Accentia Technologies Ltd

BSE Code: 531897

CMP: Rs.110.20

EPS: Rs.17.70 (on Standalone Basis)

P/E: 6.23

Industry P/E: 21.14

Market Cap: Rs.148.14 Cr

52-week High/Low: Rs.163.90/Rs.72.25

Introduction: Accentia Technologies Ltd (ATL) has come a long way from its small beginnings in HRCM segment in India from the year 1998. Having weathered a lot of market uncertainties and testing periods, ATL has been able to establish itself firmly in India and abroad as a trusted collaborator in project planning and execution. ATL has built an enviable reputation among its clients, vendors and suppliers for its transparency and professionalism. ATL caters to all the requirements of the IT industry with special emphasis on Transcription services, Medical Billing and Coding, Insurance Claim Processing, Consultancy Services etc. With a prime focus on quality and the high priority towards customer satisfaction, Accentia Technologies Ltd, is all set to be the market leader in the MT market by the year 2012.

Shareholding Pattern: The promoters hold 17.93% while the general public holds 81.77%. What is interesting is that the public shareholding has come down to 82% (approx) from 86% (approx) considering Y-o-Y basis.

Shareholding belonging to the category "Public" and holding more than 1% of the Total No.of Shares
Sl. No.	Name of the Shareholder	No. of Shares	Shares as % of Total No. of Shares
1	Babu Mathews	152,336	1.13
2	K K Ramniklal	1,160,179	8.63
3	Orison Jose France	200,000	1.49
4	Shantanu Nalavadi	147,000	1.09
5	Shivram Jagnnath Angne	322,061	2.40
6	Ravi K Seth	150,000	1.12
7	Bharat K Seth	150,000	1.12
8	Berggruena A P Mauritius	1,241,969	9.24
9	J Scott Schram	166,667	1.24
10	Debbie Schram	166,666	1.24
11	Herb Cane	208,333	1.55
12	Berggruen AP	611,111	4.55
13	Dilipkumar Lakhi	155,990	1.16
14	Vanja Sundar	428,515	3.19
15	Mangalambal Eswar	213,015	1.58
16	Hawa Faisal Zubair	149,210	1.11
17	S I Investments & Broking Pvt Ltd	186,712	1.39
18	JP Morgan Chase Bank	222,222	1.65
	Total	6,031,986	44.87

Financials: On a consolidated basis, the total income of the company for Q1FY10 came out to be Rs.54.4 Cr as against Rs.52.8 Cr in the same period previous year. The net profit of the company for Q1FY10 came out to be Rs.15.83 Cr as against Rs.15.53 Cr in the same period previous year. The EPS of the company on a consolidated basis for Q1FY10, came out to be Rs.11.95 as against Rs.12.21 in the same period previous year.

Triggers:

• Healthcare receivables cycle management (HRCM) player Accentia Technologies, recommended a final dividend of 20% for 2008-09. The good performance in 2008-09 was achieved despite the global recession that had forced many BPO/KPO companies to take extreme measures including large-scale pink slips and cost cutting.
• ATL with its integrated focus on Medical Transcription, Coding, Billing and Insurance Claims offers the gamut of integrated value chain of a healthcare BPO, which is unique in concept. Such integration reduces the costs for hospitals and helps them realize their receivables in a shorter time. Thus the demand for ATL’s integrated healthcare BPO services is receiving a good response.
• Accentia Technologies Ltd last year acquired Bangalore-based Asscent Infoserve Pvt. Ltd. (now a subsidiary) for using its infrastructure facilities meant for HRCM (Healthcare Receivables Control Management) services and has access to outsource this 600 seater spread across 7000 sq. ft. Recently Accentia Technologies Ltd informed that the merger of M/s. Asscent Infoserve Pvt. Ltd, Bangalore with M/s. Accentia Technologies Ltd, is under process. Moreover, the Company is seeking the approval of ROC, Ministry of Company Affairs for extension of time for holding Annual General Meeting for the Accounting Year 2008-09.
• ATL has major plans to increase its outsourcing infrastructure to cater to the increasing demand for its services through domestic acquisitions and third party outsourcing providers across India and Philippines.
• The company utilizes sophisticated internet technologies combined with its global delivery model to offer its services to US healthcare providers.
• Accentia Technologies Ltd has allotted 4, 00,000 shares of Rs.10 each issued at a premium of Rs.125.99 per share aggregating to Rs.135.99 per share against exercise of warrants by the Promoters, which were earlier issued to promoters on a preferential basis.
• Accentia will be adding 1800 seats before Dec 2009 at its Bangalore, Trivandrum, Hyderabad, Cochin and Bhubaneshwar units. The 1800 seats (5400 seats in 3 shifts) would enable Accentia hire 5000 new recruits in FY 2009-10. Accentia would be implementing its "Healthdox" platform to streamline and migrate the jobs from offshore to its workforce in India and Philippines.
• ATL has firmed up measures to buy out many some companies this year. The targeted companies, all players in the healthcare BPO segment, include three foreign and five Indian firms.
• It has already acquired three US-based healthcare BPO companies - Florida-based GSR Physician Billing Inc and GSR Systems Inc. and Oregon-based medical transcription services provider DenMed Inc., for about Rs.80 cr. that it bought in a cash-cum-stock deal.
• Last year it acquired 51% stake in Oak Technologies (OT) of USA in an all-cash deal. OT is an integrated services provider in HRCM operating from 5 units in USA and Hyderabad, Nagpur and Bhubaneshwar in India. Through this acquisition, ATL got into its fold a global workforce numbering 700.
• ATL’s acquisitions add to the company's portfolio in the HRCM space. In USA, 49% of the transcription, coding, billing and collection work in the healthcare space is outsourced by US hospitals to US-based service companies and only 1% work is offshored to India making entry barriers in the sector extremely difficult. But since the three US companies have 60-65 clients each with long-term contracts, ATL would be in a better place to penetrate the market that is valued at nearly $2.2 trillion.
• When considering outsourcing to India, US and UK based hospitals look beyond traditional medical transcription services. Leading hospitals in USA have shown a keen interest in the integrated value chain software for tracking developed by ATL as it provides the complete range of end to end solutions for hospitals.

Chart Check and Conclusion: From the charts it is found that the stock could give a short term move in the upward direction, after consolidating for a long term in the price band of Rs.104-Rs.110. The stock could be purchased near the supports of Rs.104-110, in any correction in the market for a short term target of XXX.

Note: This stock was recommended to the Paid Groups in the Sunday Report of 4th October, 2009.