IT Consultants Ltd's revenue from Automated Teller Machines (ATM) installations has declined over the last three years, as banks shifted from deploying new ATMs to Cash Recycling Machines (CRM).
As IT Consultants Ltd (ITC) is involved with the development and maintenance of projects for government agencies, it is exposed to the risk of not achieving the projected revenue and earnings from these projects if they fail to succeed, read an EBL Securities equity report.
The leading stock broker added that for instance, ITC’s postal cash card project with the Bangladesh Post Office lost popularity a few years after its inauguration.
Due to its involvement in an Information Technology Enabled Service (ITES) service-related business, ITC currently enjoys full tax exemption for its IT-enabled services until June 30, 2024, as per Income Tax Ordinance 1984.
However, once this tax benefit expires, the company might experience a rise in income tax expenses, potentially leading to a reduction in net profit after tax, according to an equity note prepared by EBL Securities.
ITC may be exposed to higher credit risk and interest rate risk owing to incurring a bank loan of Tk 204 crore for constructing the "ITC Tower." The debt-equity ratio and interest coverage ratio of the company stood at 0.08x and 14.55x, respectively, in Q1 of FY24.
ITC is constructing the ITC Tower, a 14-story data center, to provide local data hosting and specialized cloud services for banks and financial institutions, by investing Tk 280 crore at the Tejgaon Industrial Area.
The project will be financed at a debt-to-equity ratio of 73:27, where the company will invest Tk 76 crore from an internal source of funds to acquire the land, and the remaining Tk 204 crore will be sourced from banks to develop the essential infrastructure.
Meanwhile, ITC is the owner of Q-Cash, the country's largest electronic payment processing platform used by 36 member banks. Recently, the company has obtained the necessary certifications to enable Bangla QR payment transactions through the Q-Cash network and launched the Q-Pay mobile application for member banks to broaden the electronic payment horizon.
Over the last five years [FY19-FY23], the company registered a 5-year CAGR of 18.6 per cent in revenue from “Q-Cash” transaction processing, accounting for an average of 55.7 per cent of total revenue during this time period.
ITC has been disbursing cash dividends in the range of 5 per cent-10 per cent over the last five years [FY19-FY23], with an average dividend payout ratio of 36.9 per cent during this period.
SiS Capital (Bangladesh) Pte Ltd and Regent Pacific Ltd jointly hold 32.77 per cent and 8.45 per cent ownership as sponsor-directors in the ITC.
The presence of foreign directors on the company board could potentially benefit local minority shareholders by promoting better corporate governance through increased transparency and accountability within the company, according to an equity note.
Its paid-up capital is Tk 128 crore. The company belongs to the “B” category of the Dhaka Stock Exchange. On Thursday, the company’s share price stood at Tk 36.60 on the Dhaka bourse.
IT Consultants Ltd is a licensed Payment System Operator (PSO) by Bangladesh Bank and provides end-to-end electronic payment services for banks, financial institutions, government organizations, etc.
