Infotech for more buys on shareholders' pressure

Infotech Enterprises Limited, a Hyderabad-based technology solutions provider offering engineering and geographic information services, will pursue acquisitions aggressively on account of shareholders’ pressure.

“We are careful about value buying. There are a couple of transactions that we are working on and our shareholders are putting a lot of pressure on us. They say the 4 per cent or 4.5 per cent returns that we are getting on the money we have in the bank are not satisfactory. Therefore, we have decided to embark on a much more aggressive acquisition strategy,” said Infotech chairman and managing director BVR Mohan Reddy.

Reddy was speaking to mediapersons on the sidelines of Information Technology and Services Industry Association of Andhra Pradesh (ITsAP)’s two-day software products showcase and awards event that kicked off here on Friday.

“We currently have Rs 400 crore on our books and are accumulating roughly Rs 40 crore every quarter. We expect to close one acquisition deal in the first quarter of the next financial year,” Reddy said, adding the company would certainly not go out of the way other than value buying. Infotech acquired Daxcon Engineering, a US-Based engineering services company, in Q3 of FY10.

Infotech Enterprises’ scrip ended the trade at Rs 359.75 on the BSE on Friday, up 3.93 per cent over the previous close of Rs 346.15.

While continuing to work in engineering, which currently contributes 66 per cent to its overall revenues, Reddy said the company was looking at adjacencies like avionics, the market for which is about $20 billion worldwide.

“We have done some work for people like Airbus on lighting in the cabin (mood lighting). We are now trying to get into cockpit electronics and aircraft engine sound support, which is a big opportunity. Yet another area which is of great interest to us is nuclear power engineering. India is also going to go nuclear in a big way and each plant will cost $1 billion. Ninety per cent of the design work is to be done locally so, we are looking at these two as major thrust areas,” he added.

Reddy said the company was expecting its earnings before interest, depreciation, taxes and amortisation (Ebidta) for the current financial year to be at 20 per cent and the sequential revenue growth for the current quarter to be flat. “While we are saying the worst is over and things are recovering, the recovery has been very slow and that’s something which we have to reckon with,” Reddy said.