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Four Soft Ltd – Not Rated

India Infoline Research Team / 17:05 , Dec 01, 2009

Four-Soft Ltd (FSL), one of the larger logistics and supply chain products company globally, has been facing a rough weather. Company’s revenues have declined in each of the past three quarters impacted by a 15-20% reduction in key customers’ product customization budgets. OPM hit a multi-quarter low of ~6% in Q2 FY10 impacted by one-time redundancy charges and accelerated investment in sales and marketing.


Revival in revenue growth is expected from Q1 FY11 with a pick-up in new product sales and reinstatement of customization budgets by customers. Margin would also start improving from then as company leverages S&M investments. FSL targets to achieve revenues of US$100mn, OPM of 30-35% and net profit of US$20mn by FY13.


Four Soft – a logistics and supply chain product company 

Four Soft is an enterprise solutions company that develops integrated software products and provides IT services (customization and AMC on its own products) for the logistics & transportation (~95% of revenues) and supply chain management (~5% of revenues) industries. Company’s enterprise solutions are 100% web-centric and end-to–end, connecting the entire complex transportation and logistics business of the customers. Being execution products, they are mission critical to the customers. The products provide visibility to the entire supply chain processes of the customers which immensely increases efficiency of their business. Product portfolio in the logistics vertical comprise software solutions for freight forwarders, NVOCCs, customs brokers, container freight stations, ships agents, warehouses, cartage, trucking and 3PL/4PL companies. In the supply chain management (SCM) vertical, FSL offers procurement and distribution solutions to manufacturing enterprises covering order management, transport management and vendor management functions.

FSL operates across the globe with development centers in India, Australia, Denmark, England, Singapore, Netherlands, Japan and United States. Company currently has 300 customers with 50,000 plus users in across 120 countries. Key clients of the company include DHL (~16% of revenues), Schenkar (~7% of revenues), Ceva Logistics (~6% of revenues), Geodis Wilson (~6% of revenues) and PNL (~5% of revenues).


Valuation summary
Y/e 31 Mar (Rs m)
FY07
FY08
FY09
H1 FY10
Revenues
1,634
1,715
1,946
680
Yoy growth (%)
81.4
5.0
13.4
(34.3)
Operating profit
172
217
539
68
OPM (%)
10.5
12.6
27.7
10.1
Reported PAT
109
127
484
36
Yoy growth (%)
83.0
17.1
280.0
(88.6)
 
 
 
 
 
EPS (Rs)
2.8
3.3
12.5
1.9*
P/E (x)
8.1
6.9
1.8
12.3
RoE (%)
11.1
11.7
30.3
-
RoCE (%)
11.6
14.0
35.5
-
Source: Company, India Infoline Research;   * annualized

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