A Stock that gave me 100% Return!

 


The most talked about sector since Covid is the IT Sector. Since 2020, there was a constant up move in the IT sector until January, 2022 (Tracking the Nifty IT index). After that, there was a correction in the IT sector until June, 2022. Since then, the Index has been in the sideways trend until today.

This 6 months correction given by the Index from January, 2022 to June, 2022 led me to look at the IT space more in detail. My interest was more towards the Midcap/Small cap/Microcap IT space rather than the Largecap IT space.

Going through the listed companies, I found a company named Datamatics Global Services. Datamatics Global Services Ltd is a global provider of Information Technology (IT), Business Process Management (BPM) and Consulting services. The Company provides business aligned next-generation solutions to a wide range of industry verticals that help enterprises across the world overcome their business challenges and achieve operational efficiencies.

The company has been listed since 2005 at Rs. 220. In 2020, the stock made a low of Rs. 27. Since then, the stock had soared to Rs. 300 until August, 2021. It came onto my watch list in December, 2021. I started observing the price movement and quarterly numbers. I entered the stock in February, 2022 around Rs. 300. Since then the stock has been not been performing price wise. There was growth in revenue as well as profitability in the quarterly results but still the price was not giving an upward move. It was still in the sideways trend on a monthly basis.

And then in April 2023, when the company declared a great result quarterly as well as yearly (as shown below), it gave a great upward move from Rs. 300 to Rs. 610 in June, 2023.



I held onto the stock since February, 2022 and holding till date.

They have given great guidance over FY24 numbers which is as follows:

ü  Full scale impact of price hike can be expected in FY24 which will help to maintain a stable and healthy margin profile. Price hikes of 5-30% have been taken. Supply side challenges are seen easing which help in maintaining margins same as this year. They have a healthy pipeline and will grow on the base of new customer acquisition. Headwinds seen in demand from US and Europe. Revenue growth in FY24 expected to be 14-15%. Same kind of deal wins expected in FY24.

ü  Targeted Acquisitions: Have initiated dialogues with several customers or prospects target companies. Looking to make acquisitions worth 20-50 million in FY24.

ü  Change in revenue mix led to better margin overall. The expansion of margins can be attributed to strong revenue growth, cost optimizations, reduced attrition and revenue conversions at higher price. 

 

Let’s hope that the Quarterly Numbers continue to perform well and this company eventually becomes a Midcap/Large Cap company over the ultra-long term Investment Horizon.

This is not a recommendation to buy whatsoever.

The stock is currently at Rs. 575 and still I see a better future for the stock.

Happy Investing!!!!!

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