Event Update - TCS to acquire Alti SA

India Infoline News Service | Mumbai |

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.

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
BSE 2,662.00 61 (2.35%)
NSE 2,661.10 59.60 (2.29%)

***Note: This is a NSE Chart

 

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