FCS Software - Rs.91.00

Incorporated in 1993, FCS Software Solutions Ltd. (FCS) is engaged in creating customized software solutions, maintaining software applications and creating digital content solutions for its clients. The business model of the company is to create dedicated software developing teams for its customers, which helps reduce the development cost of its clients and make them more efficient. In short, the following three segments are its core competency:

IT Consulting Services: This segment constitutes about 55% of its total revenue and provides Application Maintenance including ongoing functional and application support for a customer’s application maintenance needs. It also provides toll-free voice access, e-mail and chat support 24x7 customer care service.

E-learning & Digital Consulting: The contribution of this segment is about 25% to FCS’s the total revenue and it develops and manages E-learning solutions that help organisations achieve optimal performance. The solutions are tailored to meet specific organisational requirements that set a definite road map for increased return on investment.

Product Engineering Services (PES): About 20% of its total revenue is generated by this segment and it specifically focuses on servicing software product companies. All services, processes and teams are structured to provide Software Product Life Cycle Management.

In a decade of its existence, FCS has carved out a niche for itself in core IT areas like e-learning, digital content services, IT consultancy and product engineering services. It derives nearly 100% of its revenue from USA and its major clients are Canon, Domino, John Deere, AIG in E-Learning & Digital Consulting, GE Transportation, Ace Technologies Inc., Savant Consulting, Oxford Global in IT Consulting business and Synergy Technology, Knowles Electronics, Digital Intelligence Systems Corp., United Software Consulting Solutions Inc, Eliassen Group Inc. for Product Engineering assignments.

Its offshore development centre in India is based in Noida apart from a development centre and marketing office at San Jose, USA. In 2005, the company enhanced capacities by setting up one more unit at Punchkula in Haryana. With the global demand for IT Applications rapidly increasing, FCS is aggressively expanding its infrastructure for which it has been allotted around 2 acres plot in the Chandigarh Technology Park. FCS has further bought another 1 acre plot in Noida. Besides, it was also awarded a plot/building Rs.1.5 cr. at an auction by Punjab and Haryana High Court but the matter is under litigation although the company has made the payment.

In Aug.’05, FCS raised around Rs.17.50 cr. through an IPO at Rs.50 per share. From it, the company has already deployed more than Rs.8 cr. till Mar.’06 and the balance has been invested in fixed deposits with banks. For FY06, its top-line grew by 35% to Rs.116 cr. and bottom-line increased by 60% to around Rs.15 cr. due to better operating efficiency. Maintaining the same trend for H1FY07, its revenue increased by 35% to Rs.72 cr. whereas profit improved by 40% to Rs.10 cr. Accordingly for the full year FY07, it is expected to register sales of Rs.150 cr. with net profit of Rs.19 cr. This works out to an EPS of Rs.14 on equity of Rs.14 cr. For FY08, it can report an EPS of Rs.18. Hence at a reasonable discounting of 12 against its FY08 earnings, the scrip has the potential to touch Rs.200 mark (i.e. 100% return) in 12-15 months.