Recommendation From IT Consulting & Software Sectors
This section gives a recommendation of a stock having stock margin padding price below Rs 100 with sound fundamentals and expected to give handsome returns over a one-year time horizon
Trigyn Technologies Ltd.
TECHNOLOGY TO DELIVER THE EDGE
HERE IS WHY Very positive quarterly performance Attractive valuations Promising growth prospects
Trigyn Technologies Ltd. is an IT company which offers products and services such as IT solutions, staffing, consulting, systems integration, managed services, software development, maintenance, data-driven digital marketing and much more. It provides unified command and control centres, smart solutions, Internet of Things (IoT), smart utilities, security and surveillance. The company has a vast footprint covering the United States, Canada, Europe, India, Africa and the Far East.
On a consolidated quarterly basis, the total income from operations stood at Rs 186.34 crore in Q1FY19, in comparison to Rs 178.77 crore in Q4FY18, registering a growth of 4.23 per cent. The EBITDA rose 15.81 per cent to Rs 17.14 crore in Q1FY19 from Rs 14.8 crore in Q4FY18. Its net profit reported a rise of 22.99 per cent to Rs 12.09 crore in Q1FY19 from Rs 9.83 crore in Q4FY18.
On a consolidated annual basis, the total income from operations increased to Rs 684.51 crore in FY18 from Rs 679.15 crore in FY17, reporting a growth of 0.78 per cent. However, the EBITDA stood at Rs 61.21 crore in FY18 as against Rs 67.29 crore in FY17, posting a decline of 9.03 per cent. Consequently, the net profit saw a marginal increase of 1.10 per cent and stood at Rs 39.47 crore in FY18 versus Rs 39.04 crore in FY17.
On the valuation front, as of Q4FY18, the company has a cash EPS of Rs 13.56 and a P/E multiple of 5.82x. It has a return on equity (ROE) of 10.65 per cent, return on capital employed (ROCE) of 16.23 per cent, return on assets (ROA) of 8.84 per cent and an asset turnover ratio of 153.38 per cent. It has an EV/EBITDA multiple of 4.27x and a healthy enterprise value of Rs 263.67 crore.
The company was appraised by KPMG at Level 5 of the Capability Maturity Model Integration (CMMI) in March, 2018. CMMI is a framework that improves capability by supplying organisations with the essential elements to make their processes more effective. A maturity level of 5 indicates that the company is performing at an “optimising” level. The company has a track record of meeting and exceeding the most arduous Service Level Agreements (SLAs) even in perplexing scenarios. Its focus on diversifying the staff augmentation business has been fruitful. Trigyn enjoys strong industry alliances with prominent technology enterprises such as Microsoft, EMC, TIBCO and IBM. It plans to institute partnerships with emerging software solution vendors who wish to penetrate the Indian sub-continent.
The company derives its business revenues from the US market. This reliance could turn against the company owing to the economic impact in this market. Additionally, the stiff competition on account of more competitors chasing less client dollars could pose a threat to the company’s profitability. Nonetheless, Indian IT-BPM sector continues to be the largest employers in India. Trigyn possesses the necessary attributes to grow along with the industry. Overall, the company has demonstrated a positive quarterly financial trend. Its attractive valuations and good quality long-term financial performance compels us to urge our reader-investors to BUY this stock
