Buy AKSL at Rs 989 and add on dips to Rs 829 - Rs 865 for Target of Rs 1190 in 1-2 quarters :: HDFC Securities

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Company Profile:
Accelya Kale Solutions Ltd. (AKSL) is a part of the Accelya Group, a leading solutions provider to the Airline and Travel industry. Formerly known as Kale Consultants Ltd.,
the company became part of the Accelya Group in 2011. The group helps over 200 airline customers streamline their financial processes. It also helps them gain insights
on business performance using decision support tools and data analytics. The company’s expertise spans across Revenue Accounting, Audit & Revenue Recovery, Credit
Card Management, Miscellaneous Billing, F&A Processes and Decision Support & Analytics. As a strategic partner to IATA, AKSL delivers robust industry solutions including
BSP (Billing and Settlement plan), BSP Link, Neutral Fare Proration (NFP) and Simplified Interline Settlement (SIS). It’s in depth experience and knowledge of the airline
industry enables it to upgrade processes to industry best standards. Key solutions of AKSL include i) REVERA - Revenue Accounting Solution, ii) FinesseCost - Cost
Management Solution, iii) FinesseMBS - Miscellaneous Billing Solution, iv) Audit and Revenue Recovery Service and v) eSpin.
AKSL is a neutral service provider and is not controlled by any competing airline. The platform and processes are independent of any airline strategic roadmap.
Confidentiality and security of customer data is of utmost importance. This gives it a unique advantage. The company has 2 software development centres at Thane and
Pune and 4 MPS (Managed Process outsourcing) centres, 2 at Mumbai and 1 each at Pune and Goa. It has international offices in US & UK. With Accelya, AKSL not only
gets a strong partner but also the best minds in the industry.
Post acquisition by Accelya, AKSL now operates under the Accelya brand and sells Accelya’s entire product portfolio. Further, the combined business development teams
now sell a much wider suite of products as the integration provided cross-selling opportunities given the complementary product portfolio with minimal overlap in both
solutions and clients. AKSL partners with airlines right from the time a ticket or an air waybill is issued, all the way through its entire financial life cycle, until the data is
converted into actionable decision support.
AKSL simplifies processes for its airline customers across the globe. The company has a well-diversified business across the globe, which minimizes any negative impact on
account of slowdown in any particular region. The company derives 33% of its revenues from America, while Asia Pacific contributes 30%. Middle East & Africa and
Europe account for the balance 22% & 15% respectively.
AKSL values long-term relationship with its customers. The ability to forge effective and lasting partnerships with large, global airlines is the Company’s strength. Many of
Accelya Kale’s airline customers over the years have extended their association with the Company. Some of its key customers include Air Canada, US Air, Etihaad, Gulf Air,
Saudi Arabian Airlines, Oman Air, Kuwait Airways, Air India, Cathay, Thai Airways etc. Recently, the company added new customers like Hawaiian Airlines, GoAir and
Garuda Indonesia, Bangkok Airways, Flybe

About Accelya Group (Parent Company)
Accelya (Accelya Holding World SL holds 76.66% stake in AKSL) is a leading solutions provider to the Airline and Travel industry. Accelya primarily provides critical business
transaction processing and business process outsourcing services to the airline and travel industry. Accelya offers electronic invoicing, message switching and EDI,
business intelligence, revenue accounting & recovery services, credit card processing services, etc. Accelya's current business was earlier known as ADP Travel Clearing
and was part of Automatic Data Processing, Inc. Accelya acquired the business in 2007 from Automatic Data Processing, Inc. This business has been in existence for more
than 35 years - as part of Automatic Data Processing, Inc and prior to that, other G.S.I. group companies like G.S.I. (UK) Limited. Accelya has operational presence, directly
and through its subsidiaries. The company has presence in 9 countries (in Spain, France, Hungary, Portugal, United Kingdom, Mexico, South Africa, USA and Tunisia)
across 5 continents and employs over 2000 dedicated professionals across the globe. The group processes around 300 mn revenue accounting transactions and 100 mn
proration transactions annually.
Accelya is directly controlled by Accelya Holding (Luxembourg) SA, which holds 100% of Accelya’s share capital. 97.54% of the share capital of Accelya Holding
(Luxembourg) SA is held by Chequers Capital XV FCPR, a fund managed by Chequers Partenaires SA (a Europe based private equity investment firm focused on acquiring
controlling positions in well-established mid-sized companies in the frame of leveraged buy-outs). The balance 2.46% share capital of Accelya Holding (Luxembourg) SA is
held by management shareholders.
During JY14, Accelya was conferred with some prestigious industry awards. The Group was acknowledged by leading global media awards viz. ‘IT Company of the year
2014’ by Air Transport News Awards and ‘Information Technology for the Air Cargo Industry 2014’ by ACW World Air Cargo Awards 2014. These awards were determined
through voting by airline industry professionals and are testament to the value delivered by the Group to its customers and the airline industry.
Latest quarter – Q1JY15 Results Review (Consolidated)
Y-o-Y
 AKSL’s net sales grew by 7.2% to Rs. 735.5 mn [Q1JY13: Rs. 792.8 mn], impacted largely by loss of significant sized customer contract (which impacted its revenues &
profits in JY14 as well). The performance at the operating level was also disappointing, as the Operating profit de-grew 20.8%, while OPM declined by 645 bps Y-o-Y to
37.5% on the back of higher employee cost / net sales (up 474 bps Y-o-Y) and higher other expenses (up 143 bps Y-o-Y).
 However, PAT growth was relatively better at 7.4% Y-o-Y, aided by forex gain of Rs. 8.7 mn compared to loss of Rs. 88.4 mn in Q1JY14. PAT margins expanded by 330
bps Y-o-Y to 24.2%. However, depreciation increased by 18% Y-o-Y, while effective tax rate on PBT increased by 40 bps Y-o-Y to 32.1%. This restricted further margin
expansion. EPS for the quarter stood at Rs. 11.9 vs. Rs. 11.1 in Q1JY14.

LINK
http://www.hdfcsec.com/Share-Market-Research/Research-Details/StockReports/3010717