Omnitech Infosolutions

Omnitech Infosolutions

Business & financials
Omnitech’s majority revenue comes from computer hardware assembling, where the operating margin is only 5%. But the company is transforming itself from a hardware assembling to a technology service provider. This business has a healthy operating margin of about 35%.
System integration i.e., hardware assembling and networking is the major contributor to the topline since last five years. It is gradually decreasing as in FY2002-03 the contribution was around 91%. On the other hand, the high margin-oriented business is growing faster and is contributing majority to the bottomline. This was seen in FY2005-06 when the net profit margin advanced from 0.75% to 13.39% and subsequently to 15.21% in FY2006-07.
Outlook
The company has to identify the targets and subsequently have to identify the synergies arising out of acquisitions. On fully diluted basis the P/E in lower and higher band comes to 9.71(x) and 11.32(x). The valuation though looks attractive, investors should tread with caution.