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omshivaya
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Joined: 06/Sep/2006
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   Posted: 24/Jan/2007 at 11:06pm |
SSKI Research report updates:
Nucleus Software Exports
Cluster: Emerging Star
Recommendation: Buy
Price target: Rs898
Current market price: Rs809
Price target revised to Rs898
Result highlights
Nucleus Software Exports has announced lower-than-expected sequential growth in its revenues at 2% quarter on quarter (qoq) and 50.3% year on year (yoy) to Rs56.2 crore (against the expectations of Rs58.6 crore). The product revenues have grown at a robust rate of 12.8% sequential. However the revenues from the project and services business declined 9.3% sequentially and resulted in a lower-than-expected overall growth in the revenues during the third quarter.
The operating profit margin (OPM) declined by 110 basis points sequentially to 27.9% during the quarter, largely due to the steep increase in the selling, general and administration expenses (SG&A) as a percentage of sales (up from 12.6% of the sales in Q2 to 15.7% in Q3). The huge jump in the SG&A expenses was driven by the additional cost incurred (on travel and other related expenses) in pursuing some of the large deals in the pipeline (including the recently bagged order from ACOM).
Consequently, the earnings were largely flat at Rs13.9 crore on a sequential basis. However, the earnings grew at a robust rate of 58.1% on an annual basis.
Notwithstanding the muted performance (sequentially) during the quarter, the company has shown an exponential growth in its order backlog that is likely to boost the overall revenue growth in the coming quarters. The pending order book jumped to Rs335 crore, up from Rs135 crore at the end of the previous quarter. The order backlog includes the multi-million multi-year order from ACOM, a leading consumer finance company in Japan.
To factor in the impact of the huge fresh order intake, we are revising upwards the revenues and earnings estimates by 7% and 9% respectively, for FY2008. At the current market price the stock trades at 22.8x FY2007 and 16.5x FY2008 earning estimates. We maintain our Buy call on the stock with a one-year revised target price of Rs898 (15x its rolling four-quarter earnings.
My notes: SSKI should revise their earnings upgrade again before FY08 is over(my hunch, no confirmation.)
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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it
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omshivaya
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Posted: 06/Feb/2007 at 11:55pm |
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By the way Nucleus is going, I think there could be another big order on the way. Dunno when any announcement would come(if at all)
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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it
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vivekkumar_in
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Joined: 19/Sep/2006
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Posted: 06/Feb/2007 at 12:00pm |
Om Ji,
Your Nucleus is on fire.. It is on a 52 week high.. How big an order ? BTW with these big orders.. Can Nucleus maintain a decent profitability in big orders?
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Often we forget there's a company behind every stock,and there's only one reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.
P Lynch
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omshivaya
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Posted: 06/Feb/2007 at 12:25pm |
Vivek ji. I have no idea on any new order except the last ACOM(300 crore-2 year) deal. I was just speculating that there maybe a big order that is known to a few big boys.
But yes I can tell you this: Vishnu jee has promised to keep margins as much as now or even better. That's the beauty of product companies: high margin business, once the intial roll-out of the product has started.
From the time Nucleus was first recommened on this forum(not the first post on this thread), I think it has almost doubled.
Let's see what Vishnu jee comes up with for next few years.
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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it
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deepinsight
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Posted: 06/Feb/2007 at 12:36pm |
Om ji: you may be right there may be some new order (or something else)cooking looking at the way the share price is moving. Guess we just have to hold tight as the valuations are moving into new territory!
The analyst call transcript on their site paints a very positive picture. Management seems very positive and poised for growing big time.
Execution will now be the key.
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"Investing is simple, but not easy." - Warren Buffet
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manishdave
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Posted: 06/Feb/2007 at 2:20am |
There is a brief interview of Vishnuji in Business world.
For OM!!
Ammend your tag line and put Om Vishnu Devay Namah!!
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omshivaya
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Posted: 06/Feb/2007 at 2:44am |
Manish jee, actually do you know why people say Om Namah Shivaya?
It is because it is one line which gives our namaskars and salutations to the divine trinity.
OM = BRAHMA ji
SHIVAYA = SHIVA ji
Guess what NAMAH means?
NAMAH=VISHNU ji
So, I am already saluting all the three lovely individuals! That is why I also included JAI MAA, thus incorporating all forms(roops) of Shakti, including Maa Laxmi, Maa Kali, Maa Durga, Ma Saraswati, Maa Parvati and the list just goes on and on.
Om Namah Shivaya! Om Namah Shivaya! Om Namah Shivaya! Jai Maa!
Edited by omshivaya - 06/Feb/2007 at 2:48am
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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it
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omshivaya
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Location: India
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Posted: 06/Feb/2007 at 2:47am |
Originally posted by deepinsight
Om ji: you may be right there may be some new order (or something else)cooking looking at the way the share price is moving. Guess we just have to hold tight as the valuations are moving into new territory!
The analyst call transcript on their site paints a very positive picture. Management seems very positive and poised for growing big time.
Execution will now be the key. |
They are scaling up. They recently constructed a new property. Now, I learn that they have given order for construction of yet another new property to handle more employees, for handling the orders. So, they are definitely scaling up. Good start, let's see if they can consistently deliver high returns(higher than 40%).
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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it
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