Purely risk vs reward. At current valuations if management manage to pull off what they plan to do over the next 3 years then the reward is huge. If they pull off just half what they promise the reward is still huge. And if they underperform then the downside is low. While OFS is obviously a safer bet a lot of the reward has already played out.
This is currently a clear mis pricing in my eyes and I’m attempting to take full advantage of it.
Will I put a huge percent of my networth here? no. But I am willing to part with approx 3 to 5 percent considering the risk reward factors since both the fundamental change and technical factors both seem to be aligning.
The fact it’s in a domain I do understand ie bfsi is a bonus. One of the few IT companies that, atleast for me, is easy to track due to them being in this one niche.
Management change, while being an MNC doesnt make them trustworthy automatically, have potential to lead the company in a positive direction too since historically SQS weren’t great capital allocators. Bonus is no debt and Free cash flow(though it went down off late due to increasing receivables which will need to keep an eye on but the situation over the last year makes that forgivable). Annual reports and management commentary seems positive too.
That being said If Q4 and Q1 aren’t up to par I will consider trimming/exiting my position.
Disc: Not a sebi advisor. Please do your own due diligence.