Kale Consultants: Ready To Take Off?

At a time, when most small and mid-sized IT companies are still struggling to

recover from the tech meltdown, Pune-based Kale Consultants has returned to

black after reporting a disappointing performance last year. Kale closed fiscal

2001 with revenues of Rs 34.63 crore and a net loss of Rs 6.72 crore. Kale

staged recover starting from the second quarter of fiscal 2002 and finally

closed the year in black.

Kale is focused on product development in the area of airlines and banking,

which contribute a combined 80% of overall revenues. In fiscal 2002, Airlines

contributed to 60% of the revenues whereas the banking segment contributed to

30% with others forming the balance part.

F A C T S H E E T

Website: www.kaleconsultants.com  Kale Enclave, 685/2B & 2C, 1st Floor Sharada Arcade, Satara Road Pune 411 037  Tel: +91 20-421 9321/421 9322 Fax: +91 20-421 9328 Area of specialization: Product development and software services in the area of Airlines and Banking Revenues (March 2002): Consolidated— Rs 54.21 crore Standalone— Rs 49.53 crore Offices: India, US, UK, Australia and Malaysia Listing (stock exchanges): Bombay, NSE Face Value: Rs 10 per share Current Market Price: Rs 70 52 Week High/Low: 88/20 BSE Code: 532268 NSE Code: KALECONSUL

Its revenue accounting software, Revera, is also popular in its category and

the company recently won the prestigious ATTIS 2002 Award for the "Best

Revenue Accounting System Provider to the Airline Industry. Based on its

success, Kale has set up a Airline Processing Center (APC) in Mumbai to provide

outsourced services to the airline industry using its proprietary product:

Revera.

Kale is optimistic about BPO offerings. In banking, Kale is currently focused

on the domestic markets with 30 mid market banking clients across 500

installations. Kale’s development center is based in Pune, Mumbai and Chennai

across 60,000 sq. ft with developer strength of 570 equally distributed across

airline and banking segments. The company achieves 80% of revenues from the

exports market. In the year ended March 2002, Kale reported revenues of Rs 49.53

crore, up 43% and net profit of Rs 2.02 crore as against a loss of Rs 6.72 crore

last year. On a consolidated basis, Kale’s revenue stood at Rs 54.21 crore and

net profit at Rs 18 lakh. In the fourth quarter ended March 2002, Kale clocked a

turnover of Rs 15.23 crore and net profits of Rs 1.83 crore. Going ahead, Kale

expects to report atleast 20% growth in the topline and show a net profit of

around Rs 5 crore in fiscal 2003. It has secured orders worth Rs 40 crore to be

executed during fiscal 2003.

Kale trades at Rs 70 discounting the projected March 2003 EPS by 17 times and

March 2004 EPS by 9 times. The company had come out with IPO at a price of Rs

120 per share in 2000 but had declined sharply to touch an all time low of Rs 20

in September 2001. The stock has gained 250% since then. Although the banking

segment is growing, we feel that competition in the segment is immense. The

global airline industry continues to reel under pressure but the company’s

foray into outsourced processing would enable the company to sustain its topline

growth and add to its bottomline. Based on the projected numbers, the stock

seems fully priced but new client additions, mainly in the outsourcing segment

could attract further investments. Market Performer.

Sushanto Mitra

is the founder of Technology Capital Partners



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