Accelya Solutions Share Price Analysis – Emerging Aviation Stock 2023

Accelya Solutions Share Price Analysis – Emerging Aviation Stock

Introduction

If I tell you that the Indian aviation industry is going to grow exponentially from here. So, you will accept this too, right? People’s income levels are increasing rapidly, and an already low flight penetration can only grow from here.

The last 6 years are a testimony to this when our domestic passenger traffic has grown at a CAGR of 14.5%. So, when the industry itself is on a strong trajectory, then it is a logical argument that the players operating in it will also get a chance.

As investors, we are always on the lookout for such growth opportunities, aren’t we? But…. If you look at the history, it tells that the business of airlines is very capital-intensive and competitive. Many Indian Airlines either went bankrupt in the past, then are running in heavy losses.

Whether it is SpiceJet, Kingfisher, Jet Airways, or the latest casualty GoFirst. So, aren’t there stocks that don’t own airlines, but benefit from the airlines’ growth? In today’s ongoing 5-minute stock idea, I will tell you about one such company which can benefit from India’s fast aviation industry. So, let’s start. Friends, there are many challenges in front of airlines for revenue declaration and control.

About Accelya Solutions Share Price

The smooth handling of Complex Transactional and Financial Operations Inn Airlines is generally outsourced. And this is what our today’s company Accelya Solutions Limited does. Accelya Solutions provides financial solutions to airlines and helps them control revenue leakage and improve revenue quality. We’ll talk more about Accelya Solutions Share Price ahead. The current Accelya Solutions Share Price is standing at INR 1,266.40 as of 24th May 2023.

Primarily, most of the company’s revenue comes from providing financial solutions to the airlines and travel industry such as revenue accounting, revenue assurance, and cost management. The rest of their revenue is generated from industry and audit solutions, commercial solutions, and cargo solutions.

Now revenue accounting for airlines is a complex business process. Airlines are required to make accurate and timely revenue declarations, bill interline payments correctly, and adhere to audit compliance. This means that whenever you book a flight and make any kind of payment, the company has to ensure that the payment is correctly entered into the account and the correct revenue is declared.

After all, long-journey connecting flights are from different airlines, so they have to have revenue-sharing standards. Therefore, revenue accounting data is very important for airlines. And with over 25 years of experience, Accelya enjoys a leadership position in this field.

Revenue Assurance Services covers a wide range of audit services that span the ticket lifecycle, from the original booking to journey completion. Along with this the company also offers comprehensive recovery services such as Agent Debit Memo (ADM), and Fund Collection.

Also Read: Aavas Financiers Share Price Analysis

Coming to the next cost management, Accelya through its cost management solutions helps airlines to manage their costs smartly. From automating the payment process for goods and services to its customers’ suppliers and vendors to providing deep insight into companies’ costs,

Accelya Airlines helps make profitable business decisions and control supplier overpayments. Today, Accelya Solutions has 250+ airline customers and processes over $1 billion in financial transactions. Furthermore, Accelya handles more than 25% of the world’s NDC traffic.

Now you must be wondering what is NDC, right? At a high level, you must understand that this is a new technology solution that airlines are now implementing in their processes, such as partner onboarding,

customer support, agent workflow, etc. Looking at the geography-wise revenue breakup of Accelya Solutions, the majority of revenue comes from the Asia Pacific and Americas regions.

What we like about Accelya Solutions

We have understood the business of Accelya Solutions Share Price, now let me tell you about some of the key features of the company. Accelya Solutions provides its clients with patented revenue accounting software and then charges its clients on a per-transaction basis. And the opportunity of being an intellectual property-based solutions business is that the incremental cost is relatively low.

Moreover, over the years, their business process outsourcing or BPO model has also matured due to their product innovation and enhancements, which is benefiting them in terms of improved efficiency and business profits.

This is also reflected in the profit and loss statement of the company. Analyzing Trailing Twelve Months, TTM basis, the company’s revenue and operating profit in the last 12 months have crossed high pre-pandemic levels. That too with improved operating margin!

And Accelya’s debt-free status, excluding lease payments, reflects their healthy financial profile. Let’s now turn to some of the risks and challenges facing Accelya Solutions and how it’s affecting Accelya Solutions Share Price.

What we don’t like about Accelya Solutions

Look, dividends are usually paid out of company profits, right? But Accelya Solutions has paid out 184% in FY21 and 121% in FY22 in the form of its profit dividend. And this tells us that even though the company has strong cash flows, this liberal dividend policy is keeping constant pressure on their reserves, and preventing them from accumulating liquid reserves, i.e., cash and equivalents.

These earnings of Accelya Solutions are higher than the dividend payout ratio which indicates that it might not have the scope to reinvest its profits. This, in turn, tells us that management doesn’t currently see attractive growth opportunities and that’s one of the reasons why Accelya Solutions Share Price is declining. All the Returns from Accelya Solutions are coming from its Dividends. Accelya Solutions Share Price has declined 12.5% since the start of May.

There is also a risk that in establishing itself in the airline industry, Accelya is exposed to customer concentration risk. The recent story was that Air India had terminated its services by Accelya due to an alleged security breach in the GST portal. And not just Air India, due to competition and industry-related risk factors many clients had terminated their relationship with Accelya Solutions.

Also, the company mentioned in its last annual report that its 2 clients account for more than 10% of their revenue. And with ongoing industry consolidation and uncertainty as seen in Go Air, this reliance on 2 customers could be a concentration risk for them.

So that’s all that I have for you about Accelya Solutions Share Price. Read the article carefully and decide for yourself whether the Accelya Solutions Share Price is justified or not.