Update: This stock really is Not a Multibagger. Since the Valuation change it is No Longer a Multibagger in our view. You can check other stocks from our latest Multibaggers pack.
https://futurecaps.com/tag/multibagger/
Futurecaps is a SEBI Registered Research Analyst providing Multibagger service to Indian Stock Market.
In this post, we would like to screen Infotech Enterprises Ltd. as a potential multibagger.
Infotech Enterprises provides leading-edge engineering solutions, including product development and life-cycle support, process, network and content engineering to major organizations worldwide. With over two decades of continuous growth, Infotech leverages a global delivery and collaborative engineering model to achieve measurable and substantial benefits for our clients. Whether your organization needs to design innovative products faster, optimize R&D costs, increase market share, enhance operational efficiency or maximize the return on investment in your networks, Infotech Enterprises is the ideal partner.
Infotech has 10,000+ associates across 36 global locations. We adopt a proactive approach to serve our clients with our best-in-class delivery centers in North America, Europe, Middle East and Asia Pacific. Our clients span multiple industries such as Aerospace, Consumer, Energy, Medical, Oil and Gas, Mining, Heavy Equipment, HiTech, Transportation, Telecom and Utilities and include 22 ‘Fortune 500’ and 27 ‘Global 500’ blue chip organizations.
Warren Buffett Checklist
| History of Consistently Increasing Sales, Earnings & Cash Flow | Yes, Sales & Net Profit increasing 20% plus every year. Trailing year too expressed growth. |  |
| Durable Competitive Advantage | We believe the product portfolio & niche skills will enable this company to continue as a Profit Player. | |
| Future Growth Drivers | Information Technology sector is expected to grow further in long term. | |
| Conservative Debt (long term debt < 3 Net Profit) | Yes. It is less than 2 times of Net Profit | |
| Return on Equity must be Above Average | Return on Equity is around 15%. Theoretically it should be above 20%. |  |
| Low CAPEX required to maintain current operations | CAPEX is around 20%. | |
| Management is holding / buying the stock | Management is Holding the stocks, but only around 22%. This leaves room for concern, as our happy promoter holding percentage is above 50. |  |
| Price is Under Valued (< intrinsic value) | Considering the Growth, Intrinsic Value is many fold of current price. | |
| Stock Price is consolidating | Stock is around 52 week low, but not seems to be in down trend. | |
Additional Futurecaps Checklist
| PE, PB Ratio | PE is half of Industry PE, so good. Price is quoting just 30% above Book Value, so good. | |
| Cash Flow Positive | Company is maintaining a Positive Net Cash Flow. | |
| Paying Dividends | Yes. | |
| EPS Growth Rate | 20% to 30% EPS growth for past 3 years, Impressing! | |
| Expected Gain in 10 Years | If the stock can maintain 30% growth rate every year, then in 3 years price should double, resulting in 8 times returns in 10 years. Company hold a Blue Chip shine during the time & can command high PE Ratio up to 20 (current is 8), so there is further 2x opportunity. So MAX GAIN expected is around 16 times. | |
| Power of Brand | Branding attracts more sales, more profit margins! Our company is building a brand & quite possible to be a brand like Infosys, TCS in future. | |
Conclusion
Considering the Performance, Value Factors we see Infotech Enterprises as a potential Multibagger.
Disclaimer
Investment Decision is your sole responsibility. Futurecaps recommends proper diversification in your Portfolio.