Company Overview. FY15 and recent performance. The company has operating profit of INR65.2m in Q2FY16. Table 1: Key financials

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1 IT Software Products l BSE Research ABM Knowledgeware Ltd. The Varhad Group CMP: INR Stock data BSE code BSE ID ABMKNO Face value (INR) 10.0 No of shares (m) 10.0 Market cap (INRm) 2, m avg. daily vol (No) 6,635.9 Free float (INRm) Dividend yield FY15 (%) 0.8 S&P BSE Sensex 26,145.7 Stock performance (%) 52-week H/L 315.0/ M 3M 12M Absolute (%) Relative (%) Shareholding pattern (%) Promoters FIIs DIIs Others 64.92% 1.62% 0.00% 33.46% Relative stock movement Company Overview ABM Knowledgeware Ltd is an information technology company in India. The company is engaged in providing software development services and sale of computers and peripherals. Their products include ABM MaiNet, ABM CARE, ABM MOIS and CRM for power distribution utilities. The company business focuses on providing e-governance solutions to municipal bodies, CRM solution for electricity distribution companies, and automation of billing, accounting and collection for water distribution authorities. Their services include IT enabling citizen services, grievances management, document journey and pendencies monitoring, water billing and accounting software and ERP. FY15 and recent performance Net sales in FY15 increased by 10.8% YoY to INR820.9m from INR740.7m in FY14. EBITDA increased from INR212.1m in FY14 to INR265.0m in FY15. The company reported net profit of INR175.8m in FY15, against INR144.8m in FY14. In balance sheet, fixed assets increased to INR279.7m in FY15 compared to INR279.5m in FY14. The investments were recorded at INR28.7m in FY15. Loans and Advances were recorded at INR56.4m FY15 against INR63.1m in FY14. Cash & Bank Balances increased from INR150.1m in FY14 to INR174.2m in FY15. Operating cash flow for the firm was recorded at INR79.0m in FY15 against INR71.8m in FY14. Revenue for Q2FY16 was recorded at INR184.3m against INR169.8m in Q2FY15. The company has operating profit of INR65.2m in Q2FY16. In Q2FY16, net profit was reported at INR41.3m against a profit of INR44.2m in Q2FY15. Table 1: Key financials Source: BSE (Y/e March) FY 13 FY 14 FY 15 Sales (INRm) YoY Growth (%) EBITDA (INRm) EBITDA Margin (%) Dec 2015 PAT (INRm) EPS (INR) YoY Growth (%) RoE (%) P / E (x)

2 Industry Overview Banking on a sustained focus on customers, with add-on services, using innovative technologies, the USD120bn Indian IT industry witnessed a turnover of fortune in As per NASSCOM estimates the industry is projected to register 15% expert growth in FY15 with revenues of USD13-14bn as against 13% in FY14 with revenues of USD118bn achieved. Although the industry had to face the headwinds of the economic slump globally in the first half of the year and its effects on the cut in government expenditure the current fiscal year demonstrated robust growth by the industry, which is constantly evolving and fuelling growth for the industry. As per NASSCOM report IT services grew 12.6%, BPM 11% and engineering R&D as well as product development 13.2%. The domestic market grew 14%, fuelled by e-commerce revenues of USD14bn to reach USD48bn. The industry now employs 3.5m professionals and added 2,30,000 employees in FY15. Board of Director Table 2: Composition of Board Name Director type Business relationship with company Sharadchandra Abhyankar Director Chairman, Independent Director Prakash B Rane Director Managing Director Supriya P Rane Director Non-executive Director Dr. Ajit C Kulkarni Director Non-executive Independent Director M.N. Ahmed Director Non-executive Director Source: Company Key Strength and growth drivers The need for e-governance in the utilities sector is increasing with increasing urbanization as well as due to the general need for improvement in efficiency by government organizations in these sectors. The smart city concept and its use of digital technology is a boon to engage more effectively and actively with its citizens. Risk and concern Delayed outstanding payments from the government offices. Clauses in the RFP s relating to unlimited liabilities, dispute resolution and payments. Interim Performance In Q2FY16, the revenue increased YoY by 8.5% from INR169.8 in Q2FY15 to INR184.3m. On operational front, in Q2FY16, the Company reported operating profit of INR65.2m as against INR67.3m in Q2FY15. In Q2FY16, net profit was recorded at INR41.3m as against INR44.2m in Q2FY15. 2

3 Table 3: Summary of year to date performance (INRm) Q2FY16 Q2FY15 YoY % Q1FY16 QoQ% H1FY16 H1FY15 YoY % Revenue EBITDA EBITDA Margin (%) PAT Competition analysis Table 4: Peer comparison CMP Mcap Rev (INR) (INRm) (INRm) NPM (%) EPS(INR) PE(x) ABM Knowledgeware Ltd , Polaris Consulting & Services Ltd , , Mindteck (India) Ltd , IKF Technologies Ltd Source: BSE Financial snapshot Chart 1: Sales trend Chart 2: Margin trend Chart 3: EPS trend Chart4: Working Capital Profile 3

4 Financial Summary Profit and loss (INR m) Balance sheet (INR m) Year ending 31 March FY13 FY14 FY15 Year ending 31 FY13 FY14 FY15 March Revenue Net Block Direct Expense Investments Staff Cost Cash and Banks Balance Other Expenditure Inventory Total Cost Sundry Debtors EBITDA Loans and Advances EBITDA margin (%) Other Current Assets Depreciation Other EBIT Total Assets ,129.0 Interest Expenses Gross Debt Non-operating Income Trade Payables PBT Provisions & other curr lia Provision for Tax Others PAT Equity Capital Growth % Reserves & Surplus PAT margin (%) Share Application money Minority Interest Minority Interest Extra Ordinary Shareholders' funds PAT (Reported) Total Liabilities ,129.0 Cash Flow Metrics Ratios, growth and per share analysis FY13 FY14 FY15 Y-o-Y % change FY13 FY14 FY15 Net Profit before tax Revenue Operating Cash Flow EBITDA Investing Cash Flow Recurring EPS Financing Cash Flow Ratios (%) Net Change in Cash ROE Op.cash and Equivalent ROCE Cl.cash and Equivalent EBITDA Margin Ratio - Du Pont Analysis Net Debt/Equity (x) FY13 FY14 FY15 Net Debt/ EBITDA (x) Net Profit Margins (%) Inventory days Total Assets Turnover Debtors days Leverage Multiplier Payables day ROAE (%) Total Asset TO ratio Valuation Fixed Asset TO Ratio FY13 FY14 FY15 Per share data (INR) EV/Sales EPS reported (diluted) EV/EBITDA Recurring EPS (diluted) P/E (x) DPS P/B(x) Book Value(basic) Dividend yield (%) Wtd avg ord shares (m) FCF yield (%) Wtd avg dil shares (m) Source: BSE, Company, Varhad research 4

5 DISCLAIMER Varhad Financial Consultancy Services Private Limited (Varhad FCS), an entity of the Varhad Group has taken utmost care to ensure accuracy and objectivity while writing this report based on publicly available information or from reliable sources. However, neither the accuracy nor completeness of information contained in this report is guaranteed. Opinions expressed herein are our current opinions as on the date of this report. Nothing in this report can be construed as either investment or any other advice or any solicitation, whatsoever. The subscriber/user assumes the entire risk of any use made of this report or data herein. Varhad FCS specifically states that it or any of its entities or employees do not have any financial liabilities whatsoever to the subscribers / users of this report. This report is for personal information only of the authorised recipient in India only. This report or part of it should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied for any purpose. PUBLISHED BY Varhad Financial Consultancy Services (VFCS) is the research and financial consultancy services entity of the Varhad Group. We have one of the best in-house research team, which has sound understanding of SMEs through clients across India. We provide project specific, company specific and sector specific consultancy services. We help companies expand businesses through network expansion. We also help in balance sheet strengthening and improvement in both credit and business profile of the company. Regd. Office: Flat No. 1, Harsh Apartment, Near Gore Apartment No. 2, Shastri Nagar, Behind Akashwani, Akola Head Office: 441, Samruddhi, Sector 25, PCNDTA, Nigdi, Pune Tel: SEBI Certificate of Registration as Research Analyst Registration No: INH Dated: 25 May