Dion Global Financial Solutions

                                   

                                    

Hello, Long term Investors,

Dion Global is a Global financial technology provider. They provide solutions to meet specific needs of the financial markets. After global Financial crisis of 2007/2008 , Most of the too big to fail corporations who deal with financial markets became very serious about the risk financial markets carries . After the financial crisis , there was a great need of the solution provider who can help them to cater transparent and logical solutions .

Dion global is promoted by the singh brothers of Ranbaxy and fortis health care. Singh brothers are considered the best management who always encouraged new innovations and new ideas. 53.3 % shares of Dion global is owned by promoters and very interestingly 15.97 % shares are owned by none other than Tech Mahindra. Tech Mahindra also have strategic partnership with the company. 34.4 % shares ( including 15.97 % of tech Mahindra ) are owned by different funds and FIIs .

Business Analysis :

 Dion Global has 550 clients in 88 countries supported by a worldwide staff of over 600, including more than 250 in product development. Dion Global started acquiring companies across every big markets in the world from 2010.

Ø Dion acquires equity stake in forming strategic partnership with Chase Cooper.

Ø Dion Global Solutions joins hands with BC Computers, Sri Lanka

Ø Dion Global shakes hands with EMIS to distribute research reports

Ø Recognia & Dion Global Solutions extend partnership into Asia Pacific

Ø Dion Global Solutions Acquires Controlling Stake in Swissrisk Financial Systems

Ø Tech Mhindra  Acquires Strategic stake in Dion Global Solutions

Ø Singapore brokers sign MOU with Dion Global Solutions

Ø Dion Global in partnership deal with Apex Softcell

Ø Dion Global develops interface with Cofunds

Now From 2013 , Dion Global started putting all the best Financial solution professionals together and they recruited best of the best IT people to run their different divisions . 

Ø Dion appoints Stephen Mitchell to its European Sales Team

Ø Dion appoints Achim Kleber to its European Sales Team

Ø Dion appoints Head of Partners and Alliances for Europe

Ø Dion appoints Managing Director for Australia & New Zealand

Its highly evident that management wants to built a giant financial solution provider from this tiny Dion Global .

Financials:

I don’t want to put too much emphasis on financials of the company , as Dion global is in the acquisition and building phase of its life cycle but there are some green shoots clearly visible in the financials of the company . Company declared profits in 2 of last 4 quarterly results . (DEC 2014 and MARCH 2014 http://www.moneycontrol.com/financials/dionglobal/results/consolidated-quarterly-results/RT07 ) . We can also see in above link that Dion global is a provider of all the datas to the most famous Indian financial market websites like www.moneycontrol.com .

Valuation and recommendations:

There are so many different scenarios where the company can turn out to be a multi bagger.

Singh brothers are famous in turning around the companies. Everyone knows how they turned around Ranbaxy from 200 crore company to 20000 crore company and sold it to Japanese. They made Religare  Enterprise 6000 crore company from 100 crore. They are in process to make fortis healthcare the biggest health care provider in Asia (At the moment 7000 crore company) .

Tech Mahindra is the Indian master in turning around as well. (E.g. Satyam computers)

I , personally , have this regret not to invest in companies like Bharti Tele , Hdfc , Concor , BEL , Tech Mahindra , Rallis in their early days but i am also proud to invest in Clariant , Wockhardt , Balmer Lawrie , L&T , Tcs  in their early stages of Business Cycles . What i learnt from all these years in stock market is , you cannot afford to miss the companies in their early struggling days . I am aware of the company’s financials which doesn’t look that great , but from this research its clearly visible that Dion Global have plenty fuel to become a giant in coming days . Thus, I recommend Buying Dion global at the Market price of 86 (23/02/2015) . It is not the company where anyone should put more than their 10 % of portfolio allocation but it’s definitely worth putting 5 to 10 % of portfolio allocation in Dion Global.

Disclosure : Holding 2600 shars at 74 Rs . 

Mastek A rare combination of Value and growth

Masket





Mastek is in two main businesses

Ø     Software Solutions services
Ø     Insurance Platform & Insurance Software Solutions
Mastek is in the process to demerge their two different companies as follows .On completion of this corporate action there will be 2 separate companies listed on bourses
Ø     Mastek Ltd – (Inc. Solutions & Services Business)

Ø     Majesco Ltd – (Inc. Insurance Platform & Insurance Software Solutions).

Every one share of the Masket will get one each shares of the above 2 companies after the completion of demerger process which may take 1 to 12 months.

My take on both the companies:

1st I want to analysis the present intrinsic value and then I will analyse the future estimated value for the both companies

Present value of both the businesses:
Mastek Ltd – (Inc. Solutions & Services Business)

Mastek Limited (Software & Services) FY14

Revenue 4160
EBITDA 599
EBITDA Margin % 14%
Dep  118
Int  3
PBT  478
Tax  115
PAT  363
PAT Margin % 8.7%
EPS  16.4

After the demerger Mastek will be left with software and services businesses , comparing with other midsize IT services and software business , I will give it 9 PE . And hence I will value it at 147 rupees  per share .

Majesco Ltd – (Inc. Insurance Platform & Insurance Software Solutions).

Majesco is also restructuring its business in US . After restructuring the business, Management is going to list Majesco in NYSE exchange . Majesco (formerly, MajescoMastek), the global provider of core insurance systems and services to approximately 100 insurance carriers worldwide,  announced that it has entered into a definitive merger agreement with Cover-All Technologies Inc. (NYSE MKT:COVR), an insurance software company based in Morristown, NJ, in a 100% stock-for-stock transaction, pursuant to which Cover-All’s stockholders and the
Holders of its options and restricted stock units, in the aggregate, will, upon the closing of the merger, receive 16.5% of the outstanding shares of common stock of the combined company, on a fully diluted basis. The combined entity will retain the “Majesco” brand globally. Cover-all technology today trade at the valuation of  28.5 million dollars which will be 16.5 % of Majesco . Hence Majesco should be value at 172 million US dollars when it will be listed in NYSE (which will take 3 to 6 months ) . It is 1036 crore rs market cap. Majesco India will hold 83.5 % of Majesco US, hence it should be valued at 865 crore Rs . It gives it 386 rs per share valuation.

Both companies together have the presence value of 147 (Mastek ) and 386 (Majesco ) which is 533 rs per share . Which have  23 % potential appreciation   then today’s market price of 432 . (24/02/2015)


Future Estimated value of both the companies:

Mastek :

In the future Mastek should grow at 8 to 10 % (Management indicated that in the last interview on CNBC http://www.moneycontrol.com/news/resultsboardroom/hope-to-improve-marginssvcs-bizfew-quarters-mastek_1281269.html )
My 2016 estimated EPS of Mastek is 19.8 and if we again will give it 9 PE then the price should be 178 Rs.

Majesco:
Majesco also merged Agile technology and Majesco UK businesses and all other insurance businesses under one umbrella which is Majesco USA. I will give all the business at least 300 million dollars of Market cap in 2016   comparing it with its nearest competitor in US and giving it just half ( Market cap / sales ) valuation then the nearest competitor . Which will be 670 Rs per share . If I will give Majesco India  15 % holding company discount , it still will be valued at 570 rs per share .

Both companies conservative future valuation will be 570 (Majesco ) and 178 ( Mastek ) which have 75 % potential  appreciation then the current price of 432 .

Conclusion:
Its evident from this research that Mastek is undervalued in term of its presence and future value of its businesses. One should buy it at current market price of 432 for 22 to 28 % compounded return for next 4 to 5 years .

Disclosure : Holding 3100 shares at 311 .