Wednesday, October 08, 2003
It is no wonder that sentiment is upbeat on Hughes Software
ahead of its results, considering that analysts expect a 75-129%
rise in quarterly net profit. In reflection of that sentiment,
the stock of the software major rose 2.54% to Rs 402.10 by
10:20 IST today. It notched up volumes of close to one lakh
shares on BSE by then.
Hughes Software (HSSL) has been witnessing prolonged but
steady gains over a one-year period, now up 214% from Rs 128.20
on 8 October 2002.
For the second quarter ended 30 September 2003, a capitalmarket.com
poll of three software analysts has estimated the company
to record a huge growth of 75-129% in net profit to Rs 14.5-19
crore on a 50.3-67.4% increase in net sales to Rs 78-87 crore.
The prediction is more-or-less in line with the company's
guidance - 55-60% jump in sales over the corresponding quarter
of the previous year and 90-100% spurt in net profit.
HSSL has strategically focussed on the telecom software solutions
domain and is now enjoying the fruits of that crucial decision.
The company lay low for a couple of years because of the shaky
and hazy business environment in the telecom space, but has
come out even stronger. The company has developed domain expertise
along with building strong relationships with customers in
the interim period.
In fact a few analysts expect the company, with its strong
order book position and improved prospects, to beat its own
bottom line guidance for FY 2003-04. For FY 2003-04, HSSL
expects sales to grow 55-60%. Profit after tax is expected
to rise 60-70%, a revision from the earlier forecast of 40-45%.
Last month, there were reports that the company had bagged
a huge $100-million order from global major Lucent Technologies.
HSSL's order from Lucent Technologies involves the supply
of software and services for 3G mobile equipment . HSSL already
has a strategic relationship with Lucent and, therefore, has
become the key beneficiary of the recent $1-billion contract
bagged by Lucent from Sprint PCS for the supply of 3G mobile
equipment.
There were also reports that HSSL is on the verge of bagging
a high-value deal from Nokia, the world's largest maker of
mobile phones. HSSL, being Nokia's only vendor in India, is
expected to be the sole or the largest beneficiary of Nokia's
ramp-up plans. Nokia recently decided to increase its market
share in India.
Recently, HSSL announced that it has been assessed on Capability
Maturity Model Integration (CMMI) Level 5, as defined by the
software engineering institute (SEI), Carnegie Mellon University.
With this certification, HSSL joins the select band of companies
worldwide that has achieved the highest level of process maturity
in accordance with the new quality standards of SEI CMMI.
HSSL was incorporated on 13 December 1991. It is engaged
in the development of packaged software, providing share consultancy
services and other ancillary products and services primarily
aimed at the telecommunications industry. HSSL is focused
on the telecom sector and derives more than 53% of its revenues
from the wireless segment. However, the company is feeling
the pinch of the sluggishness in the telecom sector globally.
Therefore, in order to de-risk its business and create added
opportunities, HSSL has decided to enter into the business
process outsourcing (BPO) segment. This will be started as
an independent operation. HSSL is also diversifying its revenue
streams and is working currently for a foray into the banking,
financial services, insurance (BFSI) segment.
In a major development, on 14 July 2003, Australian media
giant News Corp, Mauritius-based HNSM and the U.S-based Hughes
made an open offer to the shareholders of Hughes Software
to acquire 20% stake in the company at a price of Rs 232.
The offer follows the global acquisition of 19.8% stake in
HSSL's parent Hughes by News Corp from General Motors. News
Corp has also decided to acquire an additional 14.2% stake
in Hughes from the latter's shareholders. With the open offer,
News Corp would own 34% stake in Hughes.
For the first quarter ended 30 June 2003, HSSL reported a
massive 245.45% rise in net profit to Rs 15.2 crore compared
to Rs 4.4 crore in the corresponding period of the previous
year. Total income increased 57% to Rs 78.3 crore from Rs
49.9 crore in JQ 2002.
As on 30 June 2003, foreign promoters' held 55.44% stake
in HSS, while the public and institutions (including FIIs)
held 15.93% and 11.14%, respectively.
Last updated : February 2, 2004
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