Good evening Jonkey, what an outstanding post mate. You are spot on with many of your numbers and assumptions in my opinion. You are one smart cookie.
From the notes I took when I met with Mohnish a few months ago:
Mphasis was owned by HP 100%. It has recently been sold to Blackstone.
It is state of the art because of HP. They wanted to use this platform to sell their other software solutions. That business did not take off so they did a sale of the 2 verticals as these 2 businesses were no longer relevant to them any longer.
I think you are a quite a bit short on that ATM revenue line estimate. When I met with management we spent a fair amount of time running through how the Mphasis deal works, and as ATM usage per machine per day rises, just how profitable that makes this deal for us. And looking at how much debit card and new account uptake there has been in India since April this year, I am confident that current numbers are blowing away even their best estimates/wishes for this business. So our EBIT number after 1 year will most likely surprise everyone to the upside.
You mentioned we get access to a predictable income stream....I would go further and agree that due to the recurring and growing nature of this business, we are equivalent to an infrastruture play....just as you have said. This business has upside unlike any other business I have ever seen.
We are in a sector which will follow the same path it has in the developed world, as the great unwashed move to be banked.....and to top it off, we are in the second most populous country in the world. The pure size of this market is insane.
I expect some serious deal flow news over coming weeks.
I expect that we will see a rights issue to raise the capital, and the balance will be debt. So those idiots selling today, are simply giving away their right to participate in the upcoming transaction. And all it will take is a few deals to be announced, and we see the SP fly past 5c...and selling at 2.2 wont look so clever then hey?
One of my team spoke with Gary this afternoon. As I previously wrote here a few weeks ago, we are going to do everything we can to ensure that as little capital as possible is raised from the market. We would much rather see this be a debt play, hence maximising shareholder ROI.
As I said this morning, this trade has been substantially de-risked as of today.
Be smart people, hold onto your script. There isnt a better position to be had IMO on the ASX.
