Dynacons Systems & Solutions

PLEASE SEE: All big report are Strictly long term stocks. A couple of bad quarters will not change my opinion,

Draft 2 - Research is still not complete
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Dynacons Systems & Solutions was incorporated as a private limited company on September 26, 1995 and was converted into a public limited company on November 30, 1999. It is an IT company with global perspectives with its headquarters at Mumbai and branches all over India and at multiple locations abroad.
Dynacons was evolved by a team of professionals with expertise in IT solutions. These activities started twenty years ago with management consultancy, which created the need for a software consultancy that carved the niche of supply of hardware and software as a package in the form of a “solution”.
The company has created a niche market and image with three main aspects -- Innovation, Technology and Services. All these made Dynacons a reliable source for providing IT solutions to its customers. The company has the technical expertise and the service delivery infrastructure to serve customers at a level of quality consistent with their expectation. Dynacons helps in the selection of the right technology and application that will yield the greatest return and build a business case for implementation based on a lower total cost of ownership and higher performance.

. Its Enterprise Services offerings include a wide spectrum of Enterprise IT and Office Automation Services including Infrastructure Managed Services, Breakfix Services, Managed Print Services, Cloud Computing, Systems Integration Services, and Applications. The key verticals driving growth for the company are - BFSI, Education, and the Government sector. Company has recently entered into several new strategic partnerships with Global IT Companies like Oracle, Aruba, Riverbed. Company has added several key customers in these segments towards managing their IT Infrastructure and Networking for their offices and branches. Dynacons has bagged the Managed Services order for Maharashtra Co-op Bank for managing their Data Centre and Disaster Recovery Centre for a period of 3 years.It has also undertaken several solution deployments such as Reserve Bank of India, State Bank of India, Central Bank, Bank of India, CGGVeritas, Breach Candy Hospital, etc. Company received recognition as the Emerging IT Infrastructure Services Company by CIO Choice. Link to various customers of the company is here.
The System Integration (SI) segment is the main contributor to the revenue growth for the company. Dynacon has also collaborated with large System Integrators for working together on large projects. In FY 14 , it won projects with Tata Consultancy Services and Atos.
The company has obtained recognition with Intel as IASP (Intel Authorized Solution Provider). There are only 20 companies in India, which enjoy such a status of IASP. The company is a co-owner of 'Millenium PC' brand of computers in Mumbai and Microsoft OEM System Builder partner. Dynacon’s client base includes 1500 business firms like Indian Airlines, National Insurance, Bank of Maharashtra, Intel Asia Electronics Inc, Onida (Mirc Electronics) and Breach Candy Hospital. The company has a fully-equipped workshop for assembly and testing, software installation and configuration. data processing, software development and R&D facilities.

Services Offered:

• Consulting  Services 
• System Inetgration
• Networking Solutions
• Software Solutions
• IT infrastructure Mgt.
• Security Solutions.

Areas Of Business Covered:

• E-Commerce & web-based software development & solutions
• Enterprise business software solutions
• Development of innovative software products and various types of consultancy services
• Internet solutions
• System integration and networking solutions

Key Strengths:-

Over 2000 Satisfied & Regular Customers

 •  Cisco Premium Partner

 •  Intel Premier Provider

 •  Member - INTEL e-Business Network

 •  Intel ISP Program Partner

 •  IBM Premium Business Partner

 •  Microsoft OEM System Builder Partner

•  Watch Guard Security solutions provider

•  HP - Compaq Business Partner

•  Parrus (Neoware) Solutions for Thin Clients

•  SUSE Novell Business Partners

•  Highly Experienced & Certified professionals, Experienced multi-disciplinary Consultants, Professionally Managed  Software Development (Customized) Center

•  Strategy to be with Clients - " Concept to Commissioning & Beyond "

Its experienced team of Intel, Novell, Microsoft, Linux, Cisco, Java & Oracle Certified professionalsand multi-disciplined consultants enhances DYNACONS' operational strength.

Clientele:

Dynacons is providing services to many clients in areas such as education, government and public sector, shipping, healthcare, banking , BPO, manufacturing and entertainment.

Education:- It is providing its services  to D J Sanghvi College Of Engineering, Father Agnel Institute, Mithibai College Of Commerce & Economics, N M College of Commerce & Economics, National Institute of Industrial Engineering (NITIE), Narsee Monjee Institute of Management Studies (NMIMS), S P Jain Institute of Management & Research, etc.

Government & public Sector:-  Government of Goa, Revenue Department, Goa Electronics Ltd, Bharat Electronics Ltd, All India Radio, Indian Airlines and AIR India, etc.

Shipping  & Logistics:- All Cargo Movers (India) Pvt Ltd, Geologistics Pvt Limited, Prudential Shipping, Shipping Corporation of India, Natwar Parikh Group, etc.

Healthcare:- Breach Candy Hospital & Research Centre, Blue Cross Laboratories Ltd, BSES Mg Hospital, Merck, Nair Dental Hospital. Banking:- Dena Bank, Financial Technologies (India) Ltd, SIDBI, National Insurance Company, etc.

BPO:- E2E technologies Pvt Ltd, Sitel India Pvt Ltd, Kashi Infotech, 3 Global Services.
Manufacturing:- Automotive Manufacturers, Advani Oerlikon Ltd, Larsen & Toubro Ltd, Bombay Dyeing Ltd, Mazagoan Docks.

Entertaintment:- Balaji Telefilms Ltd, Shangrila India Ltd, Milestone Entertainment Ltd, Baba Digital.

The adoption of Social media, Mobile, Analytics and Cloud (SMAC) technologies is expected to drive growth in all the segments. Cloud and client maturity are the major drivers for this, especially in IT. Dynacons is adapting this technology for upgrading its existing solutions as part of its offerings.

Expected opening up of  infrastructure sectors like roads, airports and sea ports, national e-Governance initiatives and implementation of Mission projects, is going to drive an increase in IT spend. This presents unprecedented opportunity for growth for the company.

Company derives more than 15% of its revenue from Storage space, which has grown at a pace of 25% YOY for last 3 – 5 years. Company has adopted revolutionary Software Defined Strorage (SDS) in the enterprise technology space. This is an upcoming technology in this segment and article on company’s promoters this was printed on the cover page of Channel World Magazine September 2014. Link here

SDS Technology provides the following benefits over the traditional data storage method:

• Flexibility—Hardware-defined storage solutions are rigid, proprietary systems that lock you into specific vendors and protocols. By contrast,software-defined storage tends to be based on open systems that are much more adaptable to changing needs and that allow you to mix and match storage layers for optimal cost effectiveness.

• Scalability—Software-defined solutions provide immediacy and relatively limitless scalability. To scale a hardware-based system requires the time and money and floor space of buying—installing—configuring the hardware. To scale a software-defined system, on the other hand, requires just a couple of software commands.

• Economy—When considering the real cost of ownership (RCO), software-defined storage reduces the cost of buying new gear, the cost of operating the equipment, and even the cost of disposal fees. Taken together, the cumulative effect of all these cost reductions can generate savings as large as 70% or more.

• Resource leveragability—With the operational simplicity of software-defined storage, businesses don’t have to maintain engineering overhead to develop separate solutions for different hardware and media, thereby allowing IT departments to focus more resources on strategic business issues.

I feel that with supernormal explosion in data these days and to save every bit of it would compel organizations to go for SDS technology and will benefit Dynacon going forward.

A snapshot of various parameters considered for arriving at a buying decision.

Rs Crs	2011	2012	2013	2014	Q1 FY 15	Q2 FY 15	Remarks
Net Sales	42.33	52.2	58.7	77.65	22.6		Growing Topline
Net Profit	0.77	1.03	0.52	0.58	0.16		NPM should improve going forward
Market Cap				5.62
Market Cap / Sales				0.07			Market cap of around 7% of sales.
Book Value				27.66
Current Price				9.48
CMP / Book Value				0.34			Trading at 34% of its book value.
Promoter Holding	29.67%	29.67%	29.67%	30.09%	31.09%	31.49%	Increasing gradually.

Pictures have been taken from the website and annual reports. 

CyberTech Systems and Software Limited - potential multibagger

Not the best quarterly result, stay patient.  Exit, re enter when i recommend again.

 

 It was in the early 2000s so  called IT bubble time, Cyber Tech Systems was one of the hot picks from the mid-cap IT space and touched a life time high of Rs. 1500.  Then, the IT spirits vapour, this stock too fell into the bear grip like other so many small IT companies. But, almost after one and a half decade, now the company introducing new product, entering new tie-ups for technology partners and sets up new facilities, We feel this company is going to write another success story.

Cybertech Systems and Software (CSS) is IT company providing professional consulting services. The Company provides its services in SAP, geographical information systems (GIS), network services and custom technologies. The Company provides advanced technology centers (ATC) for the training, development and support of SAP, ESRI, Cisco and Microsoft technologies and has strong relationship with those companies. The Company’s GIS practice focuses on providing computer information systems (CIS) assessment, application development, integration and maintenance services. The custom technologies practice offers services in software application development, maintenance, support, modernization and migration using Microsoft, SUN, IBM, and Oracle technologies. It provides network services, which includes infrastructure, unified communication, wireless, security and data centre. Its subsidiaries include CyberTech Systems & Software Inc. and Cyber Middle East WLL, Bahrain. Mr. Viswanath Tadimety is the Chairman of the Company.
 
 

On 20th September 2014 - CyberTech received the “Skoch Order of Merit” in the 37th Skoch Summit on “Minimum Government, Maximum Governance” held at the India Habitat Centre, New Delhi on 19-20th September 2014. CyberTech has received this prestigious recognition as “India’s best governance projects 2014” for the excellent project conceptualized and delivered for the city of Bangalore. The project has been awarded this appreciation in two categories: ‘Smart Governance’ & ‘Advanced Technology’.

The Skoch Digital Inclusion awards is a highly renowned and prestigious platform instituting India’s highest independent civilian honors in the field of Governance, Finance, Technology, Economics, and the Social Sector. CyberTech’s selection has come after a fierce competition among more than 1000 entries from across the country, including leading national and international IT and technology companies. CyberTech’s selection for this ‘Order of Merit’ speaks volumes for the customer acceptance and quality of its GeoCivic® solution. It is a reflection of the success that CyberTech has had at building market-driven solutions on leading Esri technologies.


This achievement will not only help in creating a stronger GeoCivic® brand, but will also create better opportunities for CyberTech to reach out to its target market and deliver better value to its customers.

CyberTech's ArcGIS software-based application suite that caters to the end-to-end needs of local governments in India, to drive the GIS transformation initiative. The Bengaluru government identified the following functions as key drivers of the city's social and economic growth:

• Property tax management
• Road infrastructure management
• Road cutting approval system
• Optical fiber cable (OFC) license issue management
• Citizen complaint redress
• Birth and death registration

These functions were thus chosen as the primary candidates for the GIS transformation drive, and CyberTech is helping the government capture the locational intelligence residing in the data.

 The company's financial performance also showing  steady improvement. For the trailing twelve month period ended June 2014, the company reported a sales income of Rs. 68 crore and EPS of Rs. 4.1. Going forward, financial performance  are expected to jump as the company introduce new products and services, technology tie-up and new recruitment. We feel the stock will have the potential to be a Multi-bagger in the medium term.



Key Risks: The stock has inherent risks of a micro cap including liquidity. Industry wide problems including exchange rate, legal and regulatory could be an issue. Any impact on profits will affect dividend payout and thus the dividends.

Conclusion: The Company has been a steady, high dividend yield payer in the past few years and with price appreciation could be a very interesting bet in the future. It has relationships with the likes of Microsoft and Cisco, and could be an interesting play in GIS. The Promoters have increased their stake in the past few months, which is encouraging. In case the price goes down significantly, it could be a very interesting opportunity in terms of high dividend yield.

More about the company - http://www.cybertech.com/whyCybertech/aboutus.aspx

Cyber techs top clients :

            and many more.

Research not complete -  all though even after speaking to the management, i still have a few doubts. 

Dynemic Products - Stong Multibagger

After my last export driven stock pick (SKM EGG) was recommended, I have found this another export driven company, Whose exports form above 70% of the total sales.



Dynemic Products Ltd. is an ISO 9001:2000 & HACCP Certified Company. The company is one of the major manufacturer and exporter in India, offering complete range of Food Colors, Lake Colors, Blended Colors, FD&C Colors & Dye Intermediates.
Dynemic believes in continuous development by incorporating the latest technology to achieve better quality. Dynemic's colours are 100 % safe for human consumption and as per international standards.
From inception, The company has laid emphasis on eco-friendly process development for food color and lake colors etc., with high yield and minimum waste & emission levels.



The food colors manufactured by Dynemic Products have variety of Applications such as:
1) Confectionary
2) Beverages
3) Proceed Food
4) Bakery Products
5) Dairy Product
6) Pet Foods
7) Pharmaceuticals
8) Cosmetic & Personal Care Products
The detailed product level application can be found here:
http://www.dynemic.com/application.html


The company  is leading global manufacturers & distributors of food copies and blended copies & US-FDA certified  FD&C dyes. Dynemic stands among the major Food Colors manufacturers in India and one of the most reliable sources for entire range of Food Colors. The Company is having 3 manufacturing units UNIT-1,UNIT-2 at Ankleshwar and Unit-3 started at Dahej in Feb, 2014. Manufacturing facilities are well equipped, Truly unique in every aspect, the Plant's standards and facilities can match any other, worldwide. Several zones of cleanliness have been defined and adhered to international norms & requirements. Manufacturing facilities include two well equipped plants spread over 50000 Sq Mt of area. Plants are HACCP (Hazardous Analytical Critical Control Point) & ISO 9001:2000, ISO 14001 (Environment Management System) certified.
All the products manufactured by Dynemic meet the regulatory requirement of BIS, EU, FDA, & WHO specification, It also fulfills criteria of Kosher & Halal certification.The company is actively exporting its products world-wide including USA, UK, Germany, South America, Middle East, South East, South Africa, Indonesia, Thailand, Philippines, China, Brazil, Argentina, Chile etc.



I  recently had a word with the management and they clearly said that the performance is sustainable thanks to booming export and increasing demand. Future outlook for the company looks very positive atleast for the next 3 years, A turnaround in global economy and improving consumer spending, The demand for colors have already increased sharply and are expected to increase further. This stocks management  reminds me of a kitex garments management  who has been rewarded heavily.
Sweet Spots: 

• Despite increase in raw materials company posted better results. 
• Cash flow from operating activity is more than doubled in the last financial year. 
• Capacity expansion at Dahej plant going to improve the results further on sales and EPS. 
• Company is having good dividend history. 
• Ethical management, surely they will be rewarded in long term. 
• 
  

Hot Spots: 

• It is in competitive industry, but company products are more standards than others. 
• The industry is stagnant in nature for some times. 

Conclusion: A good company currently trading at around  75 rs. Do remember the way kitex management rewarded. I expect company will continue it's spectacular performance in coming quarters. Hence, it's  a strong buy at the current market price. This Stock can touch 200 anytime in next 2 years, It can even meet this target in 6 months if earnings continue to be solid throughout the period. Short term target of around 100rs.


Edit - Results update . EBIDTA has increased by 37.5% YOY. Operating margin has increased by 103 basis points NPM is also up by 24 basis points. opline increased by 29.3% and net profit by 32.9%. - Great result 

Gruh finance - Mini Hdfc

Gruh Finance Ltd (GFL), a subsidiary of HDFC Ltd., was promoted in the year 1986. The company is a leading small ticket size housing loan provider with predominately based in tier 2 and tier 3 cities & towns in the states of Maharashtra and Gujarat driving ~70 percent of business.

The company's loan assets have grown rapidly at 24 percent CAGR in last 10 years and with, rapid geographical expansion; we expect the tempo of growth momentum to continue at 24-26 percent CAGR for next 3-5 years. We initiate coverage on the stock with 'BUY' rating.

Investment Rationale:

Niche presence in relatively high growing market:

The Company predominately provides low ticket size housing loan to individual in salaried and self employed categories. The company is comfortably positioned with regards to loan to value ratios with average outstanding loan per head at 4.61 lakh as compared to average cost of dwelling unit at Rs7.5 lakhs. Gruh operates in tier 2 and tier 3 cities and towns in the states of Maharashtra and Gujarat which is not only growing rapidly but are relatively matured market as compared to other emerging real estate geography.

Over the year, due to rise in property price index, the incremental credit per head is enhanced to Rs7.25 lakh. The company is on a rapid geographical expansion mode to add ~10-12 branches per year in growing real estate market like Rajasthan, Madhya Pradesh and Chhattisgarh etc. Gruh has innovative products viz GRUH Suraksha, GRUH Suvidha, GRUH Sajavat and GRUH Samruddhi to lend for different housing needs.

Enjoys premium spread and NIM:

The Company being present in niche segment, enjoys on an average over 13 percent yield on advances with healthy spread of over 4 percent and net interest margin ~5 percent. These markets require tremendous of skill and experience to manage risk and understand the demographic nature of borrowers. The company has proven business model with 90 percent loan asset comprises of individual loan and over 40 percent business coming from rural areas.

To ensure a deeper geographic reach, GRUH has been sourcing retail business through third party channels by appointing GRUH Referral Associates (GRAs). GRAs only source loans while GRUH retains control over the credit, legal and technical appraisals. Business sourced through GRAs was 58.6 percent of incremental credit for the year FY12.

Well capitalized balance sheet:

The NHB guideline has mandated minimum 12 percent Capital Adequacy Ratio (CAR). The company has maintained on an average ~15 percent CAR since last 4 years. We continue to believe that, Gruh would maintain over 14 percent CAR going forward.

Impressive growth in loan assets with low NPA

Despite the weak economic outlook and sluggish real estate market, loan disbursement has grown at a 27 percent CAGR between 2009 and 2013 from Rs2091 crore to Rs5438 crore in respectively. We expect the loan asset to further grow at a 27 percent CAGR for next 2 years between FY13A and FY15E to Rs8832 crore. Despite impressive growth in loan assets, the quality of outstanding credit remains intact, in fact the Gross Non Performing Assets (GNPA) as a percentage of outstanding loan asset has reduced to 0.32 percent in FY13 from nearly 1 percent in FY09.

100% provisioning coverage with rapid expansion on card

GFL has taken steps over and above the NHB guideline on provisioning requirement. The Net Non-Performing Assets (NNPA) is NIL since last 5 years.

Attractive affordable home finance market

Due to rapid urbanization, the shortage of urban house stands at 18.8 million units (as per census 2011) ~99% is towards EWS/LIG/MIG. According to the working group of rural housing, for Twelfth five year plan (2012-2017) the estimated shortages of housing is expected to be ~44 million units, nearly 90% of these shortage is with respect to the population below poverty line (BPL).

Housing finance market for loan between Rs3-10 lakh is estimated over Rs1 trillion. Gruh's average ticket size of loan is less than Rs5 Lakh whereas incremental credit per head is ~Rs7.25 lakh which falls under Rs3-10 lakh categories which is driving the overall demand. Only 20% of total loan disburse in FY 2011 were loan in the bracket of 3-10 Lakh.

Quick Q on Q comparison

performance on the key financial parameters is as follows:

                                                                                                  (Rs. in crores)

Particulars	Half Year ended September 30, 2014	Half Year ended September 30, 2013	Growth %
Net Interest Margin	159.52	124.87	28%
Non-Interest Expenses	33.32	29.20	14%
Operating Profit	142.47	107.92	32%
Profit Before Tax	128.71	95.54	35%
Profit After Tax	85.00	68.12	25%
Loan Assets	7910.15	6142.90	29%
Loan Disbursements	1503.15	1197.15	26