Honestly speaking, as of now, I don't have a good answer for that.
The only thing I can say is that in a turnaround, you have to think about what can happen ahead. If we keep looking back, we will never invest.
Large provisioning means the sales were not done correctly. Definitely, that is why they took a hit. In a tech business, R&D will be predominantly employee expense right, while building a product?
But this says nothing about what can happen in the future. Closely tracking the future results and management comments can provide more clues.
What can happen ahead is all about execution and results, which I cannot predict. The only thing I can do is identify what is company has done in the past and what is getting changed. "Looking back is like watching in the rear mirror when you drive".
I believe every management tells a beautiful story to appeal to investors - these two questions stop me from even spending more time reading about this company.
Agree. It's a turnaround story. And turnaround seldom turns. They are risky. Everyone knows that. And everyone has a right to reject a stock based on their views. So we respect your views and opinion.
Great write-up. If they grow 13-14% in the next 4 years and do a peak NPM of 9%, then also an EPS of 18 and a PE of 22-23 will fetch us a 400-450 kind of price. I know everyone has different mechanisms for valuing a company. Just putting out my thesis, nevertheless a great write-up.
I had a few questions
1. Is recording all employees and consultancy expenses as R&D expense is right? Can you explain why it is so?
2. Why did the company have such a large provision in the last 5 years? Is it only a sales problem?
Good questions, Girish bhai
Honestly speaking, as of now, I don't have a good answer for that.
The only thing I can say is that in a turnaround, you have to think about what can happen ahead. If we keep looking back, we will never invest.
Large provisioning means the sales were not done correctly. Definitely, that is why they took a hit. In a tech business, R&D will be predominantly employee expense right, while building a product?
But this says nothing about what can happen in the future. Closely tracking the future results and management comments can provide more clues.
Regards,
Ankit
What can happen ahead is all about execution and results, which I cannot predict. The only thing I can do is identify what is company has done in the past and what is getting changed. "Looking back is like watching in the rear mirror when you drive".
I believe every management tells a beautiful story to appeal to investors - these two questions stop me from even spending more time reading about this company.
Agree. It's a turnaround story. And turnaround seldom turns. They are risky. Everyone knows that. And everyone has a right to reject a stock based on their views. So we respect your views and opinion.
Great write-up. If they grow 13-14% in the next 4 years and do a peak NPM of 9%, then also an EPS of 18 and a PE of 22-23 will fetch us a 400-450 kind of price. I know everyone has different mechanisms for valuing a company. Just putting out my thesis, nevertheless a great write-up.
Thanks, Prabhat. Let's see.
Was studying about top 6 IT SOFTWARE companies in india , now I got a new direction product based IT SOFTWARE
Thanks