Accelya Solutions India Ltd: Software Solutions for Airlines

By -

Accelya Solutions India Ltd: A Hidden Gem in the Airline and Travel Industry


Accelya Solutions India Ltd (ASIL) is a leading provider of software solutions and services to the global airline and travel industry. The company offers a comprehensive portfolio of products and solutions that cover revenue accounting, audit and revenue recovery, payment solutions, data analytics, cost management, and more. ASIL is a publicly traded company listed on the Indian stock exchange with a market capitalization of only Rs 2114 crore as of February 2023.

Why ASIL is a Great Investment Opportunity

ASIL has several factors that make it an attractive investment opportunity for long-term investors. Here are some of them:

  • Strong customer base: ASIL serves over 400 customers across 80 countries, including some of the world’s leading airlines such as Emirates, Lufthansa, British Airways, Air France-KLM, Qatar Airways, Singapore Airlines, and more. ASIL also has strategic partnerships with industry associations such as IATA and ARC.
  • High entry barriers: ASIL has deep domain expertise and a proven track record of delivering complex and mission-critical solutions to the airline and travel industry. The company has invested heavily in research and development, quality assurance, and customer support to ensure high standards of service delivery and customer satisfaction. ASIL’s solutions are compliant with the latest industry standards and regulations, which creates high entry barriers for new entrants.
  • Recurring revenue model: ASIL generates over 90% of its revenue from recurring sources such as annual maintenance contracts, subscription fees, transaction fees, and percentage of revenue share. This provides the company with a stable and predictable cash flow and reduces the dependency on new project wins. ASIL also benefits from long-term contracts with its customers, which typically range from 5 to 10 years.
  • Growth potential: ASIL operates in a large and growing market that is expected to witness a strong recovery post the Covid-19 pandemic. According to IATA, global air passenger traffic is projected to grow at a compound annual growth rate (CAGR) of 3.6% from 2023 to 2039, reaching 8.5 billion passengers by 2039. The demand for software solutions and services that enable airlines to optimize their operations, enhance their customer experience, and increase their profitability will also increase accordingly. ASIL is well-positioned to leverage this opportunity with its innovative and scalable solutions that cater to the evolving needs of the industry.
  • Attractive valuation: ASIL is currently trading at a forward price-to-earnings (P/E) ratio of just 20, which is significantly lower than its peers in the IT sector. The company has delivered consistent growth in its revenue and profitability over the past five years, with a CAGR of 15% and 18%, respectively. The company has also maintained a healthy return on equity (ROE) of over 25% and a dividend payout ratio of over 40%. ASIL’s valuation does not reflect its strong fundamentals and growth prospects, which makes it an undervalued stock.

A Catalyst for Growth: Tata’s Airbus Order

One of the recent developments that could boost ASIL’s growth potential is the massive order placed by Tata-owned Air India for 250 aircraft from Airbus in February 2023. The order includes 40 A350 wide-body long-range aircraft and 210 narrow-body ones, believed to be variants of the A320neo family of jetliners for Air India1. This is the world’s largest aviation deal in history, worth over $80 billion.

This order will have a positive impact on ASIL for several reasons:

  • Increased demand for ASIL’s solutions: As Air India expands its fleet and network, it will require more software solutions and services from ASIL to manage its revenue accounting, audit and revenue recovery, payment solutions, data analytics, cost management, and more. ASIL has been a longstanding partner of Air India, providing it with various solutions such as REVERA (revenue accounting), FinesseMBS (miscellaneous billing), VIVALDI (card management), Accelya Payment Gateway (APG) (payment processing), Accelya Revenue Analytics (ARA) (data analytics) and more2. ASIL will be able to leverage its existing relationship with Air India and offer more value-added solutions to support its growth plans.
  • Enhanced brand visibility: As Air India becomes one of the largest customers of Airbus in the world, it will also enhance the brand visibility and reputation of ASIL as a trusted partner of the airline. This will help ASIL attract more customers from other airlines that use Airbus aircraft or plan to do so in the future. According to Airbus, there are over 7,400 A320 Family aircraft in service with over 330 operators worldwide3. ASIL will be able to showcase its capabilities and expertise in providing software solutions and services to this large and diverse customer base.
  • Cross-selling opportunities: As Air India joins the Tata group, which also owns other airlines such as Vistara and AirAsia India, there will be opportunities for ASIL to cross-sell its solutions and services to these airlines as well. The Tata group has the vision to create a larger and premium full-service carrier that will cater to the growing travel demand in the region1. ASIL will be able to support this vision with its comprehensive portfolio of products and solutions that cover the entire value chain of the airline and travel industry.

Conclusion

Accelya Solutions India Ltd is a hidden gem in the airline and travel industry, offering software solutions and services that enable airlines to optimize their operations, enhance their customer experience, and increase their profitability. The company has a strong customer base, high entry barriers, a recurring revenue model, growth potential, and attractive valuation. The recent order placed by Tata-owned Air India for 250 aircraft from Airbus is a catalyst for growth for ASIL, as it will increase the demand for its solutions, enhance its brand visibility and create cross-selling opportunities. ASIL is a stock that deserves a place in your portfolio if you are looking for long-term returns.

Disclaimer: This blog post is for informational purposes only and does not constitute investment advice. Please do your own due diligence before investing in any stock.

Comments

Post a Comment

Popular posts from this blog

Deccan Gold Mines Up 150% in a Year, Makes Major Lithium Move in Mozambique

By -
Image
The country's only listed gold exploration and mining company Deccan Gold Mines Limited (DGML) acquired majority stake in 5 lithium blocks in Mozambique, Africa  Deccan Gold Mines Limited (DGML), India's sole listed gold exploration and mining company, has recently made a significant move that has caught the attention of investors worldwide. The company has acquired a majority stake in five lithium blocks in Mozambique, Africa, positioning itself within the globally recognized Alto Ligonha pegmatite belt, known for its abundant reserves of lithium-cesium-tantalum (LCT) pegmatites. {jistoc} $title={Table of Contents} A Strategic Acquisition This acquisition is crucial for the mining of lithium, tantalum, and beryllium. The critical mineral concession block has been procured through Deccan Gold FZCO, a wholly-owned subsidiary of DGML. DGFZCO will hold a majority ownership stake of 51% in DGMOZ, with the potential for this ownership to increase to 70% in the near...
Read more

Small Cap Gem: Sakuma Exports Doubles in 2024, Bonus Share Proposal on July 1st?

By -
Image
Sakuma Exports: A Smallcap Stock with Big Returns in 2024 In the world of stock trading, smallcap stocks often go unnoticed. However, one such stock has been making waves in the Indian stock market - Sakuma Exports Ltd. This company, engaged in the buying, processing, marketing, exporting, and importing of agricultural products, has seen its share price double in the calendar year 2024. {jistoc} $title={Table of Contents} A Stellar Performance As of Thursday, June 20, the Sakuma Exports stock price has recorded a nearly 100% year-to-date gain , hitting the day’s high of ₹37.86 apiece on the NSE. This impressive performance is not a sudden phenomenon but the result of a strong run over the past couple of months. The company's shares have been on a steady upward trajectory, reflecting the positive sentiment among investors. The surge in the stock price is a testament to the company's robust business model and its ability to deliver consistent growth. Bonus Issue ...
Read more

Simple Investing: It's Not Rocket Science (But It Takes More Than Luck)

By -
Image
Successful Investing: Simple, But Not Easy Disclaimer:  This blog post is for informational purposes only and should not be taken as financial advice. Always do your own research and consider seeking advice from a certified financial advisor before making any investment decisions. {jistoc} $title={Table of Contents} The Myth of Easy Wealth The bull market of the 1990s created a myth that the stock market was essentially a high-return savings account. This belief was fueled by the ease of access to financial information and the ability to trade stocks online. However, as many investors discovered when the bubble burst, if something looks too good to be true, it usually is. Investing requires more than just opening an online account and watching financial news. It requires a deep understanding of the market, the ability to analyze and interpret financial data, and the discipline to stick to your investment strategy even when the market is volatile. It also requires...
Read more