Excel Infoway IPO

by Manshu on July 13, 2009


Date and Price Band of Excel Infoway IPO

Excel Infoway IPO opens on 14th July 2009 and closes on 17th July, 2009. The price band for Excel IPO is between Rs. 80 and 85.

Excel Infoway IPO Grading

The Excel IPO has been graded 1 by CARE. This is a scale of 1 to 5, where 1 indicates that Excel Infoway has poor fundamentals.

Business of Excel Infoway

Excel Infoway is a BPO and Customer Contact Center, which has customers in the US and UK. The company’s customers are concentrated in the Telecom and Financial sectors. The company operates with a capacity of 150 seats, and the IPO is planned to set up 300 additional seats in the financial year 2010 – 2011.

Excel Infoway Risk Factors

Heavy Dependence of a Few Customers: The top 4 customers of Excel Infoway contributed 98.87% of the revenues of the company in fiscal 2009. This was up from 94.17% in fiscal 2008.

No Proven Track Record: Excel Customers was incorporated in 2003, and as such the company doesn’t have a long record of existence.

Negative Cash Flow: Excel Infoway had negative cash flow last year of Rs.344.5 lakhs.

Cost per seat higher than peers: Business of Excel Infoway: Interior & Furnishing Cost and Technology & Equipment Cost for setting up new facilities of 300 seats at two locations in Borivali and Kandivali in Mumbai will amount to Rs.2117.12 lakhs. Average Interior & Furnishing Cost and Technology & Equipment Cost per seat come to around Rs.7 lakhs. This is higher than the competitors of the company.

Financials of Excel Infoway

The company had revenues of Rs. 1860.73 lakhs in 2009, which declined from Rs. 2,310.89 lakhs in 2008 and 1979.0 lakhs in 2007.

The profit after tax for 2009, 2008 and 2007 has been Rs. 1485.07 lakhs, Rs. 1433.80 lakhs and Rs. 1537.98 lakhs.

The company saw a substantial increase in its debtors for the past few years. The company had debtors of 48.18% of sales for the last year and 38.06% for the year before that. This can be attributed to the recession because of which Excel Infoway had to extend credit facilities to its customers.

The company had a diluted EPS (weighted for last three years) of Rs. 9.56. Based on this the P/E Multiple at the higher end of the offering is 8.89 and at the lower end it is 8.36.  

This is just a summary of Excel Infoway’s business, and is not a buy or sell recommendation on the IPO.

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