Mehabe score: 5 G Factor: 4 Piotski Score: 6 The stock has a rating HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 4 and Piotski score of 6.
Description
Coforge is an IT services company providing end-to-end software solutions and services. .
It is among the top-20 Indian software exporters. Prominent global customers include British Airways, the ING group, SEI Investments, Sabre, and SITA. Over the years, Coforge has set up subsidiaries in the US, Singapore, Australia, UK, Germany and Thailand, mainly to market and mobilise projects for the software division. The company has business partnerships with large IT companies across the world.
Main Points
Acquisition of NIIT Tech
The co. was formerly known as NIIT Technologies Ltd. and was incorporated in April 2003. In May 2019, NIIT and its founder’s family members sold their stakes totalling 30.2% in Coforge to Hulst B.V. In August 2019, Hulst made an open offer and acquired 39.85% stake from the public, increasing its total stake in Coforge to 70.05%Site:COFORGEMain Symbol:COFORGE
Stock trades at 4465.0, above its 50dma 3711.67. It also trades above its 200dma 2923.23. The stock remains bullish on techicals
The 52 week high is at 4279.00 and the 52week low is at 1490.70
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– is almost debt free.
– has been maintaining a healthy dividend payout of 20.31%
Weakness
– Stock is trading at 10.97 times its book value
Competition
– The industry trades at a mean P/E of 31.1x. Happiest Minds trades at the industry’s max P/E of 109.18x. COFORGE trades at a P/E of 57.6x
– Industry’s mean G-Factor is 3.9 while the mean Piotski score is 9.0. COFORGE has a G-Factor of 4 and Piotski scoreof 6.
– Average 1 month return for industry is 13.5%. The max 1- month return was given by Happiest Minds: a return of 30.08 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 1262.0 cr compared to Rs 1109.0 cr for period ended Mar 2020, a rise of 13.8%
Operating Profits reported at Rs 210.0 cr for period ended Mar 2021 vis-vis 198.0 for period ended Mar 2020 .
Operating Margins contracted -121.4 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 21.95 compared to Rs 20.14 for previous quarter ended Dec 2020 and Rs 18.18 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 4663.0 cr for period ended Mar 2021 vis-vis sales of Rs 4184.0 cr for the period ended Mar 2020, a healthy growth of 10.3%. The 3 year sales cagr stood at 16.0%.
Net Profit reported at Rs 456.0 cr for period ended Mar 2021 vis-vis sales of Rs 444.0 cr for the period ended Mar 2020, rising 2.6%.
Company recorded a healthy Net Profit CAGR of 17.7% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 19.0% compared to 20.0% over the last 3 Years. – The stock has given a return of 190% on a 1 Year basis vis-vis a return of 59% over the last 3 Years. – The compounded sales growth on a TTM bassis is 11% vis-vis a compounded sales growth of 16% over the last 3 Years. – The compounded profit growth on a TTM basis is 6% vis-vis a compounded profit growth of 19% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 14.62% vis-vis 14.44% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 9.54% vis-vis 9.36% for Dec 2020
Conclusion
– has reduced debt.
– is almost debt free.
– has been maintaining a healthy dividend payout of 20.31% – Stock is trading at 10.97 times its book value
The business fundamentals of the stock remain stable. Stronger near term results will build interest in the stock. We suggest to wait for a upturn in business performance.
Technically, the stock remains above its 50 DMA 3711.67 and is trading at 4465.0, thus bullish price action wise.
