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July 28, 2001
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Money > Business Headlines > Report July 28, 2001 |
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SBI Caps valued Cyberspace stock at Rs 1,072 in July 2000Surajeet Das Gupta & Bhupesh Bhandari On the eve of the Cyberspace Infosys' Rs 1 billion private placement deal in July 2000, SBI Caps had valued the company's stock at Rs 1072.80, based on its projected FY2001 earnings per share of Rs 71.52 and a price earnings ratio of around 15. Using the "sum of parts" valuation method, SBI Caps had valued the stock even higher at Rs 1,380.42 on FY2001 projected earnings. In this method, each business of the company is given a different valuation and finally they are all added to arrive at the valuation of the company. This information is contained in the company's prospectus for the private placement deal. UTI had picked up 345,000 shares of Cyberspace at Rs 930 per share and shelled out Rs 328 million. The Central Bureau of Investigation is probing the role of SBI Caps in the controversial issue. And effective April 18, 2001, the Bombay Stock Exchange suspended trading in the Cyberspace scrip. Commenting on the earnings outlook of the company, SBI caps had predicted that Cyberspace will see a topline growth of 306 per cent in FY2000 over the previous year. Further, from FY2001 to FY2003, it would witness a CAGR of 158 per cent in its topline. As per the projections, the turnover of the company would rise from Rs 396 million in FY2000 to Rs 6.78 billion in FY2003. The operating profit margin of the company was projected to grow at 22 per cent in FY2001 before climbing to 25 per cent in FY2002 and 28 per cent in FY2003. Similarly, the net profit margin of the company was projected by SBI Caps to grow from 19 per cent in FY2000 to 22 per cent in FY2003. In its business analysis, SBI Caps had commented that Cyberspace, after establishing a delivery engine in India and tie-ups with some IT majors, was looking at tapping the foreign market going through the acquisition route. It was in the process of acquiring a New York-based $28 million company and was in advanced stages of negotiations with a $14 million company in the US Mid West and a $6 million London-based company. "The acquisition of overseas companies would bring clients like AT&T, Citibank, Deutsche Bank, American Express and Goldman Sachs. The client concentration is expected to improve in the coming years with a larger and more diversified base of customers," the SBI Caps report had commented. Powered by YOU MAY ALSO WANT TO READ:
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