Wednesday, July 11, 2012

Infotech Bought by First Carlyle

BVR Mohan Reddy,
Chairman & Managing Director, Infotech Enterprises Ltd.

By Staff Reporter:
08:57 PM IST, Wednesday, 11th July 2012:

Infotech Enterprises Ltd (BSE: 532175, NSE: INFOTECENT) counters in NSE & BSE on Wednesday witnessed massive buys coming up to 1.11 crore shares by the FII, First Carlyle Ventures Mauritius.

The deals were disclosed at National Stock Exchange and Bombay Stock Exchange after trading hours on Wednesday.

The FII belonging to The Carlyle Group, the leading global private equity player, bought the shares at Rs. 190 per share at both NSE & BSE, making the deals worth Rs. 210.89 crore.

Wednesday’s buys by Carlyle into Infotech Enterprises, amounts to a significant 9.96% stake in  the leading Indian design engineering services firm with a global footprint.

First Carlyle Ventures Mauritius has now become the third largest non-promoter investor in the company, after Carrier International Mauritius and GA Global Investments, if these two investors have not transacted in the counter post Q4.

However, the buys by Carlyle were against matching institutional selling by two investors, American Funds and Kotak.

Two funds belonging to the leading US MF, American Funds, offloaded 59.18 lakh shares in NSE, while Kotak India Focus Fund sold off 29.30 lakh shares in transactions at both NSE & BSE. All the sells were around Rs. 190 a share, and altogether there were 88.48 lakh shares sold by these two institutions as against 111 lakh shares bought by First Carlyle.

The massive institutional churn witnessed today seems to be due to healthy but contrasting valuation calls made by different institutions.

Inotech Enterprises has had a good run in the market during the last seven months, rising from a 52-Week Low of Rs. 100.15 on 23rd December to a 52-Week High of Rs. 198.75 on Wednesday.

This is also its two-year high, and as such, the sells by American Funds and Kotak have enough justification. Also, the sells have come in after Infotech went ex-dividend on Wednesday.

However, for the buyer, First Carlyle, which is buying into the stock for the first time, the company still offers a decent growth engine to bet on for the long term.

Infotech Enterprises’ Return on Equity (RoE) stood at 14.80% in FY’12 and it has no significant debt on its books.

An engineering solutions provider, Infotech delivers product, process, network, & content engineering for industries like Aerospace, Automotive, Consumer, Energy, Heavy Equipment, Marine, Medical Devices, Oil & Gas, Transportation, HiTech, Telecom, & Utilities.

It has grown organically and inorganically during the past two decades, with several overseas acquisitions, and counts among its clients marquee organizations like Boeing, Airbus, UTC etc. Infotech Enterprises has subsidiaries in USA, Europe, Germany, Japan, & India.

On Wednesday, Infotech stock closed in green despite being the date of going ex-dividend. At NSE, it closed at Rs. 189.70 up by 3.95%, after falling intraday from its two-year high of Rs. 197.80.

Further momentum of the stock will depend on whether other large investors in the counter would take the sell route shown by American Funds and Kotak. 

Apart from its largest investors, Carrier International and GA Global Investments, other institutional investors in the stock are ICICI Prudential Life Insurance Company, Ironwood Investment Holdings (Sequoia), Amansa Investments, Morgan Stanley Mauritius Company, SBI Mutual Fund, Reliance Capital Trustee Company Ltd, and Tele Atlas Datas.

However, after the stabilizing and convincing buy by the Carlyle Group fund, Infotech Enterprises stock is likely to find buying support after minor corrections if any.