IT AND IT ENABLED SERVICES MONTHLY UPDATE / Advisory / 4 September 2014 
Contents 
M&A update for IT and 
ITES industry 
P...
KeydealsinAugust2014 
Zensar Technologies acquires Professional Access 
ITfirmZensarTechnologies,partoftheRPGgroup,hasacqu...
Company Market Cap(1) Share 
price(2) 52 Wk High 52 Wk Low Net Sales(3) EBITDA(4) EBITDA 
Margin 
Net Profit 
Net Profit 
...
Company Market Cap(1) Share 
price(2) 52 Wk High 52 Wk Low Net Sales(3) EBITDA(4) EBITDA 
Margin 
Net 
Profit(5) 
Net Prof...
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IT and ITES Monthly Update - Issue 59, September 2014

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KPMG in India's Corporate Finance practice is pleased to release the fifty ninth issue of 'IT and IT Enabled Services Monthly Update'.

This monthly update will highlight select M&A transactions announced in August 2014, and provide trading multiples for key IT and ITES companies.

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IT and ITES Monthly Update - Issue 59, September 2014

  1. 1. IT AND IT ENABLED SERVICES MONTHLY UPDATE / Advisory / 4 September 2014 Contents M&A update for IT and ITES industry Page 2 Valuations update for the IT industry Page 3 Valuations update for the ITES industry Page 4 KPMG in India's Corporate Finance practice is pleased to release the fifty ninth issue of the 'IT and ITES monthly update'. This monthly update will highlight select M&A transactions announced in August 2014 and provide trading multiples for key IT and ITES companies. KPMG's Corporate Finance practice provides a wide range of investment banking and strategic advisory services to clients, advises on mergers and acquisitions, divestitures, financing, and other strategic initiatives. IT AND IT ENABLED SERVICES MONTHLY UPDATE 4 September 2014 © 2014, KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Gaurav Gupta Associate Director Corporate Finance gauravgupta3@kpmg.com Tel: +91 22 3090 2413 KPMG in India contacts: Anand Vermani Partner Corporate Finance avermani@kpmg.com Tel: +91 124 334 5121
  2. 2. KeydealsinAugust2014 Zensar Technologies acquires Professional Access ITfirmZensarTechnologies,partoftheRPGgroup,hasacquiredUS-basedProfessionalAccess.Whilenofinancialdetailsofthedealweredisclosed,itislearntthattheacquisitionwouldbefinancedbyacombinationofinternalaccrualsanddebt.WithUSD38millionrevenues,ProfessionalAccessisoneofthelargestOracleATGandEndecapartnersintheworld. TheacquisitionofProfessionalAccessissignificantforZensarbecauseretailisabigplayforthefirm.Revenuefromtheretailverticalposttheacquisitionisexpectedtogoupto14percentfromthecurrent10. Source: Business Standard Link: http://www.business-standard.com/article/companies/zensar-technologies-acquires-professional-access-114081400353_1.html Sonata Software acquires US-based travel SaaS firm Rezopia SonataSoftwarehasacquiredcontrollingstakeinCalifornia-basedRezopiaInc.,acloud- basedSaaStravelITsolutionsforanundisclosedamount.TheacquisitionwillseeRezopiabenefitingfromSonata’sabilitytosupportcontinuedinvestmentinitsplatformdevelopmentroadmapandengineeringsoftwareproducts,andgaintravelcustomersinmultiplegeographiesglobally. Source: VCCircle Link: http://www.vccircle.com/news/technology/2014/08/25/sonata-software-acquires-us-based-travel-saas-firm-rezopia KPO firm Evalueserve acquires German business intelligence company Beyond Data ResearchandanalyticsfirmEvalueservehasacquiredGermany-basedbusinessintelligenceproviderBeyondDataGmbH,foranundisclosedamount.TheacquisitionwillincreaseEvalueserve’sofferingsandtechnologicalskillsintheareasofdatascience,analyticsandbusinessintelligenceforvariousindustrysegments. EvalueserveandBeyondDataplantojointlydevelopcloud-basedbusinessintelligenceplatformsinthemarketingintelligence,procurement,pharmaceuticalandotherdomainswhichwillbedirectlyusedbyclientsaswellasembeddedwithEvalueserve’sanalyticalservices. Source: VCCircle Link: http://www.vccircle.com/news/technology/2014/08/26/kpo-firm-evalueserve-acquires-german-business-intelligence-co-beyond-data Key IT and ITES transactions (August 2014) Source: Mergermarket website: www.mergermarket.com ISI Emerging Markets © 2014, KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. M&A update for the IT and ITES industry Announced date Target Target country Deal type Acquirer/investor Acquirer country Deal size (USD mn) 8/15/2014 Professional Access United States Acquisition Zensar Technologies India NA 8/25/2014 Rezopia United States Acquisition Sonata Software India NA 8/26/2014 Beyond Data GmbH Germany Acquisition EvalueServe India NA
  3. 3. Company Market Cap(1) Share price(2) 52 Wk High 52 Wk Low Net Sales(3) EBITDA(4) EBITDA Margin Net Profit Net Profit Margin EV(5) EV(5)/ Sales(3) EV(5)/ EBITDA(4) P/E Commercial IT Services - Large Cap HCL Technologies Ltd. 1,143,096 1,630 1,666 970 324,721 85,492 26% 62,822 19% 1,058,524 3.3x 12.4x 18.2x Infosys Ltd. 2,053,621 3,594 3,847 2,888 508,369 140,618 28% 109,962 22% 1,769,492 3.5x 12.6x 18.7x Tata Consultancy Services Ltd 4,945,005 2,525 2,613 1,877 859,333 263,610 31% 208,921 24% 4,744,789 5.5x 18.0x 23.7x Wipro Ltd. 1,385,762 565 611 439 448,267 102,665 23% 82,766 18% 1,229,211 2.7x 12.0x 16.7x Commercial IT Services - Large Cap Mean 27% 21% 3.8x 13.7x 19.3x Commercial IT Services - Large Cap Median 27% 20% 3.4x 12.5x 18.4x Commercial IT Services - Mid Cap 3i Infotech Limited 4,837 8 14 4 13,710 (231) -2% (3,775) -28% 31,706 2.3x NA NA CMC Limited 64,978 2,145 2,175 1,229 23,375 3,733 16% 2,857 12% 61,693 2.6x 16.5x 22.7x Geometric Limited 9,161 143 163 74 11,040 2,051 19% 500 5% 8,537 0.8x 4.2x 18.3x Hexaw are Technologies Limited 48,098 160 180 112 24,403 4,979 20% 3,488 14% 44,324 1.8x 8.9x 13.8x Infotech Enterprises Limited 47,348 422 449 175 23,442 3,944 17% 2,802 12% 40,093 1.7x 10.2x 16.9x KPIT Cummins Infosystems Ltd. 27,668 148 191 128 27,705 3,778 14% 2,396 9% 28,967 1.0x 7.7x 11.5x Mastek Limited 4,243 190 228 117 9,250 658 7% 456 5% 2,550 0.3x 3.9x 9.3x MindTree Limited 94,055 1,125 1,144 505 32,140 6,393 20% 4,425 14% 87,184 2.7x 13.6x 21.3x NIIT Technologies Limited 21,888 360 486 269 23,407 3,232 14% 2,205 9% 20,301 0.9x 6.3x 9.9x Nucleus Sof tw are Exports Ltd. 6,997 216 251 80 3,393 580 17% 648 19% 4,028 1.2x 6.9x 10.8x Oracle Financial Services Sof tw are Ltd. 302,863 3,599 3,643 2,775 39,149 15,482 40% 13,875 35% 236,137 6.0x 15.3x 21.8x Persistent Systems Limited 50,458 1,261 1,400 537 17,469 4,102 23% 2,610 15% 45,875 2.6x 11.2x 19.3x Polaris Financial Technology Limited 21,403 215 267 111 24,399 2,135 9% 1,943 8% 15,420 0.6x 7.2x 11.0x R Systems International Ltd. 6,400 50 68 26 6,429 1,009 16% 681 11% 5,482 0.9x 5.4x 9.4x Rolta India Ltd. 16,802 104 122 55 33,356 5,895 18% 3,783 11% 54,426 1.6x 9.2x 4.4x Sasken Communication Technologies Ltd. 6,448 303 342 101 4,508 473 10% 423 9% 5,084 1.1x 10.7x 15.2x Sonata Sof tw are Limited 12,057 115 115 24 15,698 1,308 8% 953 6% 9,662 0.6x 7.4x 12.7x Take Solutions Ltd. 4,320 36 42 28 7,814 890 11% 577 7% 5,594 0.7x 6.3x 7.5x Tech Mahindra Limited 555,003 2,362 2,373 1,259 198,497 42,633 21% 29,732 15% 524,345 2.6x 12.3x 18.7x Xchanging Solutions Limited 3,197 29 29 8 2,431 176 7% 303 12% 2,464 1.0x 14.0x 10.5x Zensar Technologies Limited 19,493 444 474 181 23,907 3,579 15% 2,325 10% 18,269 0.8x 5.1x 8.4x Commercial IT Services - Mid Cap Mean 15% 10% 1.6x 9.1x 13.7x Commercial IT Services - Mid Cap Median 16% 11% 1.1x 8.3x 12.1x Valuations update for the Information Technology industry (August 31, 2014) INR million, except share price © 2014, KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Source: CapitalIQ, website: www.capitaliq.com Note: (1) Market Capitalisation amounts are based on closing share prices as of August 31, 2014 (2) Share prices are in INR (3) Net sales (does not include other income) and valuation multiples are based on latest available TTM data (4) EBITDA equals Profit before Interest, Taxes, Depreciation and Amortization (5) Enterprise Value (EV) equals market cap plus total debt, minority interest, preference shares minus cash and cash equivalent and investment in associates
  4. 4. Company Market Cap(1) Share price(2) 52 Wk High 52 Wk Low Net Sales(3) EBITDA(4) EBITDA Margin Net Profit(5) Net Profit Margin EV(6) EV(6)/ Sales(3) EV(6)/ EBITDA(4) P/E Commercial ITES Services - US listed Exlservice Holdings, Inc. 883 27 31 23 488 89 18% 48 10% 717 1.5x 8.0x 18.4x Genpact Ltd. 3,756 17 20 14 2,183 381 17% 219 10% 4,214 1.9x 11.1x 17.2x WNS (Holdings) Ltd. 1,019 20 23 17 512 102 20% 47 9% 946 1.8x 9.2x 21.7x 19% 10% 1.7x 9.5x 19.1x Commercial ITES - US l isted Median 18% 10% 1.8x 9.2x 18.4x Commercial ITES - US l isted Mean Company Market Cap(1) Share price(2) 52 Wk High 52 Wk Low Net Sales(3) EBITDA(4) EBITDA Margin Net Profit(5) Net Profit Margin EV(6) EV(6)/ Sales(3) EV(6)/ EBITDA(4) P/E Commercial ITES Services- India Allsec Technologies Limited 342 22 39 18 1,851 (300) -16% (282) -15% 314 0.2x NA NA Datamatics Global Services Ltd 3,342 57 64 21 7,931 963 12% 520 7% 3,469 0.4x 3.6x 6.4x eClerx Services Limited 41,239 1,361 1,408 790 8,685 3,529 41% 2,474 28% 37,679 4.3x 10.7x 16.7x Firstsource Solutions Limited 24,695 37 42 12 31,444 3,708 12% 2,052 7% 35,063 1.1x 9.5x 12.0x Hinduja Global Solutions Ltd 12,530 607 737 224 26,119 3,124 12% 1,644 6% 14,321 0.5x 4.6x 7.6x HOV Services Limited 1,223 98 122 24 139 (22) -16% (391) -282% 1,246 9.0x NA NA Commercial ITES - India l isted Mean 7% -42% 2.6x 7.1x 10.7x Commercial ITES - India l isted Median 12% 6% 0.8x 7.0x 9.8x Valuations update for the ITES industry (August 31, 2014) INR million, except share price Source: CapitalIQ, website: www.capitaliq.com Source: CapitalIQ, website: www.capitaliq.com USD million, except share price KPMG, Lodha Excellus, 1st Floor, Apollo Mills Compound, Mumbai Maharashtra - 400011. Phone: +91 22 3090 2007/3428, Fax: +91 22 3090 2166 The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2014, KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. This document is meant for e-communications only The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International. kpmg.com/in Note: (1) Market Capitalisation amounts for Indian listed companies are in INR million and Market Capitalisation amounts for US listed companies are in USD million, based on closing share prices as of August 31, 2014 (2) Share prices for Indian listed companies are in INR and share prices for US listed companies are in USD (3) Net sales and valuation multiples are based on latest available TTM numbers (4) EBITDA equals Earnings before Interest, Taxes, Depreciation and Amortization (5) Net profit is after minority interest, but before extra-ordinary items (6) Enterprise Value (EV) equals market cap plus total debt, minority interest, preference shares minus cash and cash equivalent and investment in associates Total debt, Cash and Cash equivalent are as per latest available quarterly numbers

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