The overall results seems to be pretty good, if viewed from the long term perspective. The best part about these March 2024 quarter results is that they prove that the results of the previous quarter December 2023 were not a one time fluke. The sales of March 2024 quarter are almost the same as the December 2023 quarter, but due to increased Employee benefits expense, the profits are a little less. The increased Employee benefits expense (Almost 60% increase) from December 2023 quarter is a huge positive sign for the upcoming quarters. Year on Year, the results are simply tremendous. When all of the Big IT companies across the world are firing their employees, this small IT company is hiring aggressively.
The opening of a branch office in Canada is a huge positive sign. The declaration of no dividend is somewhat negative. But the company is in an infant growth stage and it may be requiring cash for exploring new markets and clients. In a nutshell, the company has recovered from a period of 6-7 years of negative returns and degrowth to a higher orbit of growth with a very good chance of multi year growth ahead of it. It has a track record of becoming a 50 to 100 bagger, a couple of times earlier in its history.
So my personal thesis for investing in this stock is intact, that over a period of 4-5 years it EPS can grow to anywhere between 40-100 and in a bull market for a growing company, the rerated PE can reach anywhere between 50-100 (before this quarters result, the PE of this stock anyway reached approximately 63 on an TTM EPS of Rs 4.8 till December 2023). Even many other payment and fintech companies like NPST and Trust Fintech have PEs in excess of 100-120.
Hence I am still a long term investor in this company until and unless I get a serious red flag, on which I can easily sell my entire holding. Hoping for the best for this exciting fast growing company and mega multibagger returns for myself.
Disclosure: Invested in this company since almost one year for the very long term. My initial buying price is in the 30s. I will sell in an instant in case of some serious red flags. My calculations can be wrong. I am not a SEBI registered advisor. Please take anything I say with a pinch of salt. This is not a buy or sell recommendation. I have contract notes to prove my point.
Amit Goyal
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