Stock Synopsis: Aftek - Another software play!

Aftek - Another software play!

Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=1216
Printed Date: 21/Apr/2025 at 2:52pm

Topic: Aftek - Another software play!

Posted By: mandarj
Subject: Aftek - Another software play!
Date Posted: 15/Sep/2007 at 9:36am

Hi..

I wanted to post this in the "Stock Synopsis" section, but I cannot start posts there.

I read in recent issue of MoneyToday about the stocks that Benjamin Graham would pick in case he were to be in india right now. Amongst other stocks there was Aftek .

AFTEK:

CMP: 62.2 (As on 31 AUg 2007)

Net Profit: 67.39 Cr

Debt-Equity ratio: 0.23

Long-Term debt: 0

P/E ratio: 7.57

I though it to be a good pick.

I would like to invite a view over this from senior members of TED forum.

Thanks

Mandar

Replies:

Posted By: basant
Date Posted: 15/Sep/2007 at 10:11am

Graham wanted to buy companies that sold at less then their working capital but personallly I am not sure how much Graham would have liked to buy Aftek!!!

If low PE and being debt free was a criteria there are many other options to choose from.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: mandarj
Date Posted: 15/Sep/2007 at 10:20am

Is AFtek only a "low pe and debt free" stock ? and nothing more ?

Mandar

Posted By: kumarrvq
Date Posted: 16/Sep/2007 at 4:17pm

In software industry which is crowded by many look alikes i.e. doing similar type of business (offshoring, same GDM model of cost diff), I do not think Aftek is a diff story. Either we need to look at niche players or leaders.

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Thanks & Regards,
Harry

Posted By: vijinat
Date Posted: 16/Sep/2007 at 5:00pm

[QUOTE=basant]Graham wanted to buy companies that sold at less then their working capital but personallly I am not sure how much Graham would have liked to buy Aftek!!!

If low PE and being debt free was a criteria there are many other options to choose from.

[

/QUOTE]

Can u kindly indicate such other companies coming under 'other options'? Thanks.

Posted By: rapidriser
Date Posted: 28/Jun/2008 at 8:45am

Aftek Infosys

CMP - 36

P/BV - 0.58

P/E < 4

Debt/Equity - 0.07

CAGR Sales (5 years) - 29%

Basantji! I Have been holding this share since Rs.60 levels, when I thought I was geting it cheap. But it keeps getting cheaper all the time. Is it time for cost averaging, or time to cash out.

Posted By: vijaygawde
Date Posted: 28/Jun/2008 at 9:17am

Originally posted by mandarj

Hi..

I wanted to post this in the "Stock Synopsis" section, but I cannot start posts there.

I read in recent issue of MoneyToday about the stocks that Benjamin Graham would pick in case he were to be in india right now. Amongst other stocks there was Aftek .

AFTEK:

CMP: 62.2 (As on 31 AUg 2007)

Net Profit: 67.39 Cr

Debt-Equity ratio: 0.23

Long-Term debt: 0

P/E ratio: 7.57

I though it to be a good pick.

I would like to invite a view over this from senior members of TED forum.

Thanks

Mandar

With the above parameters, How does TeleData Informatics look like?

CMP:                13.95
Book Value:      21.62
EPS (TTM):        18.72
Price/Bk value: 0.65
P/E:                   0.75

Something more than meets the eye??

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Diversification is protection against ignorance, it makes little sense for those who know what they’re doing.

Posted By: smartcat
Date Posted: 29/Jun/2008 at 4:35pm

If there is one stock that can show a negative number on its ticker, Teledata is the one!

Posted By: rapidriser
Date Posted: 29/Jun/2008 at 7:46pm

Are you saying that Aftek too may be manipulating their books like Teledata is rumoured to be doing? I had thought this was unlikely because Aftek has been a dividend paying company for the last 10 years. Of course it is not paying much income tax, but I felt it could be due to its STP-EOU status.

Posted By: manishdave
Date Posted: 29/Jun/2008 at 8:28pm

With all tha funamentals what holds promoters from buying back? Isn't it strange than not many companies are not declaring buy back?

Posted By: rohitc99
Date Posted: 29/Jun/2008 at 12:57pm

I had posted the following analysis on my blog on aftek in May 2007. i have not analysed the stock since then, but i think it would pay to check if the following red flags still exist

- the company’s management was penalized by SEBI for participating with Ketan parekh in various behind the scene deals during the 2000 bull market (see http://economictimes.indiatimes.com/News/CompaniesA-Z/A_Companies/Aftek_Infosys/Sebi_bans_Aftek_Infosys_promoters_for_KP_link/articleshow/557751.cms - )

- The company had an investment of almost 46 Crs in a company called Arexera. They have accquired this company this year (the balance portion) for a sum of 56 crs. One would consider this accquisition to be significant. The positives of the acquisition are mentioned all over the report. However the valuation of the deal is not mentioned. The company had a net profit of 1 Crs last year (see page 100 of the annual report). The company was acquired at a valuation of 100 Crs ( PE = 100 !!!). The management has not discussed the valuation anywhere in the report and why they paid so much for it. Finally surprise , surprise – this company was accquired from the promoters !!! . See the cash flow statement on page 83. There is an entry for 54.8 Crs which was paid to promoters to acquire this company. So the management accquires this company and has a related party transaction and does not mention this in the complete report??

- The company has issued 3.96 lac warrants to the promoters. They have received 10% of the price now and the rest can paid by the promoters within 18 months. Why have these warrants been issued if the company is swimming in cash, had some FCCB still open and is making almost 100 Crs per year ?

- Promoter holding is only 12%.

- FCCB issue in the last few years to raise capital. This capital is being used to accquire companies like Arexera from promoters.

disclosure : i have no interest in the company. i am neither short nor long on the stock

Posted By: excel_monkey
Date Posted: 10/Nov/2010 at 6:35am

Even I have been duped into buying this company way back and lost almost 80% on my investment
Why does SEBI allows these chors hasn't it learnt any lesson from Satyam