Let's take a look at the company's financials:
One bad thing is that the return on equity has been only 10-12% in the past couple of years, which is a bit low for my standards.
The company trades at a market cap of 1400 Rs.Cr. and a P/E of only 8.7 and P/S of 0.5. These are very low values given the growth of the business. I did a 3-stage DCF valuation with the following assumptions:
- Net profit growth of 10% for the next 5 years and 5% for the other 5
- 2% terminal growth rate and discount rates of 10%,12% and 14%
I like the company but competition is pretty tough in the field, which is evidenced by it's low margins. I already have Tata Consultancy Services, but I might initiate a small position, because the company looks good from a valuation standpoint. The stock shot up 20% on Friday and reached a new all-time high. The stock was also bought by one insider in the past 6 months.