Saturday, March 17, 2012

Glodyne Technoserve Bought by the FIIs, UBS & Merrill Lynch, for Rs. 18.7 Crore

Annand Sarnaaik,
Chairman, MD, & CEO,
Glodyne Technoserve Ltd. 
By Staff Reporter:

Glodyne Technoserve Ltd (BSE: 532672, NSE: GLODYNE) continued to attract buying interest from major FIIs, for the second day in this week. On Friday, Glodyne witnessed a massive buy of 2.50 lakh shares by the Foreign Institutional Investor, Swiss Finance Corporation (Mauritius) Ltd, in National Stock Exchange, which amounts to around 0.56% of the total shares.

Swiss Finance Corporation is a subsidiary of Swiss banking major, UBS AG. The buy by Swiss Finance was at Rs. 352 a share, making the deal worth Rs. 8.80 crore. There were no identifiable sellers from the promoter group or institutional holders as counter-parties to the buy, which hints that the stake was picked up from the wider market.

On Wednesday, Glodyne Technoserve has witnessed a comparable buy, when the FII Merrill Lynch Capital Markets Espana, bought 3 lakh shares of Glodyne amounting to 0.67% of the company. Like the buy by the UBS arm, this too was picked up from the wider market, with no identifiable seller. At Rs. 330 a share, the Merrill Lynch buy was worth Rs. 9.90 crore.

Glodyne Technoserve Ltd is a small-to-medium sized software & IT services firm, coming in at the 14th position by revenue among India’s listed software players. Measured by FY’11 standalone revenue, it is behind such firms like Rolta, Polaris, Prithvi, Spanco etc, and ahead of players like Zylog, Vakrangee, & Firstsource.

The institutional interest has come as a surprise to the Glodyne counter, as apart from the FII, Cerberus, and the DII, Religare, noted marquee names from the institutional space was not there in the company with notable stakes.

The buzz in the market is that Glodyne Technoserve may bag two significant e-governance projects from two state governments of India. Though the management has refused to confirm the rumour, Glodyne is up by over 75% in March, that is, within just 13 trading days.

On the fundamental side, Glodyne Technoserve has been an outperformer during the last four fiscals, with consolidated revenue growing by almost 940%, and consolidated net profit surging by over 800%. 

The market performance of Glodyne had also followed suit, and until mid November in FY’11, its stock had soared by more than 30 times, that is within a period of 3½ years. But since then, the stock has been losing value steadily, not in sync with its fundamental performance, which was mainly due to the significant dilution that saw its equity more than doubling. 

Even in the current fiscal year-to-date, though the fundamental performance has been good, the Glodyne stock has been almost on a free fall. 

Consolidated revenue for this nine-monthly period is up by over 68%, while consolidated bottomline is up by nearly 34%. Yet, Glodyne Technoserve stock had fell from a 52-Week High of Rs. 473.20 in BSE on 8th April to a 52-Week Low of Rs. 190.55 on 24th November, which is a loss of nearly 60%, within 7 months.

Glodyne had also failed to resurrect with the recent market rise, but has risen now on this order buzz and the entries by Merrill Lynch and UBS.

It will be interesting to watch whether Glodyne Technoserve can hold on to the gains, as the rise has been very steep. It will take nothing less than a confirmation of the order for Glodyne to keep gaining.

Meanwhile, the dilution is continuing in Glodyne’s equity with Q3 witnessing a dilution of 10 lakh new shares or 2.28%, in favour of promoters through their warrant conversion. Another 15 lakh warrants have been approved for promoters during this quarter that will cause a further 3.33% dilution when converted.

One risk factor in Glodyne Technoserve’s equity structure is that out of the 57.32% promoter stake, 86.66% is pledged. This amounts to 49.67% of the company’s total equity base. 

Major non-promoter investors in Glodyne include Religare Finvest with a 2.50% stake and Cerberus Partners with a 2.28% stake.

Glodyne Technoserve closed Friday’s trade at Rs. 356.15 in NSE, up by 3.05%.