JETKING INFOTRAIN LTD. (JITL) Date : 2 nd November, 12 Stock Performance Details Current Price : Rs. 67.95** Face Value : Rs. 1 per share 52 wk High / Low : Rs. 75.5 / Rs. 37.Total Traded Volumes : 9,435 shares** Market Cap : Rs. 4 crore** Sector : IT Training Services EPS (FY11) : Rs. 3.46 per share P/E (TTM) : 16.51 (x)^ P/BV (TTM) :.69 (x)^ Financial Year End : 1 st April 31 st March BSE Scrip Name : JETKINGQ BSE Scrip Code : 51763 **as on 2 nd November, 12; ^ as on June 12 Shareholding Details September 12 Particulars Share holding Nos. (%) Promoter & Promoter Group Holding 27,29,76 46.35 Total Institutional Holdings (FIIs & DIIs) 3,41,115 5.79 Public Holdings 28,18,179 47.86 Total 58,89, 1. Background Jetking Infotrain Ltd (JITL) is engaged in Hardware and running a Networking Training Institute. The Company follows the Smartlab Plus teaching methodology. This methodology incorporates modern technology training coupled with ancient Indian art well being practiced through Yoga. The Smartlab Plus teaching methodology includes training on communication skills for successful interviews, personal presentations and workplace etiquette. The students are trained to interact with managers at every level with confidence and clarity. Jetking caters to various industries such as IT, BPOs, Retail, Manufacturing, PSUs, and Healthcare etc. The Company has ISO 91: certification. Strategy Focus The Company plans to tap working professionals who want to upgrade their skill sets in latest technologies. An innovative teaching methodology is one of the focus areas for the Company. Jetking has also launched training programs for its franchisees and incentive schemes for staff members. Jetking has embarked on various marketing initiatives such as internet campaigns, generation of referrals through existing students, alliances with colleges etc. The Company has opened a centre in Vietnam marking its international foray and has a tie up with the largest University there. The Company also has recently entered into an arrangement with Sikkim Manipal University in India whereby Jetkings students get a lateral entry into the second and third semester of Sikkim Manipal University s BSc (IT-IMS) program. Jetking has a tie up with various state governments for skill development programs. It bagged its maiden skill development project in the state of Gujarat under Tribal Development Department with a mandate to train 9, students over a three year period. To strengthen its presence in untapped territory and expand its product offerings, Jetking is also in discussion with National Skill Development Corporation (NSDC) to train 1.87 million students over the next ten year period. An Initiative of the BSE Investors Protection Fund 1
Financial Snapshot Particulars From the Research Desk of LKW s Gurukshetra.com Standalone Financials (Rs. In Million) Income Statement FY12 FY11 FY1 Net Sales / Income from Operations 332.7 388.7 45. Expenses Cost of material consumed... Change in Inventories -1.4 1.9 5.5 Operating Expenses 6.3 66.3 89.9 Power/Electricity Charges 5.4 4.8 5.4 Employee Benefit Expenses 12.6 96.9 65.3 Administrative & Other Expenses 1.6 1.7 139.3 EBIDTA 45.2 98.1 144.6 Depreciation & Amortization 17.3 19.5.4 Finance Costs / Interest Expense 6.8.2 1.2 Other Income 14.5.7 23.1 Profit After Tax (PAT) 21.9 67.4 98.1 Key Ratios Income Statement EBIDTA Margin (%) 13.6 25.2 32.1 PAT Margins (%) 6.6 17.3 21.8 Balance Sheet Networth 376. 364.3 318.9 Non Current Liabilities / Loan Funds 23.1..1 Non Current Assets / Fixed Assets 23.6 145.2 154.4 Inventories 6.2 4.8 6.7 Debtors 6.6 59.5 7.8 Key Ratios Balance Sheet Debt : Equity (x).3.. Book Value (BV) (in. Rs.) 63.7 61.8 54.1 Return on Capital Employed (ROCE) (%) 11.7 27.8 51.3 Return on Equity (ROE) (%) 6.9 19.7 34.2 Debtors Turnover (x) 5.5 6. 6.8 Inventory Turnover (x) 6.5 67.6 47.6 Valuation Ratios P/E (x) 15.3 1.5 8.2 P/BV (x).8 1.9 2.4 EV / EBITDA (x) 5.2 5.4 4.2 Source: Capitaline.com; as on year ended 31 st March, 12 The Net Sales de-grew by 14.4% to Rs. 332.7 million in FY 12. The Company is impacted due to the slowdown in the overall industry and the IT sector. More than 9% of enrollments during the An Initiative of the BSE Investors Protection Fund 2
year were in Jetkings career courses. Among the career programs, Jetking Certified Hardware and Networking Engineer (JCHNE) and Jetking Certified' Hardware and Networking Professional (JCHNP) constituted major enrollments. Newer products, Masters in Network Administrator (MNA) and Smartgrad targeted towards engineering graduates and other graduates witnessed a rapid rise in enrollments with major demand coming from the Southern region. The Jetking Doit-yourself (DIY) Tablet course bundled with its career programs launched in the last year saw good traction drawing a large pool of students. EBITDA for the same year was at Rs. 45.2 million, translating into a de-growth of 53.9% as compared to the last year on account of drop in Net Sales and increase in employee costs and power & fuel expenses. The employee costs account for 31% of the total sales and have increased on a y-o-y basis. Despite this, the overall Expenses dropped by 1.1%. At the Net level, the Company reported a Profit of Rs. 21.9 million, a fall of 67.5%. The Company paid an Interest expense of Rs. 6.8 million in FY 12 as compared to Rs..2 million. Resultantly, the corresponding margins both at the EBIDTA and PAT level also declined and stood at 13.6% and 6.6% in FY12 as compared to 25.2% and 17.3% during the previous fiscal. While, in FY11 the company was debt free in FY 12, the company has taken bank overdraft which resulted in the loan funds to increase to Rs.23 million from zero in the previous fiscal. In Q1, FY 13, the Net Sales increased by 6.4% to Rs.86.5 million as compared to the similar quarter of the last fiscal. Expenses grew by 22.6% and resultantly EBITDA posted a 61.2% drop to Rs. 6.6 million. At the Net Level, the Company reported a Profit of Rs. 3.6 million. Performance on the Bourses Stock Performance as on 2 nd November 12 % 1 1 8 6 4 - Jet Infotrain BSE Small Cap An Initiative of the BSE Investors Protection Fund 3
Peer Comparison The below mentioned table provides a snapshot of the financial performance for FY12 for JITL as compared to some of its closest comparable peers with similar business model and operating in the overall IT sector. Standalone Financials Particulars (Rs. In Million) Jetking Infotrain NIIT Aptech Net Sales 332.7 7,345.7 99.5 EBIDTA 45.2 3.8 132.6 PAT 21.9 962.5 182. EBIDTA Margins (%) 13.6 4.4 14.6 PAT Margins (%) 6.6 13.1. P/E (x)^ 16.5 16.2 18.5* P/BV (x)^.7 1.1 1.4* Debt : Equity (x).3.4 EV / EBIDTA (x)^ 5.7 3. 9.81* Source: Capitaline Database; as on 31 st March, 12; ^ as on June 12;* as on September 12. About the Industry India s vocational education space holds out good potential. There is a lot of focus by the Government of India on skill development through its various initiatives such as National Skill Development Corporation (NSDC), National Vocational Education Qualification Framework (NVEQF) and several other initiatives in different States. The focus is on training youth with vocational courses to make them employable. The Government has an ambition of training 5 million youth by 22. The Government has also announced certain benefit in the budget for vocational training institutions. Amidst emerging opportunities, primarily emanating from Governmental intervention, Jetking initiated a number of proactive steps to tap these opportunities. With the global economy still reeling under slowdown pressure along with headwinds emerging from Eurozone, the spectre of degrowth on IT spending is looming on the industry. Disintegration of the Euro-zone can trigger reconsideration in IT budgets which could translate into low expenditure thus impacting manpower requirement. However, huge domestic spending led by the Government towards building core IT infrastructure would insulate the industry from any significant downturn. Outlook Spending by the Government towards e- governance channelled through the National e- Governance Plan (NeGP) is expected to emerge as the next enabler in driving the IT industry. The massive investment planned towards creating core IT infrastructure across the nation would act as a catalyst towards skilled resource requirement in the future. Jetking as a leading resource provider to the industry is well positioned to reap the benefits. Advent of technologies such as cloud computing, advances in virtualization and convergence of data centre infrastructures is expected to generate fresh job avenues and will require over 2 million professionals by 15 to meet the demand in the industry. To bridge the gap of skilled workforce and increase the employability quotient of the youth, the Government of India is aggressively promoting various skill development programs through central and state funded schemes. Jetking has fair medium to long term prospects if it manages scalability well. An Initiative of the BSE Investors Protection Fund 4
Financial Graphs Net Income from Operations Rs. in Million 5 45 4 35 3 25 15 1 5 45 388.7 332.7 FY 1 FY 11 FY 12 EBITDA & EBITDA Margins Rs. in Million 16 14 1 1 8 6 4 32.1 144.6 98.1 25.2 13.6 45.2 35 3 25 15 1 5 % FY 1 FY 11 FY 12 EBIDTA EBIDTA Margins PAT & PAT Margins 1 21.8 25 Rs. in Millions 1 8 6 4 98.1 17.3 67.4 6.6 21.9 15 1 5 % FY 1 FY 11 FY 12 PAT PAT Margins An Initiative of the BSE Investors Protection Fund 5
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