The moneycontrol consolidated PE might be more accurate at 34:

http://www.moneycontrol.com/india/stockpricequote/auto-ancillaries/mothersonsumisystems/MSS01

The trailing EPS seems to have been adjusted for the bonus at 1:2.

Adding in a few more details from what I have understood about this company till now and trying to map it in my own crude way with the business quality framework suggested by Donald and team:

Strategic Assets
– A company which offers services based on cloud platform. It is also diversifying its portfolio based on it cloud expertise to mobile services, identity management, server management etc.
– Expertise and tons of experience on cloud makes it a niche player.
– Access to businesses which need cloud and hence it is doing backward as well as forward integration across the cloud business value chain.
– Access to and partnership with most large cloud providers.

Disproportionate Future
– Recent buyouts in healthcare area could help with Obamacare gaining momentum.

What Can Go Wrong?
– There are many other companies in the market which “could” offer “similar” services and hence the differentiation could be lost. All Indian IT companies can offer such services, though 8k miles will invariably beat them in quality and efficiency.
– Cloud services, at this point in time are more in demand from small SMEsMSMEs and hence predictability of earnings is suspect. In terms of business development, this approach is diametrically opposite to how large Indian IT companies gain money by “partnering” with larger corporates.
– With my limited understanding of their solutions, I believe that they don’t have any specific products that they sell yet and they are still primarily a services provider.

New Products/Innovation/Branding
– Niche services in cloud healthcare space
– Cloud is a service model in which the client is completely dependent on the cloud provider and hence as an extension on the service provider for cloud too.

This is based on my limited understanding, Will keep adding as I gather more details.

Some questions I haven’t found an answer to yet:
– Do they earn by providing services – the usual time and material or fixed bid models, or do they get a share of the profits of the business? Or do they charge based on transactions?
– How long have they been serving their oldest client?
– How well are they able to mine a client?

Serious investors must ask questions to themselves whether 8k have economic moat. What does it do which the other established IT peers can’t do in near future. As basically it’s doing ims do such high pe justified. As the biggest wealth is created and destroy in pe expansion and pe contraction.

Dhiraj

There is not capex because this is a services led business – world over most of hardware + services companies do not need a lot of capex.

I did talk to a packaging head of a FMCG company and he told me control print is offering much looser credit terms than their competition – look at inventory + receivables days and it’s jumped from 232 days in 2009 to 335 by FY 2015 – hardly sign of an increasing moat. Infact, that explains the reason why promoters have to keep bringing in money in what’s a high margin,high ROE business. Look at operating cash flows as a % of sales and they are falling too.

ultimately for a Rs. 300 Cr. mcap you are getting 8 cr. of OCF – Even without growth, its about 15-16 cr. of OCF – that’s very expensive IMHO. A company that keeps growing EPS without a growth in OCF has a lot of risks – eg., opto circuits, suzlon

I did look at their competitors – their receivables/inventory are not as high.

Look at what munger has to say about such a business –

“There are two kinds of businesses: The first earns 12%, and you can take it out at the end of the year. The second earns 12%, but all the excess cash must be reinvested — there’s never any cash. It reminds me of the guy who looks at all of his equipment and says, “There’s all of my profit.” We hate that kind of business.”