Trigyn Technologies Ltd (TTL), earlier it was known as
Leading Edge Systems Ltd is a leading IT consulting and solutions provider
company. It has deployed more than 1500 resources over the last 30 years across
the world. TTL provides IT Staffing, Consulting, Solutions, Systems
Integration, Digital Marketing and other services to its clients. TTL offers
its valuable services to clients of repute in domains of International
Organizations, Non-Governmental Organizations, State and Local Governments, and
the Commercial sector including Financial Services, Pharmaceutical,
Manufacturing and Distribution. TTL offers a comprehensive range of services
including Offshore Development and Maintenance Solution & Services
associated with Enterprise4 Content Management, Enterprise Mobility and
Emerging Technologies), Staff Augmentation, Managed services and Business
Process Outsourcing. These services include System Integration Services,
Application Development and Maintenance, Reengineering, 24X7 Support Services,
Financial Products Support.
BSE Code - 517562
NSE Code - TRIGYN
Bloomberg - LES IN C
Equity Capital - (Rs cr) 29.7
Face Value (Rs) - 10.0
Equity Share O/S (crs) - 2.97
Market Cap (Rs crs) - 344.7
Book Value (Rs) - 99.1
52 Week High - 140.6
52 Week Low - 46.6
Investment Rationale:
Focused on dealing with diversified services: TTL is an
innovative solutions and service provider and has been in the business of
system integration for close to three decades. TTL has professionals on the
board at location in the U.S., Europe, India, Africa and the Far East. TTL
provides IT Staffing, Solutions, Systems Integration, Software Development and
Maintenance, Data-Driven Digital Marketing and other services to its clients.
Emerging segments could provide good business opportunity to TTL going forward.
Associated with strong partners and allied: TTL has
established partnership with the leading technology companies like Microsoft,
EMC2, TIBCO® and IBM. TTL continues to strengthen its relationships with its
partners and looks to build new partnerships with emerging technology companies
in areas of enterprise content management, mobility, information security and
those with a niche focus on vertical domains such as Government, financial
services, e-governance, healthcare, and engineering, procurement and
construction. TTL could focus on forming partnership with emerging software
solution vendors who wish to establish base in the India sub-continent and tap
the potential in niche areas. TTL has served international organizations across
19 countries for over ten years.
High growth on emerging segments: TTL has coverage of wide
range of verticals like Digital marketing, Enterprise Application, custom
application, Government services, Enterprise mobile solutions etc. This helps
to improve the productivity of the business and helps to empower its client.
Digital space is the key revenue driver for TTL. The company has developed
strong resources and specializing applications. TTL helps their clients to
improve ecommerce, helping them to manage their resources, also help to manage
their infrastructure. Its robust business structure and focus on emerging
verticals could provide edge to TTL over other IT services company.
Improving margins and financial matrix TTL has been fairly
successful in registering decent growth over a period of time.
Its consolidated sales CAGR during FY12 to FY16 is an
impressive 21.6% (at Rs 625 crore), while the profit after tax (PAT) during the
same period has grown by 35% (to Rs 48.7 crore).
TTL attained consistent margin improvement in spite of
adverse economic conditions and slow demand in the industry. EBITDA margin has
grown from 5.80% to 10% in the span of 5 years (From FY12 to FYFY16). Net
profit margin has improved from 5.4% to 6.2% for the same period.
Strong financials and higher return ratio makes the TTL
attractive. Return on equity (ROE) and Return on capital employed (ROCE) has
been stable at 13.2% and 21.8% in FY16.
We expect TTL could maintain RoE and RoCE at a range of ~14
and ~23% in FY17E and FY18E respectively. These ratios suggest that the
financials of the company are getting stronger over the period of time.
Cash per share as per FY16 numbers stood at ~Rs 26, which is
more than 22% of CMP. Total debtors as of March 31, 2016 stood at Rs 142crore
(23% of sales) against Rs 154 crore (31.2% of sales) of March 31, 2015.
Debtors Sales Outstanding (DSO) decreased from 114 days to
83 days in FY16.
View and Valuation:
TTL is focused on emerging business as
per the customers’ demand over the last three decades and company does not
depend on industry or vertical specific business. Apart of this, company could
get good opportunity in digital and online marketing business application
because of high demand. Apart of this, Governments central as well as state are
working on “Digital India”, “Skill India” and “Make in India”. TTL could get
good opportunity from government’s initiatives going forward.
TTL has cleaned up
its books (high cost acquisitions done at the time of tech boom) by providing
write downs and now proposing to write of accumulated losses against share
premium. Its business is on good traction and the recent uncertainty in the IT
space has so far had limited impact on its working. . Its Q1FY17 results bear
this out. Its financial metrics are attractive and hence we think it can be a
good value cum growth play.
We recommend investors could buy the stock at the
CMP and add on dips to Rs. 93-102
At the CMP of Rs 128.00 the stock trades at 9.60x of FY16
EPS
Technical Aspect
On seeing Weekly chart, Trigyn technology looks positive and any downside movement will be buying opportunity in it. It made a high of 3250 in 2000 there after it crashed vertically to 6.15 and now trading around 128.
It looks positive and could test 140--150 mark. Three consecutive closes + weekly close above 150 will see sharp upside rally in it.
Chances are bright for upside move in and could test 300--500 mark in near term, as price seems bottom out around 6.15 levels now we’ll expect positive momentum will remain continue. Volumes are active in stock at lower levels which indicate strength in it and bottom fisher will grab this opportunity.
MACD and RSI too are in positive zone whereas trading above its 21DEMA and below 55DEMA is at 110.50 and 107.50 respectively
Recommendation:
Traders can buy and accumulate
Buy Trigyn Technology at CMP and add more quantity in panic for the initial target of 300--500+ marks.
