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i-flex solutions Q4 net rises 29%

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CIOL Bureau
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BANGALORE: Financial software firm i-flex solutions ltd on Monday said its net profit rose 29 percent in the March quarter over the year ago, ahead of an eagerly awaited initial public offering. The Bombay-headquartered firm, which filed in March a draft document for an IPO issue, said its net profit rose to Rs 358.6 million ($7.3 million) in the last quarter, boosted by sales of its flagship FLEXICUBE product -- a leading banking solution software.



It said revenue rose 47 percent to Rs 1.24 billion from a year ago. For the full year to March, net profit rose 15.2 percent to Rs 1.27 billion on sales that grew 34.5 percent to Rs 4.15 billion. "Our USP is the dominance of product sales in total revenue and less dependance on the U.S. market," Deepak Ghaisas, chief executive of i-flex solutions, told Reuters.



Reflecting that strategy, the proportion of product sales in total revenue rose to 60 percent from 54 percent in the previous year. i-flex, 47.7 percent owned by Citigroup, has a business model which is different from most Indian software companies, which usually focuses on cheap manpower and depend on corporate IT budgets in the world's biggest economy.



"The U.S. accounts for only 34 percent of our total revenue compared with the 70-80 percent that one sees in many Indian software companies," Ghaisas said. India's once high flying software sector has been slammed by declining business volumes and falling billing rates amid downbeat corporate conditions in the United States -- the destination for over 60 percent of software exports.



As U.S. companies curtailed their IT budgets, even top rung Indian software firms reported staid revenue growth. Infosys Technologies, India's No 2 software exporter, posted a 32 percent growth in revenue in the year to March, much below the 85 percent average growth in the preceding five years.



In its IPO filing i-flex said it will offer 3.96 million shares or 10 percent of its post-issue capital to investors. Of these shares, 3.36 million will be fresh equity. The issue will be made entirely on a book-building basis and analysts say the issue would attract aggresive bidding.



"Most Indian companies are into system integration and package implementation whereas i-flex is known for domain expertise in financial services," said Richard D'Souza, software analyst with brokerage Sunidhi Consultancy. "Besides, Citigroup is a founder and major client with which i-flex is implementing cutting edge technology products," he said. The pricing of the issue will be decided by road shows due to begin in end-May, and since there were no pricing benchmarks because of i-flex's lack of peers, analysts said the price at which a recent issue was made could influence.

(C) Reuters Ltd.

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