Dion Global Solutions CAPEX surged on 290% while Revenue dropped on 14.4%

25-05-2016 • About Dion Global Solutions ($DION) • By InTwits

Dion Global Solutions reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:

The company operates at negative EBITDA Margin: -4.1%
EBITDA Margin is quite volatile: -4.1% in FY2016, 15.4% in FY2015, -8.5% in FY2014, 8.5% in FY2013, 10.0% in FY2012
Dion Global Solutions has high CAPEX intensity: 5 year average CAPEX/Revenue was 20.8%. At the same time it's a lot of higher than industry average of 4.4%.
CAPEX is quite volatile: ₹475m in FY2016, ₹122m in FY2015, ₹698m in FY2014, ₹310m in FY2013, ₹739m in FY2012

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

Revenue and profitability

Dion Global Solutions's Revenue dropped on 14.4%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 19.6 pp from 15.4% to -4.1% in FY2016.

Net Income margin dropped on 34.9 pp from 1.3% to -33.6% in FY2016.

Investments (CAPEX, working capital and M&A)

The company's CAPEX/Revenue was 18.4% in FY2016. CAPEX/Revenue increased on 6.5 pp from 11.9% in FY2013 to 18.4% in FY2016. It's average CAPEX/Revenue for the last three years was 17.4%.

Leverage (Debt)

Debt level is 0.0x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA dropped on 7.4x from 7.4x to in FY2016. Debt jumped on 10.2% while cash dropped on 60.7%.

Dion Global Solutions has short term refinancing risk: cash is only 0.7% of short term debt.

Financial and operational results

Dion Global Solutions ($DION) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	1,851	2,607	2,358	3,014	2,580	-14.4%
EBITDA	184	222	-202	465	-106	-122.8%
Net Income	-309	-242	-528	39	-867	-2,310.9%
Balance Sheet
Cash	102	110	170	63	25	-60.7%
Short Term Debt	2,273	1,619	1,866	1,798	3,831	113.1%
Long Term Debt	9	1,005	877	1,715	42	-97.6%
Cash flow
Capex	739	310	698	122	475	289.8%
Ratios
Revenue growth	40.4%	40.8%	-9.5%	27.8%	-14.4%
EBITDA growth	-4.2%	20.4%	-190.7%	-330.9%	-122.8%

EBITDA Margin	10.0%	8.5%	-8.5%	15.4%	-4.1%	-19.6%
Net Income Margin	-16.7%	-9.3%	-22.4%	1.3%	-33.6%	-34.9%
CAPEX, % of revenue	39.9%	11.9%	29.6%	4.0%	18.4%	14.4%

ROE	-24.1%	-10.4%	-26.2%	2.3%	-80.0%	-82.2%
Net Debt/EBITDA	11.8x	11.3x		7.4x

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	FY2012	FY2013	FY2014	FY2015	FY2016
Twinstar Industries ($TWINSTAR)	204.5%	59.8%	38.8%	40.3%	-
Atishay Infotech ($ATISHAY)	-25.4%	6.9%	21.8%	28.2%	-
Avance Technologies ($AVANCE)	-11.7%	-17.9%	-30.8%	20.3%	-
Softsol India ($SOFTSOL)	-10.4%	9.3%	-20.4%	14.1%	-
Aurionpro Solutions ($AURIONPRO)	13.9%	17.7%	14.2%	13.6%	-
Median (16 companies)	13.1%	15.4%	21.8%	9.4%	2.6%
Dion Global Solutions ($DION)	-	40.8%	-9.5%	27.8%	-14.4%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Atishay Infotech ($ATISHAY)	35.7%	28.1%	25.8%	24.5%	-
Subex ($SUBEX)	27.3%	17.0%	24.9%	23.6%	20.8%
Tata Elxsi ($TATAELXSI)	13.8%	11.9%	17.6%	20.9%	23.0%
Cambridge Technology Enterprises ($CTE)	-	-	-	20.9%	-
Virinchi Technologies ($VIRNICHIQ)	-	-	-	17.4%	-
Median (23 companies)	7.5%	9.4%	10.2%	9.2%	11.2%
Dion Global Solutions ($DION)	10.0%	8.5%	-8.5%	15.4%	-4.1%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Aurionpro Solutions ($AURIONPRO)	17.5%	12.3%	12.6%	13.4%	-
Mastek ($MASTKBBPH)	2.2%	-	0.0%	4.9%	2.4%
Tata Elxsi ($TATAELXSI)	5.3%	5.4%	3.1%	3.9%	3.6%
Polaris Financial Technology ($POLARIS)	7.2%	2.5%	1.5%	3.9%	1.6%
Datamatics Global Services ($DATAMATICS)	20.2%	3.1%	12.9%	2.2%	-
Median (9 companies)	3.1%	4.3%	1.9%	2.2%	1.6%
Dion Global Solutions ($DION)	39.9%	11.9%	29.6%	4.0%	18.4%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Tata Elxsi ($TATAELXSI)	22.5%	19.1%	38.3%	55.4%	65.9%
Mindteck (India) ($MINDTECK)	-2.6%	1.2%	20.0%	17.5%	10.6%
Blue Star Infotech ($BLUESTINFO)	-	7.1%	16.3%	17.4%	-
Polaris Financial Technology ($POLARIS)	19.5%	15.1%	12.6%	16.2%	24.8%
Aurionpro Solutions ($AURIONPRO)	8.6%	8.6%	5.9%	12.1%	-
Median (31 companies)	3.9%	5.6%	16.3%	12.1%	10.6%
Dion Global Solutions ($DION)	-	-	-	-	-

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Subex ($SUBEX)	4.6x	13.1x	8.5x	8.0x	0.9x
Aurionpro Solutions ($AURIONPRO)	1.7x	1.7x	1.9x	1.2x	-
Saksoft ($SAKSOFT)	2.8x	2.3x	0.0x	1.2x	-
Datamatics Global Services ($DATAMATICS)	0.5x	0.3x	0.5x	0.3x	-
Virinchi Technologies ($VIRNICHIQ)	0.8x	1.1x	-	0.0x	-
Median (19 companies)	0.5x	0.0x	0.0x	0.0x	-1.0x
Dion Global Solutions ($DION)	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.