Monday, July 14, 2003
Hughes Software showed much resilience today, staying in
positive territory in afternoon trades, despite an open offer
to shareholders by News Corp at a price much lower than the
market price. At 13:45 IST, the stock was 1.09% higher than
its previous closing, at Rs 255.25. Close to 4 lakh
Hughes Software Systems (HSS) shares changed hands on BSE
by that time.
Investors have not been put off by the open offer price for
HSS because strong results are being expected from the company.
Today, Australian media giant News Corp, Mauritius-based HNSM
and U.S.-based Hughes have made an open offer to the shareholders
of HSS to acquire 20% stake in the company at a price of Rs
232. This is at a discount of 9.1% to the current market price
of the HSS stock. The offer will open on 20 August 2003 and
close on 18 September 2003.
The offer follows the global acquisition of 19.8% stake in
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% of the shares of Hughes.
For the first quarter ended 30 June 2003, a capitalmarket.com
poll of five software analysts has estimated a net profit
of Rs 8.8-15.2 crore for HSS, a massive growth of 100-245.5%.
Net sales are expected at Rs 66.4-72.3 crore, a rise 40-52.5%.
In other developments, HSS acquired Tenet Technologies Pvt
Ltd, Bangalore, this month. The consideration at the time
of the announcement of the acquisition deal was put at not
more than Rs 18 crore.
Recently, the company announced a multi-year outsourcing
relationship with Lucent Technologies, the world leader in
mobile communications. Under the agreement, Lucent Technologies
will outsource the software development and maintenance support
for selected wireless products, and HSS will set up a
state-of-the-art dedicated development facility in Nuremberg,
Germany, and expand its existing operations in Bangalore.
For the full year ended 31 March 2003, HSS registered a 27.4%
drop in net profit to Rs 37.9 crore on a 6% fall in net sales
to Rs 220.4 crore. It declared a 40% dividend for FY 2002-03.
For 2003-04, HSS has projected a 40-45% growth in net profit
and a 35-40% growth in sales.
Hughes Software Systems (the Indian arm) 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. HSS 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.
In order to de-risk its business and create added opportunities,
HSS has decided to enter into the business process outsourcing
(BPO) segment. This will be started as an independent operation.
HSS is also diversifying its revenue streams and is working
currently for a foray into the banking,
financial services, insurance (BFSI) segment.
As on 31 March 2003, public and institutions (including FIIs)
held 12.78% and 12.59% respectively.
Last updated : February 2, 2004
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