The primary business of ITS Ltd (BSE:508807) is manufacturing parts for automotive companies that require precision engineering. GM, Fiat and Suzuki are its prominent clients.
Gurgaon Infospace Limited is a fully-owned subsidiary of ITS Ltd. It engages in developing commercial real estate inside SEZ (special economic zones) for use by other companies providing IT services and ITES. 89.97% of the profit of ITS Ltd comes from this subsidiary. 80.17% of the net assets of ITS Ltd are of this subsidiary.
Market capitalization at 8.54 billion rupees is 76% of its book value. Total debt of 32 million rupees gives it a total debt to equity ratio percent of 1.49% Debtor days have reduced 1/3rd from 28.8 to 20.8 days. ITS Ltd’s working capital requirements have reduced from 88.0 days to 56.9 days. ITS Ltd has delivered a sales growth of 1.75% over the past five years. ITS Ltd has a return on equity of 9.41% over last 3 years. Shares held by promoters at 74.98% are just within the maximum permissible 75%.
Disclaimer:
I am not employed by ITS Ltd or any of ITS Ltd’s subsidiaries, either fully or partially owned by ITS Ltd. I am not related to anyone employed by ITS Ltd nor derive remuneration through any means from ITS Ltd (or its subsidiaries.) I do not hold a material ownership in ITS Ltd thus far but do not guarantee that my position of non-ownership will stay the same.
Catalyst:
States in India are competitive in nature. The Uttar Pradesh government under Chief Minister Yogi Adityanath had initiated forming these SEZs (Special economic zones) after he came to power where IT and allied services companies could work out of. ITS Ltd was able to successful capture this newly formed market via its conduit of Gurgaon Infospace Limited. As other state witness the effectiveness of SEZs for providing employment to their large (40% of the nation being under 35 years of age), skilled (1.5 million engineering graduates each year) but unemployed (42 percent for graduates under 25.) As other states opening up their SEZs, ITS Ltd is uniquely situated to benefit with its prior experience of working it SEZs with a pre-existing client list to boot.