Mehabe score: 6 G Factor: 2 Piotski Score: 8 The stock has a rating OBSERVE & 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 2 and Piotski score of 8.
Description
Founded in 1992, it is a software product company which works in the space of Digital Trust i.e. it is focussed on privacy, security, risk mitigation, predictability and confidence in data mainly in the telecommunication space focusing on products to communications Service Providers(CSPs) globally. #
Main Points
Products based on Digital trust
Digital Trust is a concept that enables users to carry out business transactions in a safe, secure, ethical and reliable manner. #
Some of the products the co. is offering is Revenue Assurance, Network Analytics, Fraud Management, Identity Analytics, Partner Ecosystem Management, IOT Security, Analytics Center of Trust and Anomaly Detection.Site:SUBEXLTD
Market Cap:
Rs 3,371 cr
Price:
59.8
Trading pe:
67.3x
Book-value:
9.73/share
Div yield:
1.25 %
Earning yield:
2.82%
Face-value:
5.00/share
52week high:
67.40
52week low:
7.37
Technical Analysis
Stock trades at 59.8, above its 50dma 53.73. It also trades above its 200dma 34.67. The stock remains bullish on techicals
The 52 week high is at 67.40 and the 52week low is at 7.37
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– is almost debt free.
– has delivered good profit growth of 30.97% CAGR over last 5 years
Weakness
– Stock is trading at 6.14 times its book value
-The company has delivered a poor sales growth of 2.90% over past five years.
– has a low return on equity of 4.92% for last 3 years.
Competition
– The industry trades at a mean P/E of 33.3x. Happiest Minds trades at the industry’s max P/E of 83.56x. SUBEXLTD trades at a P/E of 67.3x
– Industry’s mean G-Factor is 3.6 while the mean Piotski score is 9.0. SUBEXLTD has a G-Factor of 2 and Piotski scoreof 8.
– Average 1 month return for industry is 11.2%. The max 1- month return was given by Happiest Minds: a return of 26.47 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 96.0 cr compared to Rs 104.0 cr for period ended Mar 2020, a fall of 7.7%
Operating Profits reported at Rs 23.0 cr for period ended Mar 2021 vis-vis 38.0 for period ended Mar 2020 .
Operating Margins contracted -1258.0 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 0.28 compared to Rs 0.15 for previous quarter ended Dec 2020 and Rs 0.57 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 372.0 cr for period ended Mar 2021 vis-vis sales of Rs 365.0 cr for the period ended Mar 2020, a growth of 1.9%. The 3 year sales cagr stood at 4.7%.
Operating margins expanded to 26.0% for period ended Mar 2021 vis-vis 24.0% for period ended Mar 2020, expansion of 200.0 bps.
Net Profit reported at Rs 52.0 cr for period ended Mar 2021 vis-vis sales of Rs -269.0 cr for the period ended Mar 2020, rising 617.3%.
Company recorded a healthy Net Profit CAGR of 35.3% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 91.0 cr for period ended Mar 2021 vis-vis Rs 67.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has improved its Return on Equity (RoE) metric. The RoE on Last Year basis was 9.0% compared to 5.0% over the last 3 Years. – The stock has given a return of 657% on a 1 Year basis vis-vis a return of 114% over the last 3 Years. – The compounded sales growth on a TTM bassis is 2% vis-vis a compounded sales growth of 5% over the last 3 Years. – The compounded profit growth on a TTM basis is 125% vis-vis a compounded profit growth of 64% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 0.01% vis-vis 0.03% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 96.43% vis-vis 96.22% for Dec 2020
Conclusion
– has reduced debt.
– is almost debt free.
– has delivered good profit growth of 30.97% CAGR over last 5 years – Stock is trading at 6.14 times its book value
-The company has delivered a poor sales growth of 2.90% over past five years.
– has a low return on equity of 4.92% for last 3 years.
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 53.73 and is trading at 59.8 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
