Other Financial Services November 09, 2012 CMP Rs. 0.3 BSE Code 531738 BSE ID SILICON High/Low 1Y (Rs.) 0.34 / 0.18 Average Volume (3M) 17,606 Market Cap (Rs. Cr.) 3 Shareholding % Sep-12 Jun-12 Promoters 4.64 4.64 FIIs # - - DIIs # - - Public & Others 95.36 95.36 Stock Chart ( Relative to Sensex) 120 100 80 60 09-Nov-11 09-May-12 09-Nov-12 Silicon Valley Infotec Sensex Stock Performance (%) 1M 6M 1Yr Silicon Valley Infotec 3.3 29.2 6.9 Sensex 0.3 13.8 9.1 Financials FY10 FY11 FY12 Revenue 37.5 0.7 1.7 Y-o-Y -98.1% 149.9% EBITDA 0.5-1.3-0.2 Y-o-Y PL - Net Profit 0.3-1.0-0.4 Y-o-Y PL - EPS (Dil.) 0.02 - - EBITDA Margin 1.3% - - Net Profit Margin 0.8% - - P/E(x) 15.5x - - Financial year ends at March 31. All figures in Rs. crore except for per share data # FIIs- Foreign Institutional Investors Silicon Valley Infotech Limited Company Overview Silicon Valley Infotech Limited (SVIL) was originally incorporated as Prashant Food Products & Holdings Limited under the Registrar of Companies, New Delhi. The company was incorporated on August 29, 1983 under the Companies Act, 1956. The company obtained its Certificate of Commencement of Business on September 23, 1983. The name of the company was changed to Prasant Global Finance Limited in 1985 and finally to Silicon Valley Infotech Limited in 1998. SVIL shifted its registered office from New Delhi to its current location in Kolkata in 1995. The company is engaged in the business of granting loans and advances and investment in shares & securities. As a part of the diversification program, the company had set up 2.46-MW wind farm project at Kayathar in Tamil Nadu. Elmostate Electron Limited and Arihant Investment Trust Limited, two companies that were engaged in the business of investment in share and securities and advancing of short-term financing, were amalgamated with the company. The company went public in February 1996 to finance its diversification program. Company Fundamentals Total revenue surged 149.9% in FY12 The total revenue of the company increased 149.9% Y-o-Y to Rs. 1.7 crore in FY12 with increase in sales of commodities and shares. The sales of shares increased 112.1% to Rs. 1.5 crore during the year under review. The company has started trading in commodities also in 2011-2012, for which the total sales stood at Rs. 0.3 crore. EBITDA stood negative at Rs. 0.2 crore The company reported loss of EBITDA, but it was far lower than the previous year s figure of - Rs 1.3 crore due to rise in revenue and decline in the other expenditure. Other expenditure declined to 13.5% of the total revenue from 323.1% in the previous year. Suffered losses despite surge in revenue SVIL suffered a loss of Rs. 0.4 crore in the current year against the loss of Rs. 1.0 crore in the previous year. The surge in revenue limited the losses during the year under review. The performance of the company during the current year was good but not up to the expectation due high volatility witnessed in the market. Key Strengths - Looking out for new opportunities in the commodity market. - Diversifying product portfolio # DIIs- Domestic Institutional Investors Initiative of the BSE Investors Protection Fund -1-
Company Business Silicon Valley Infotech Limited (SVIL) was incorporated with the name of Prashant Food Products & Holdings Limited under the Registrar of Companies, New Delhi. In 1985, the company changed its name to Prashant Global Finance Limited and finally in 1998, the name of the company was changed to Silicon Valley Infotech Limited. The company was originally incorporated on August 29, 1983 under the Companies Act, 1956 and obtained its Certificate of Commencement of Business on September 23, 1983. The company shifted its registered office from New Delhi to its current location in Kolkata in 1995. The company is engaged in the business of granting loans and advances and investment in shares and securities. As part of the diversification program, the company had set up a 2.46- MW wind farm project at Kayathar in Tamil Nadu. Elmostate Electron Limted and Arihant Investment Trust Limited, two companies that were engaged in the business of investment in share and securities and advancing of short-term financing were amalgamated with the company. The company went public in February 1996 to finance the diversification program. The company aims to invest in the businesses related to infrastructure, telecommunication and software etc. in the coming years as it sees good prospect in these areas. SVIL is trying to establish itself as a strong player in the finance industry. With the capital market expected to be in a better position than previous years, the company is looking forward for various opportunities. Segment Revenue - FY12 15.15% 84.85% Sale of Commodities Source: Company Annual Report Sale of Shares Initiative of the BSE Investors Protection Fund -2-
Silicon Valley Infotech Limited Industry Overview Over the years, there has been a considerable expansion of the Indian financial market. This has been the result of various financial market reforms undertaken by the regulators, introduction of innovative financial instruments in recent years and the entry of sophisticated domestic and international players. The private sector participation in sectors such as banking, asset management and brokerage has contributed to the development and modernisation of the financial services sector. Introduction of new products and expansion of delivery channels have helped non-banking financial services sector, such as equities, derivatives and commodities brokerage, residential mortgage and insurance service witness significant growth rates. The capital markets have also undergone substantial reforms in regulation and supervision, particularly the establishment and empowerment of SEBI. Moreover, screen-based nation-wide trading, dematerialization and electronic transfer of securities, rolling settlement and derivatives trading have improved both the regulatory framework and efficiency of trading and settlement. In India, the primary segment of the capital markets has also been witnessing a surge in activities driven by factors such as strong fundamentals of the Indian economy, a buoyant secondary market, revival of structural reforms by the Government and an investor-friendly framework provided by the market regulator. Financial brokerage market in India is going through sweeping changes with new players looking to be a part of the highly-competitive brokerage market, characterized by dwindling brokerage and exponential growth of brokers and sub-brokers. The fortune of the brokerage industry is closely linked to the performance of the capital market turnover which, in turn, depends on the performance of the equity market and economic condition. The industry benefited when impressive Indian GDP growth boosted investors confidence, thus resulting in enhanced participation in the equity markets. Strengths Increased income levels in Tier-2 cities. Huge market potential given the underpenetration of equities as an investment avenue among Indian investor community. Challenges Increasing cost of regulatory compliances. Greater dominance of the foreign brokerage houses in the institutional broking segment. A more flexible cost structure arising from the increasing reliance on franchisee model. Protecting brokerage yields and market share in the highly competitive and fragmented equity brokerage industry. With the industry having passed through rough phases during 2008-2009 and 2011-12, the profitability of the brokerage houses came under intense pressure with the brokerage income getting adversely impacted and the turnover declining amid falling stock prices and average brokerage yield. Many existing players have been forced to reduce operations due to lack of revenues while others are surviving on the basis of consolidation. Rising rate of fixed deposits and other traditional saving instruments due to turbulent Indian market conditions are acting as major challenges for the market. Global uncertainties have also put huge pressure on the market. Competitor Analysis We have compared Silicon Valley Infotec Limited with its close peers in the other financial industry. Company Year End CMP M Cap Revenue Source: Capitaline, BSE, Market cap and Revenue in Rs. crore. CMP and M Cap as of 25 October 12 EBIT Margin Silicon Valley Infotec Limited Mar-12 0.3 3.0 1.7 - - - Bridge Securities Ltd Mar-12 10.5* 3.5 0.1 - - - Pankaj Piyush Trade & Investments Mar-12 50.6** 2.0 0.0 40.0 1.9 26.1x EPS P/E Initiative of the BSE Investors Protection Fund -3-
Summary Financials Particulars (Rs crore) FY10 FY11 FY12 Net Sales 37.5 0.7 1.7 Other Op. Revenue 0.0 0.0 0.0 Total Revenue 37.5 0.7 1.7 Growth (%) -98.1% 149.9% Increase/Decrease in Stock -36.5 0.4-1.5 Gross Profit 0.9 1.1 0.2 Employee Costs -0.2-0.1-0.1 Other Expenditure -0.2-2.3-0.2 EBITDA 0.5-1.3-0.2 Depreciation -0.3-0.3-0.3 EBIT Profit 0.2-1.6-0.4 Finance cost 0.0 0.0 0.0 Other Income 0.1 0.6 0.0 Exceptional Items 0.0 0.0 0.0 PBT 0.3-1.0-0.4 Income Tax 0.0 0.0 0.0 Profit after Tax 0.3-1.0-0.4 Extra Ordinary Items 0.0 0.0 0.0 Net Profit 0.3-1.0-0.4 Rep. Basic EPS 0.02 - - Rep. Diluted EPS 0.02 - - Equity Capital 13.0 13.0 13.0 Face value 1 1 1 Ratio Analysis FY10 FY11 FY12 Margins EBITDA Margin (%) 1.3% - - Net Profit Margin (%) 0.8% - - Valuation P/E (x) 15.5 - - P/BV (x) 0.2 0.2 0.2 Profitability ROCE (%) # - -6.1% -1.8% RONW (%) 1.1% -4.4% -1.9% Solvency Ratio Debt/ Equity Ratio (x) 0.1 0.1 0.1 Interest Cover (x) - - - # Bifurcation between LT and ST Debt is not available for FY 10 Initiative of the BSE Investors Protection Fund -4-
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