DataMatics Global Services Ltd. – Multibagger Analysis
Datamatics is a trusted partner to several Fortune 500 Companies globally for managing their End-to-end Application Life Cycle & Business Critical Processes. Datamatics is a global Information Technology (IT) and Business Process Outsourcing (BPO) organization focused on delivering smart, next-generation business solutions that help enterprises across the world overcome their business challenges. These solutions leverage innovations in technology, knowledge of business processes, and domain expertise to provide clients a competitive edge.
Company URL: http://www.datamatics.com/
Screener URL: http://www.screener.in/company/?q=532528&con=1
Warren Buffett Checklist
|History of Consistently Increasing Sales, Earnings & Cash Flow||Yes.|
|Durable Competitive Advantage||
Company is being into IT for decades, Till past years it cannot make a strong brand footage. Latest year shows double EPS & Net Profit growth though.
|Future Growth Drivers||Boom in IT sector will continue for next 1-2 years; This company will definitely gain from it. But be watchful, recession after that.|
|Conservative Debt (long term debt < 3 Net Profit)||Current Liabilities around 83 & Latest Net Profit around 53 which makes enough gap for 3×53 > 83;|
|Debt Equity Ratio||At 0.13 which is very low & good.|
|Return on Equity must be Above Average||ROE still around 10! We require 15 for marking green.|
|Low CAPEX required to maintain current operations||Seems to have high CAPEX.|
|Management is holding / buying the stock||Flat. But management is holding a whopping 72% holding.|
|Price is Under Valued (< intrinsic value)||Considering latest EPS jump of 50% and leveling it as 20%, the market price is clearly below Intrinsic Value|
|Stock Price is consolidating (now)||Price is at good levels with no recent hefty jumps.|
|Stock Price is growing in past years along with EPS growth||Moderate.|
Additional Futurecaps Checklist
|Consolidated PE, PB Ratio||PE 6 (good); PB: 1 (v.good)|
|Cash Flow Positive, Net Profit % greater than 8%||Low profit margins at 6%|
|Paying Dividends, Tax||Yes.|
|EPS Growth Rate||20% on average.|
|Jump in Trailing EPS||Yes. 50%.|
|Jump in Quarterly EPS||Yes. 30%.|
|Expected Gain in 5 Years||6-8 Times in 5 years. If the company is lucky to super-grow & resize PE as 20, then it can go to 20-30 times in 5 years.|
|Price Movement Graph, 52 Week High & Low||52 Week High & Low do not have large gaps.|
|Low Volume accelerates Price Hike||Volume around 30 thousand. Good.|
|Power of Brand||Moderate.|
|Corporate Governance, Reputation of Leaders||Yes. Leaders are highly experienced, qualified (MIT graduates), reputed (founding members of TCS)|
|Fraud reported||Not in current search.|
Considering the value parameters above, we declare Datamatics as a multibagger. But, as the company have shown only recent year EPS-jumps, be watchful for the upcoming 1-2 quarters.
2-3% of portfolio.
Futurecaps recommends 20 to 25 multibaggers per year, we recommend a 25% to 50% allocation of your savings in equity. The stocks recommended here are gone through Analysts of several years experience in stock market. Although they were successful in predicting future multibaggers, the overall stock market is a risky game. So we recommend the reader to put his/her own thoughts & invest wisely.