Mehabe score: 7 G Factor: 1 Piotski Score: 6 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 1 and Piotski score of 6.
Description
California Software Company is engage in the Business of Software Development, Implementation, Support, Validation and Testing.Site:CALSOFTMain Symbol:CALSOFT
Stock trades at 13.6, above its 50dma 11.72. It also trades above its 200dma 10.6. The stock remains bullish on techicals
The 52 week high is at 21.31 and the 52week low is at 6.25
Price Chart
P/E Chart
Sales and Margin
Strengths
–
Weakness
– Stock is trading at 3.08 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
-Promoter holding is low: 35.73%
– has a low return on equity of -83.82% for last 3 years.
– might be capitalizing the interest cost
– has high debtors of 902.50 days.
-Promoter holding has decreased over last 3 years: -7.43%
Competition
– The industry trades at a mean P/E of 36.1x. Happiest Minds trades at the industry’s max P/E of 125.78x. CALSOFT trades at a P/E of 110.0x
– Industry’s mean G-Factor is 3.4 while the mean Piotski score is 9.0. CALSOFT has a G-Factor of 1 and Piotski scoreof 6.
– Average 1 month return for industry is 19.8%. The max 1- month return was given by Happiest Minds: a return of 46.19 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 3.5 cr compared to Rs 0.35 cr for period ended Jun 2020, a rise of 900.0%
Operating Profits reported at Rs 2.95 cr for period ended Jun 2021 vis-vis 0.18 for period ended Jun 2020 .
Operating Margins expanded 3285.7 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 1.91 compared to Rs -0.27 for previous quarter ended Mar 2021 and Rs 0.15 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 4.61 cr for period ended TTM vis-vis sales of Rs 1.46 cr for the period ended Mar 2021, a healthy growth of 68.3%. The 3 year sales cagr stood at 47.0%.
Operating margins expanded to 72.23% for period ended TTM vis-vis 38.36% for period ended Mar 2021, expansion of 3387.0 bps.
Net Profit reported at Rs 2.86 cr for period ended TTM vis-vis sales of Rs 0.19 cr for the period ended Mar 2021, rising 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 5.22 cr for period ended Mar 2021 vis-vis Rs -0.58 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 3.0% compared to -84.0% over the last 3 Years. – The stock has given a return of 64% on a 1 Year basis vis-vis a return of -21% over the last 3 Years. – The compounded sales growth on a TTM bassis is 24% vis-vis a compounded sales growth of 15% over the last 3 Years. – The compounded profit growth on a TTM basis is 217% vis-vis a compounded profit growth of -24% over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Jun 2021 public holding stood at 64.27% vis-vis 64.27% for Mar 2021
Conclusion
– – Stock is trading at 3.08 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
-Promoter holding is low: 35.73%
– has a low return on equity of -83.82% for last 3 years.
– might be capitalizing the interest cost
– has high debtors of 902.50 days.
-Promoter holding has decreased over last 3 years: -7.43%
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 11.72 and is trading at 13.6 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
