70
Preliminary & Preoperative Expenses	10.00
Public Issue Expenses	15.00
Contingencies	8.36
Overseas Office Establishment	88.74
Working Capital Requirement	121.25
Advances & Deposits	30.05
Net Current Assets	16.88
Total	600.00
Means of Finance
Equity Share Capital
Core Promoters	224.65
Public	141.00
Directors, Friends and Relatives	151.85
Reserves and Surplus	22.50
Term Loans	60.00
Total	600.00

Top

Critical Success Factors

Twin Cities had started off its business with on-site services and web-enabled technologies. It however, concentrated on strategic alliances in its first year of operations, which helped the company in propelling its growth.

The company is planning to continuously evolve and implement growth strategies. The company has structured its organization as profit centers, each of which will focus on chosen domains and contemporary technologies. Twin Cities has an agreement with Saroh Infotech Ltd., for delivering a part of its business. Saroh has an agreement with DM SOFT SRL of Italy.

Top

Competitive Position

The company's products are not very clear. The focus is mainly on providing web-related services to its clients in the US on a consultancy basis. Lack of proper focus on product development makes the company's competitive position quite weak. There are innumerable such companies in the market, and assessing one against the other is quite impossible. Companies with real value and the capacity to survive and grow, are clearly identified by the market. These are the companies that do well on the bourses too.

Top

Market Scenario

The primary market had witnessed a boom at the beginning of this year when many companies came out with public issues at high premiums. The market has however now learnt to identify the good and high growth companies from the entire lot. While companies offering at par are still sailing through, the ones charging a premium need to be more careful. Companies like SIP Technologies have called off their IPOs due to poor response.

Top

Recommendation

The company’s weighted average EPS for the last three years is Rs.15.28. Based on the issue price of Rs.10/- a share, the P/E is 8.4. Compared to the industry average of 150, TCIL's P/E shows the chances of appreciation of the scrip. However, the promoters are very young with not much of experience in the software industry. Moreover, the company does not have any strong projects in hand. The scrip is an average issue.

Top