Both the companies have one theme in common - “Digitalization”… Both are into the new… Happiest minds is focused on digital transformation, cloud infrastructure, big data, Robotic Process automation, security and acquiring those companies while Expleo Solutions is focused on testing those “new” things along with the traditional testing.
When it comes to testing, there are traditional testing methods and there is new age testing methods, which is primarily led by specialists testing and automation testing and AI led testing. These segments are growing at a decent pace. As per Gartner reports, specialized testing or the new age testing servicing is growing at almost 13% CAGR (would likely reach 16-20% in a few years time), while the traditional testing is growing at around 1.5% to 2% CAGR. That comes around 15% CAGR for now (expecting 20-23% CAGR in 2-3 years). Their testing focuses on “Digital”…around Mobile, AI-based automation, User experience (UX) and other cognitive capabilities like Robotics Process Automation (RPA).
Arrival of Mr. Rajesh Krishnamurthy (ex-infoscion like me) as the new CEO. He was an integral part of engineering, quality and consulting services across Europe and Expleo wants to retain their base in Europe after having a drop of around 6% last year from 68 to 62% and wants to expand in US (currently just 3% presence). So its a bit of betting on the jockey as well. Possibility of a buyback after Q4 results as per MD in latest concall. Double digit growth expected in Q1.
Trading at cheaper valuations to its peers by a decent margin. Corrected almost 30% from the top since the last few months. The management intends to double revenues in 3 years to 100 million USD , with an estimated net profit of ₹110-120 Cr …that would give the company an EPS of around ₹110-120 and share price would go up north. But I would assume this is probably improbable at this stage.
Even though the company appears to have a niche in testing, there is nothing stopping from the big players gaining more market share. Would be more of different customer base that the biggies and this company can acquire.
It is an aggressive digital services company. Strong promoter with industry Veteran, Ashok Soota (trusting the jockey again). As per their MD in one of the interviews, they are expecting 21-23% CAGR for FY22. Valuations are definitely high at the moment…so is the ROCE % (43%) and ROE % (83%) . Paying premium price because of that. Needs to be closely observed as the ROCE % and ROE % might not be sustainable.
I’ve been doing swing trading mostly using technical analysis and I spend at least 30 mins every working day to monitor the stocks. That’s why ok to take bit higher risks.
You caught me with my idea of Trend investing. As soon as I feel the company doesn’t perform well to my expectations, I would cut it out and then bring in a new stock. No emotions whatsoever.