Expleo Solutions (Earlier: SQS India BFSI) - A niche Small Cap Value Pick

Scheme of Amalgamation is effective from 01.04.2023. Consequently the authorised share capital stands increased from Rs 12 cr to Rs 32.7Cr.

1b75645a-ba67-4b35-85b2-f4a71c9c2f6c.pdf (bseindia.com)

This means the equity capital of the company will go up by over 2.5 times. The question is will the newly merged entities have the bottomline to sustain earnings or will it be diluted?

The # of share count will go up to 1.55 Cr, from 1 Cr. So Mcap will go up by ~ 55%. Not 3x

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With this amalgamation the promoter will hild 71.05% of the co.Lets hope the new entities will add value to justify the dilution

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Can you please explain why the stock has not receahed the 5000 plus levels?

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It hasn’t even reached half of it. When you hold a large stake you are blinded in love and utter whatever comes to your mind.

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Finally mgmt is considering for dividend in next meeting for result on 25-May…

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Expecting to be a really positive numbers compared to last quarter and last year quater as billing is done in euro and usd which has appreciated against INR.

Further dividend agenda can drive the future for the company as this was discussed lot in conference call

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Disappointing to see 10X growth in intangibles to Rs 24 crs which they have to write off.
Dont know what their policy on intangible write off is concerned and whether this intangible came from the unlisted cos.

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They had a one time settlement last quarter which makes it look inflated; without that there is sequential QOQ growth as well; YOY already looks good. Admitted slowdown but guided for mid teens growth and doubling of revenues in 3 years along with non linear growth to increase the employee count from 4k to 10k .

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BPEA (Baring Private Equity Asia) to buy Expleo Solution controlling stake as reported in todays ET.

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If this deal materialise then can be uptick in valuation.
Lets hope

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The profit is not getting converted into cash (increasing receivables, reasons?). Valuation on basis of just PE may be fallacious.

Disc: Not invested. Tracking.

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Kindly refer to conference call most of the trade receivable balances are recovered in may itself.

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Guys I’m holding this share since 400 levels and have held onto it due to the merger news ,i think a lot is priced in for the company and valuation wise it trades at peak valuation according to me or the upside is not the worth the risk.

The only reason I’m holding on the shares are the because of the merger and will be getting a significant number of shares and i believe when such a event happens there is generally a small or big rally which no can predict.

Any idea when the merger might happen i can see the assets have been pooled in but the new ratio of stocks has not happened yet .

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Sir,

If there is a demerger, a shareholder can get the shares of the demerged entity. But if there is a merger, how is it possible to get shares?

Please clarify.

In the case of merger, the existing shares will be delisted and you will be allotted shares of resulting entity after merging.

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I too have similar understanding. I have attached my data analysis for last 10 years that compares sales, CFO and PAT.
Need help from finance professionals to decipher and conclude

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Promoter holding increased in June quarter from 56 to approx 71 percent ? Was it due to merger ?

Yes - refer to Allotment to Promoter Group

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