With companies rated at single digit growth valuations(considering cash in bank and 2 percent dividend yield) there is no such thing as a right to win and i don’t expect it either. If it was rated at 20+ pe then id say that would be important. For now its a contra bet and barely investable company and Here one has to back the horse and from what ive read of Ajay S. Bhutoria and from the concalls and presentations and overall communication by management im very impressed. They have so many verticals now that id need to actually work for the company to understand the nitty gritty of each… however i like the sectors they are targetting and the numbers say they are going in the right direction with each one of them. Id say the revenues are currently sustainable and growth looks about a year or two away. Ive seen similar situations with the likes of kpit 2 years ago(priced at rs 60)… ie where a company in the IT sector is not rated due to margin compression but the revenue growth is fine. I suspect that their margins will fall to 11 or percent for the whole of this FY. And as attrition rate falls, cost of employee’s drops and consumer spending comes back in the west therell be a stabilisation at 15 to 18 percent margins with revenues at around current mcap. At higher valuations id ask for right to wins etc… at current valuations i just want a few metrics to come back to the norm.
That being said… ive checked the recruitment side of things through the colleges and students i deal with… and the few whove heard of them have complained that their recruitment process itself poor(im not sure if im allowed to type more regards this). So there could be endemic reasons behind the higher than industry average attrition rate and costs. So i want to wait a few quarters and see if they take this now obvious failing seriously before investing
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