The specialist software consultant, Kale Consultants, was on Thursday acquired by France-based Accelya. It had been attracting alot of attention in the stock markets of late. There was a buzz in the markets for the last few days that the company was up for sale.
The airline industry itself has been going through a lot of trouble. Hence, the ancillary industry has also suffered. However, over the past five years, Kale Consultants has posted revenue and net earnings growth of 24 per cent and 43 per cent, respectively. Even in the June quarter, operating income grew 31 per cent to `34 crore compared to `25.62 crore a year ago. The company has been able to maintain its earnings before interest, tax, depreciation and amortisation margins at around 24 per cent, better than most generic technology players in the market place.
Kale Consultants remains amarket leader in passenger revenue accounting (PRA) solutions, with industry-acclaimed products, the largest pool of expertise, the widest solution portfolio and the biggest customer base. Out of 20 airlines, 15 use Kale Consultants' solutions. It has three software development centres and four managed process outsourcing units. The company employs over 1,600 professionals who focus on delivering quality service to over 120 clients across 30 countries.
However, earnings are expected to stagnate and plateau, as growth in the airline industry will be restricted. There are plans to tap the logistics space, but they have not fructified as yet. Therefore, the market expected the company to strike an alliance or sell out the stake to a bigger player.
The current share price is around 11 times the FY11 earnings and so the company was a great target for acquisition. Institutions and traders have been eyeing the company for a long time.
French company Accelya buys the software consultant, but worries about the aviation sector may weigh on the stock
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