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Event Update - TCS to acquire Alti SA

Alti SA is a one of the leading IT service provider in France with services around enterprise solutions, assurance and CRM servicing verticals like BFSI, luxury, and manufacturing and utilities.

January 01, 1970 5:30 IST | India Infoline News Service

TCS today announced its intention to acquire 100% equity of Alti SA, a France based IT services/System Integrator company, by signing a definitive agreement for a total cash consideration of Euro75mn (~US$97mn). This private company is jointly owned by company management and private equity funds CM-CIC LBO and IDI .


The salient features of the acquisition are –

  • With a CY12 revenues of Euro126mn (US$162mn), the acquisition is valued at 0.6x trailing twelve month sales. This is cheaper than ~1.6x paid by Infosys for Lodestone and ~0.8x paid by Wipro for SAIC.
  • Alti SA is a one of the leading IT service provider in France with services around enterprise solutions, assurance and CRM servicing verticals like BFSI, luxury, and manufacturing and utilities.
  • Over past five years (CY07-12) the company has witnessed a decent revenue CAGR of 14.5%
  • The company has employee strength of 1200 and a client base of 50 (10+ listed in CAC 40 index). Along with France, the company has presence in Belgium and Switzerland too.

Though the revenue/margin impact of this deal on consolidated TCS financials (<1.5% of TTM revenues for TCS) would be insignificant, Alti acquisition is a strategic plus.  Being a leading service provider in world’s fifth largest IT market (France), Alti acquisition would add value in terms geographic presence, local delivery base and decent set of mineable clientele. A strong local presence in a generally difficult market for IT outsourcing is also a key advantage in this deal. We maintain our MP rating on TCS.


Financial summary*
Y/e 31 Mar (Rs m) FY12 FY13E FY14E FY15E
Revenues 488,938 630,108 716,915 819,389
yoy growth (%) 31.0 28.9 13.8 14.3
Operating profit 144,205 180,600 197,053 224,411
OPM (%) 29.5 28.7 27.5 27.4
Reported PAT 106,514 140,360 150,500 171,879
yoy growth (%) 22.7 31.8 7.2 14.2
         
EPS (Rs) 54.4 71.7 76.9 87.8
P/E (x) 27.6 20.9 19.5 17.1
Price/Book (x) 9.9 7.3 5.7 4.5
EV/EBITDA (x) 20.0 15.6 13.8 11.7
RoE (%) 39.5 40.3 32.8 29.5
RoCE (%) 50.4 50.9 42.3 38.1
Source: Company, India Infoline Research
*do not include Alti  SA financials

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