Kalpraj Dharamshi, the veteran value investor, is a textbook example of modesty and humility. When Ramesh Damani asked him the secret of his phenomenal success in the stock market, he unreservedly credited Rakesh Jhunjhunwala and Radhakishan Damani, the living legends of the stock market, for providing him guidance and tutoring him on the fine art of finding multibagger stocks.
Kalpraj also confidently asserted that there are “at least 100 Ten-Baggers And Ten 100-Baggers stocks waiting to be discovered” by investors if they are prepared to roll up their sleeves and do hard work.
Since then, inspired by Kalpraj Dharamshi’s words of wisdom, we have been on the quest for such multibagger stocks.
SQS India BFSI is one such stock. As of 31st December 2015, Kalpraj Dharamshi held 200,000 shares while Hemang Raichand Dharamshi held 150,000 shares. Ravindra Dharamshi held 1,00,000 shares as of 31st March 2015 which probably continues unchanged to date. This means that the total holding of the Dharamshi family in SQS India BFSI is 4,50,000 shares, worth Rs. 41 crore at the CMP of Rs. 923.
SQS India BFSI was discovered by Daljeet Kohli in April 2014. At that time, SQS India was known as Thinksoft Global Services. Daljeet had the clairvoyance to realize that the takeover of Thinksoft by SQS, the European software behemoth, would result in a “game changer” and catapult Thinksoft’s fortunes to great heights.
Daljeet was right because immediately after the takeover, SQS has spurted from Rs. 370 to about Rs. 900, resulting in spectacular gains of about 150%.
Aashish Tater of FortuneWizard.com has now taken over the mantle and recommended a buy of SQS India BFSI on the ground that it has “huge potential” and is a “potential 10-bagger” stock even from the present levels: This is what he says:
“SQS India BFSI is a part of SQS BFSI Germany. People have taken a myopic view on this particular sort of business, but we regard it as one of the 10-baggers in our report when we first initiated this particular stock. We feel this has got huge potential. If you see the entire business, they are into software rating and also software testing. If you see SQS BFSI Germany and the analyst report, they sound extremely bullish on the parent itself.
When I chalked down the major reasons, this can be a huge beneficiary of software rating getting mandatory because you cannot ask an IT company to test its products and rate it over its competitors. If you have an independent player who can do that, the business is infinite and cannot be put into excel because if I was going through that Nascom thing, it was somewhere around USD 15 billion opportunity and where only 3-4 major players are there of which the parent and the kid SQS BFSI India, even if they are able to garner 10-15 percent, that will be a huge opportunity going forward.
On valuation front, there will be a 40-45 percent jump in terms of topline and bottomline for the SQS India parent. Similar numbers are expected even from SQS BFSI India. If that happens, the stock on the forward basis trades at somewhere around 25-24 odd mark. They have been paying consistent dividend. Once they took over from Thinksoft Global because it was Thinksoft Global before and it had become a multi bagger, but we still feel that it has got huge potential to go up.
Our target of over next three years can be a potential multi-bagger, where we have a conviction target of almost 5x even from current level. But I would be, say from this year perspective over next 6-8 months have a target of Rs 1,500 on the stock.”
Aashish Tater’s logic makes sense. SQS India is still a micro-cap with a market capitalisation of only Rs. 981 crore and so it does have a long way to go with the benign backing of its German behemoth parent.
However, we must also note that Daljeet Kohli has got somewhat jittery at the steep rise in the stock price. SQS India reported “soft” Q3FY16 results and so Daljeet has recommended a “hold” to enable the valuations to catch up with the price of the stock.
The bottom line is that we have to keep an eagle eye on SQS India and wait for a green signal from Daljeet before we make our move!
SQS right now is trading for like 11 times its book value. If we take a look on EPS it might take more than 20 years to justify current price in terms of net worth o SQS.
Though it is fundamentally okay, it is more of now just a trading stock than investment stock.
Book value is for financial not for tech companies.
#Niveza #Review on SQS India Stock ::
Stock such as SQS India BFSI is a IT s/w company, with a market cap of 987 Crs, PE of 35 (Dec 15 numbers). The company has reported revenue CAGR of 20-21% for past 3 years with PAT CAGR of 23-24% over the same period. Any stock to become a multi bagger should have robust revenue visibility with high growth rate good and sustainable margins and good return rations with descent valuation. At PE of 35 and P/B of almost 9-10, SQS India is certainly not at a attractive valuations, being about to become a multi bagger it has to show good revenue visibility for next few years with good margins and then it might become a multi bagger. But as of now, there are not many chances that it will give more than 100% returns in next 1-1.5 years unless any big orders or client acquisition is done.
AASHISH TATER has good hold on MNC and midcap small cap turning into midcap to blue chips … Remember recommending Thinksoft at 200 for 3000 ,eicher and bosch , ZF Steeering from 400 , Laopala at mere 60 and Atul at 200 Igarshi from 70 bucks… Many of his recommendations have proved that he picks stocks because its an MNC backed company Alfa lAval COpco Nestle Goodyear..perhaps safest formula .. I have seen him a lot in 2010-2013 period many of his stocks had grown 8-10 fold in last few years but now he is not seen on Television media … Perhaps good to see him after a long time . Any more multibagger he recommending ?
As per his recommandation Link Pen Buy 500 @44, Sold 300 on profit.remaining still holding for long term