Dion Global Solutions revenue surged on 27.8% in 2015 and EBITDA Margin jumped on 24.0 pp from -8.5% to 15.4%

27-05-2015 • About Dion Global Solutions ($DION) • By InTwits

Dion Global Solutions reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

EBITDA Margin is quite volatile: 15.4% in FY2015, -8.5% in FY2014, 8.5% in FY2013, 10.0% in FY2012, 14.6% in FY2011
Dion Global Solutions has high CAPEX intensity: 5 year average CAPEX/Revenue was 19.2%. At the same time it's a lot of higher than industry average of 3.2%.
CAPEX is quite volatile: 122 in FY2015, 698 in FY2014, 310 in FY2013, 739 in FY2012, 141 in FY2011
It operates with high leverage: Net Debt/EBITDA is 7.4x while industry average is 0.8x

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Dion Global Solutions ($DION) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	1,318	1,851	2,607	2,358	3,014	27.8%
EBITDA	193	184	222	-202	465
Net Income	-149	-309	-242	-528	39
Balance Sheet
Cash	66	102	110	170	63	-62.6%
Short Term Debt	2,291	2,273	1,619	1,866	1,798	-3.6%
Long Term Debt	2	9	1,005	877	1,715	95.5%
Cash flow
Capex	141	739	310	698	122	-82.5%
Ratios
Revenue growth	-63.2%	40.4%	40.8%	-9.5%	27.8%
EBITDA growth	1,027.2%	-4.2%	20.4%	-190.7%	-330.9%
EBITDA Margin	14.6%	10.0%	8.5%	-8.5%	15.4%	24.0%
Net Income Margin	-11.3%	-16.7%	-9.3%	-22.4%	1.3%	23.7%
CAPEX, % of revenue	10.7%	39.9%	11.9%	29.6%	4.0%	-25.6%
ROE	-117.1%	-24.1%	-10.4%	-26.2%	2.3%	28.4%
Net Debt/EBITDA	11.6x	11.8x	11.3x		7.4x	7.4x

Revenue and profitability

The company's Revenue jumped on 27.8% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.3 pp from 4.9% to 3.7% in FY2015.

Net Income marign jumped on 23.7 pp from -22.4% to 1.3% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 the company had CAPEX/Revenue of 4.0%. The company showed big decline in CAPEX/Revenue of 35.9 pp from 39.9% in FY2012 to 4.0% in FY2015. For the last three years the average CAPEX/Revenue was 15.2%.

Leverage (Debt)

Debt level is 7.4x Net Debt / EBITDA and 7.5x Debt / EBITDA. Net Debt / EBITDA surged7.4x from to 7.4x in FY2015. Debt surged on 28.1% in FY2015 while cash dropped on 62.6% in FY2015.

Valuation

The company's trades at EV/EBITDA 15.6x and P/E 97.6x while industy averages are 10.5x and 26.1x. The company's EV/(EBITDA-CAPEX) is 21.2x with the industry average at 4.7x.

Appendix 1: Peers in IT Software Products

Below you can find Dion Global Solutions benchmarking vs. other companies in IT Software Products industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Blue Star Infotech ($BLUESTINFO)		5.1%	49.2%	43.3%	-2.0%
Saksoft ($SAKSOFT)		16.3%	29.5%	41.1%	3.1%
Twinstar Industries ($TWINSTAR)	-90.5%	204.5%	59.8%	38.8%
Datamatics Global Services ($DATAMATICS)		60.5%	24.5%	33.4%	12.8%
Trigyn Technologies ($TRIGYN)		16.8%	27.1%	29.8%	9.1%
Median (15 companies)	-40.9%	15.1%	15.4%	21.8%	9.4%
Dion Global Solutions ($DION)		40.4%	40.8%	-9.5%	27.8%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Atishay Infotech ($ATISHAY)	19.6%	35.7%	28.1%	25.8%	24.5%
Subex ($SUBEX)	26.8%	27.3%	17.0%	24.9%	23.6%
Tata Elxsi ($TATAELXSI)	11.4%	13.8%	11.9%	17.6%	20.9%
Polaris Financial Technology ($POLARIS)	13.6%	13.8%	11.9%	10.2%	11.9%
Datamatics Global Services ($DATAMATICS)	5.6%	9.2%	9.4%	12.4%	10.4%
Median (12 companies)	8.1%	7.5%	9.4%	10.2%	9.7%
Dion Global Solutions ($DION)	14.6%	10.0%	8.5%	-8.5%	15.4%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Datamatics Global Services ($DATAMATICS)	5.7%	20.2%	3.1%	12.9%	2.2%
Aurionpro Solutions ($AURIONPRO)	15.7%	17.5%	12.3%	12.6%
Atishay Infotech ($ATISHAY)	3.8%	41.7%	8.6%	10.0%
Tata Elxsi ($TATAELXSI)	7.0%	5.3%	5.4%	3.1%	3.9%
Blue Star Infotech ($BLUESTINFO)	6.0%	1.4%	3.1%	2.3%	0.7%
Median (10 companies)	4.6%	3.1%	4.3%	1.9%	2.2%
Dion Global Solutions ($DION)	10.7%	39.9%	11.9%	29.6%	4.0%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Tata Elxsi ($TATAELXSI)	13.2%	22.5%	19.1%	38.3%	55.4%
Trigyn Technologies ($TRIGYN)	15.7%	15.2%	21.1%	26.2%
Mindteck (India) ($MINDTECK)	6.7%	-2.6%	1.2%	20.0%
Atishay Infotech ($ATISHAY)	30.9%	27.2%	15.7%	19.2%
Datamatics Global Services ($DATAMATICS)	2.5%	9.8%	11.4%	16.4%	11.3%
Median (31 companies)	4.7%	3.9%	5.6%	16.3%	13.8%
Dion Global Solutions ($DION)

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Subex ($SUBEX)	4.2x	4.6x	13.1x	8.5x	8.0x
Saksoft ($SAKSOFT)	3.8x	2.8x	2.3x	0.0x	1.2x
Datamatics Global Services ($DATAMATICS)	0.2x	0.5x	0.3x	0.5x	0.3x
Danlaw Technologies India ($DANLAW)			-0.2x	0.0x	0.0x
B2B Software Technologies ($B2BSOFT)			-39.5x		0.0x
Median (11 companies)	0.1x	0.5x	0.0x	0.0x	0.0x
Dion Global Solutions ($DION)	11.6x	11.8x	11.3x		7.4x

Dion Global Solutions stock price chart

Dion Global Solutions financials

mln.	FY2010	FY2011	FY2012

Revenue	3,578	1,318	1,851
EBITDA	17.079	192.5	184.5
Net income	-247.255	-149.034	-309.025
CAPEX	66.110	140.5	738.7
Debt	1,187	2,293	2,281
Cash	39.952	65.625	102.0

About Dion Global Solutions

Dion Global Solutions Limited provides software solutions to financial institutions in India and internationally. It offers trading, settlement, and wealth management products comprising front office and back office suite, customer management, and other value added products. The company also provides governance, risk, and compliance (GRC) products, including GRC Enterprise Compliance, a regulatory compliance risk management solution; GRC Enterprise Audit, a risk-based end-to-end audit planning, execution, and issues remediation solution; Foreign Account Tax Compliance Act (FATCA) TRAC, a solution for firms FATCA compliance checks and tax management; and FATCA FORCE, a FATCA project monitoring solution. In addition, it offers messaging and workflow solutions, such as X-Gen, a business process engine to enhance straight through processing across applications, such as SWIFT, FIX, and other industry standard financial messages; SEPA Gateway, an application to process SEPA payments; TaxGateway, a solution for banks, KAGs, and fund platforms; and dfferentia, a hosted, multi-asset class pricing, valuation, and risk management solution. Further, the company offers information products, including INSIGHT, a database on Indian capital markets; D-WEB, a solution for designing, developing, and maintaining financial portals; D-RIVE, a proprietary database development platform for creating customized data and research platforms for analysts and fund managers; IR Online, a solution that creates investor relations micro sites on the corporate site of listed companies; and AlphaClick, an analytics platform. Additionally, it provides business research, financial research and modeling, and white label research solutions; and search engine optimization, social media optimization, content creation and management, and online branding and PR, including blogging, press releases etc. The company was incorporated in 1994 and is headquartered in Noida, India.