@Balki where did you find out about Marcellus little champs buying shares in Expleo? The list you have posted doesn’t mention it like you said.
Marcellus is very prompt in disclosing their exits and additions via their monthly newsletters and they have said nothing about Expleo yet. In fact in their last webinar they spke about how they don’t understand the tech space well enough to invest in it.
Request you to please share the source of this information.
Dear Vineet Jain ,as I mentioned the quantity of purchase & details are not in public domain. You can check with any investor holding little champs PMS & find Expleo solutions in it .
Dear jitt007 , the only way, is to get the details of holding of little champs from PMS holders. All I can say is certain MNC stocks like Expleo , Saint Gobain sekurit ,Multibase , find their place of pride in little champs.
Dear Balki
I am closely watching this thread looks like today is the highest ever volume traded, something is happening any idea when the results are ?
Thanks
Yes, this seems like some institution decided to buy in the open market. Not sure if this is backed by any specific event, but it has broken out of important historical levels. May be a good trading bet anyway, as there is still margin of safety at the preset price.
No date announced for results, right?
IT sector is in cusp of growth & Expleo solutions is the cheapest MNC available on the Indian bourses ,that too in the IT sector.
As I mentioned, consolidated EPS for the next 2 years ended March 22 & 23 are estimated in the vicinity of ₹75 & ₹125 , though perhaps the actuals may be higher.
So my personal view is that u can anticipate a price of ₹1300 to ₹1500 by Q2 Results in November.
How did you come up with the figure of eps of 75 and 125 that is quite a bold and big prediction?
I do agree with the share price can go higher considering a very less free float combined with recent increase in both FII and DII in march quarter and todays high volume .
Expleo doesn’t provide forward looking statements or guidance, but one has to decipher from the words , uttered from the lips of the MD in the concall .
During past 5 years , from latter half of 2016 , which can be called a down cycle, though there was no growth in topline, bottom line was respectable with annual consolidated EPS of around₹40 . During the worst period of impact hit , this EPS was ₹26.
Now IT sector is in cusp of growth, perhaps for the next 5 years on digital play , which is a compulsion rather than an option.order pipeline is healthy with a mega deal win from an MNC , the largest win ever in history, requiring recruitment of 150 specialists, exclusively for this deal, requiring a completion period of2 years. More such mega deal wins are anticipated.
Under Expleo branding umbrella, the new MNC promoters with substantial financial muscle are focused on ramping growth. Double digit growth will kick in from Q1
On a small capital base , with one or two mega deal wins ,the consolidated EPS can substantially increase due to high tide effect, though I have chosen conservative estimates.
Digitalization is on double digit growth with good margins, contours of QA have rapidly changed , IOT, AI ,RPA cloud have created paradigm shift in business outlook.
Views expressed are my personal views, based on concalls & observation of events.
Hi Balki…just loved your understanding of the company. The concall was private or is available in public domain?
Dear hcpl ,all concalls of Expleo are in public domain.u can google for the transcript of the concall & assimilate the contents. Listen to every word from the lips of the MD & you decipher future events.
Hi @Balki, really appreciate your patience with Expleo over the years. I am evaluating it for a fresh entry at these levels. I must admit that I got interested when you mentioned that Marcellus LCP clients own Expleo too, and the valuations seem to suggest good margin of safety.
However, I don’t have a very good understanding of the IT space, and especially the QA space, both of which I am trying to read about. I was hoping you could throw some more light on the above statement you made. How have the contours of QA changed and what is the extent of the paradigm shift in business outlook? Are there any estimates on whether the addressable market has changed significantly, or how the opportunity size has evolved for companies like Expleo. Also in large order dependent businesses, what do you feel are the strengths (moat) for Expleo to be competitive, as many of the large IT firms are also into / getting into testing solutions. I understand that the management is top notch and Expleo has some good tech development, but at the end of the day how will they beat the big fish with larger financial muscle?
Apologies of the questions sound naive but I didn’t get concrete answers from the rest of the thread, so thought I’d rather ask directly. Thanks!
With Digitalization contours of QA have changed . traditional testing is less & moving over to Agile or digital testing. Around 25 percent of budget of software development is earmarked for testing.
Testing occurs at midpoint to the end of software development or at the beginning to end as co development. Rather than QA , Now clients prefer consultancy as managed service solutions, encompassing the full spectrum, rather than piece meal work.
Expleo is also executing order for Non BFSI clients, a first ,in Robotic process automation. Suffice it to say that several segments of revenue have suddenly opened up , like , cloud computing, Data analytics , security surveillance, Artificial intelligence application, 5 G & IOT , block chain etc
So ,It’s my view that Expleo is likely to report a consolidated EPS of ₹18 for Q4. For Q1 & Q2 , Consolidated EPS will shift to ₹20 plus territory, giving estimated EPS of ₹24 & ₹26 for Q1 & Q2.
For the year ended March 21 & 22 , Consolidated EPS is anticipated in the vicinity of ₹80 & ₹120 respectively on double digit growth & surge in IT sector,on digitalization push.
Expleo has already bagged a mega deal , the biggest ever, requiring exclusive recruitment of 150 specialists for this work over a 2 year period & more such mega deal wins are anticipated as per MD in last concall .
Disclaimer & Disclosure ,Iam heavily invested in Expleo solutions. It’s a high risk high return MNC small cap subject to extreme volatility. But being an MNC & next 4 to 5 years seems favourable for IT sector is a plus point. My view is that Expleo should breach it’s life time high of ₹1296 in 2016 & test ₹1500 levels by Q2 results in November 21. My views only . please do your due diligence before investing in Expleo solutions. U can also go thru the top 100 shareholders list ,in which Nihar Nilekani,son of Infosys director, Nandan Nilekani & Expleo Director ,Rajiv kucchal , hold over 50,000 shares. Marcellus little champs has bought Expleo recently from ₹450 upward,s in individual demat accounts of Little champ ,PMS holders by saurabh Mukerjhea .
Dear Vineet Jain, you have asked plenty of questions, for which I will give brief & specific reply
IT consists of software development & testing. The world, Both BFSI & non BFSI segments run on software & typically 20 to 25 percent of software development budget goes to testing.
Software testing is expected to grow at a CAGR rate of 13 percent to USD 60 billion in 2026 from USD 40 billion in 2019 . There is space for all & the pie is shared by big & small as well as system integrator companies.
Contours of QA are rapidly changing from manual testing to digital testing & Agile , even though certain clients insist on manual testing. For Expleo ,Manual or traditional testing constitute 20 percent & balance is in digital mode.
Iam , not a software engineer, but have taken pains to study the Business of Expleo . QA ( Quality assurance is to make the system effective & efficient. Typically automated testing is done to save time & money & include performance testing, fixing bugs , security of the system. QA also includes technology transfer, validation, documentation, product quality assurance & improving product lifecycle by updates. Typically u have CMMI ( capability maturity model integrated) from level 1 to 5 & TMM ( Testing maturity model) from 1 to 5.
Now ,Expleo gets large projects, which continues over 2 years as well as piece meal work , which gets over in a quarter or two. Similarly repeat clients as well as new clients are mined .
Testing is usually outsourced , though certain system integrators have their own dedicated testing units . The most here, is that all end customers , prefer , testing & validation by an independent dedicated specialist, than testing & validation by the developer of the software.
Paradigm shift, implies new applications like 5G & internet of things, Artificial intelligence application, Robotic process automation, Cloud computing,Data analytics, block chain application for crypto currency, security surveillance etc ,all of which requires QA & validation & improving product lifecycle by updates as well as cutting costs.
Hope I could answer at least a few of your queries.U can get to the web site of Expleo for moats & updates.
Dear Vineet Jain
I would kindly request you to go through the written transcript of the last concall on the net .u can use Google to get transcript of Concall of Expleo solutions. Assimilate the words uttered from the lips of the MD & u get insight.
Now due to project based income there is volatility in quarterly profits , though the company has been able to generate an annual consolidated EPS of ₹40,
for the past 5 years . The least EPS was ₹24 during brexit hit & forex losses.
Again, past 5 years have not shown topline growth due to subdued demand, SQS group unwilling to take risk & content with running the company, the easy way & paying ₹24 dividend every year.
Now with take over of SQS Germany, by Assystem services GmbH Germany , unlisted entity fully owned by Assystem SA France & PE investor ,Ardian , France & creation of Expleo brand umbrella for ramping growth ,in both BFSI & non BFSI segment,a phase of growth has begun.
Further, extreme volatility in quarterly profits have been ironed out due to judicious mix of long term & short term projects.
I think, I have provided most exhaustive coverage on Expleo solutions .Any specific doubts u are welcome to clarify.
Thank you @Balki
Admire your in depth research. You have clearly put in many hours to understand the business and it is a huge help to all of us - especially to me as Idon;t have a software background either.
Drfinitely seems like an exciting opportunity with decent margin of safety. I will dig deeper and come back with specific questions.
The point is the software testing market ( both BFSI & non BFSI) is estimated at USD 60 billion by 2026.
Expleo solutions is focused on doubling turnover over the coming 3 years ,as per statement made by MD in last concall. Double digit growth should kick in Q1 & all the rest have been explained in previous posts.
Just listened to the Q3FY21 call and I am optimistic about the future. Q4FY21 results dates are announced but no mention of any dividend.
Can someone help me to understand this group structure in a graphical format ?
Parent - Subsidiaries - Sister Concerns etc… and their holding % pattern ?
Expleo results on May 20 . Expleo & it’s unlisted entities is focused on doubling revenues over the coming 3 years. Therefore dividend or buyback is unlikely & cash will be utilised for ramping growth.
Expleo solutions ( the listed entity) is owned by the unlisted Assystem technologies GmbH , Germany, which in turn is owned by Assystem SA France & French PE investor Ardian.
The unlisted entity Expleo ( which is erstwhile SQS Germany) derives 50 percent turnover from BFSI segment & balance 50 percent from Non BFSI segment.
As for the listed entity, Expleo solutions, almost 100 percent of revenue comes from BFSI segment, but for the first time, the company is executing deals in Robotic process automation in Non BFSI segment & more such deals are likely.
Thanks Balki. In the call there is reference to other entities based in India which are treated as sister concerns, I am not clear about these. Can you please help me to complete this diagram ?
And also where is this Expleo (unlisted fit into this ? )
A link that shows the history
