This is the 9th post in our quarterly result update series for Q3FY21.
In this post, we’re sharing the latest updates of the stocks from our watchlist. Please don’t treat this as a buy recommendation. We find these businesses interesting and we may build position (or buy more of those that are already in our portfolio) in them in the future. The purpose of this post is to bring clarity to our understanding of the businesses we are tracking. We make our notes on the quarterly results and conference calls. Putting it up here makes it easier for us to refer them at a future date.
You can see the earlier updates here.
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Please click on the read more button for more details on each stock.
Intellect Design Arena
Intellect has had an excellent quarter with its first ever German deal and a first ever cloud subscription deal in USA. 9MFY20 was very good for Intellect with it scoring 20 deals in the year so far with 11 of them being big destiny deals. The company is now targeting to grow organically in the USA market with its SEEC platform and its data platform which is reportedly similar to Palantir. It remains to be seen whether the company will be able to maintain its growth momentum as the management has proposed or whether there will be any other headwinds that will put pressure on the company. Nonetheless, given the acceptance of the company’s products in all kinds of financial institutions worldwide and its high customer retention rate and accelerated implementation time for its projects, Intellect Design Arena remains a stock to watch out for in the financial software industry.
LTI has had a good Q3 with major deal wins including from Injazat which has a TCV of > $200 million. The management has also been perceptive in identifying offshoring and creating new operating and sales models as a good source for improving performance and bring in cost savings. It is also focused on the digital transformation theme and is confident that this will be the primary growth driver for the Indian IT industry in the next 4-5 years. LTI is also doing well to maintain its partnerships with industry leading platforms like AWS, Snowflake, and Google Cloud. It remains to be seen how the company will be able to sustain its growth momentum and the increased competition in the tech space. Nonetheless, given the company’s ever-increasing roster of marquee clients and its focus on driving growth from cloud & data products, L&T Infotech is a pivotal technology stock to watch out for.
Persistent had an excellent quarter with many deal wins resulting in a TCV of $302 million. It is also looking to double down on the industry partnerships as it is a growing source of income for PS and a new medium to source new customers. The company is also looking at possible acquisition opportunities particularly in Europe to reduce dependence on USA. It remains to be seen whether the company will be able to maintain its current momentum and whether its strategic acquisitions will prove to be as useful as projected. Nonetheless, given its fast rise in recent years and its big presence in North America & its various Alliances, Persistent Systems remains a key technology stock to watch out for.
Ramco Systems had a phenomenal quarter with large deal wins including one of >$10 million. It has also added another big USA customer and now accounts for 4 out of 5 ADAIR companies in USA. The management has repeatedly emphasized the importance of the SaaS model going forward for all of its verticals. The management remains confident of the demand going forward despite admitting to the lumpiness of revenues at the same time. It remains to be seen whether this earning momentum can carry on in the quarters to come and whether the company will be able to fulfill its promises of superior implementation times without any compromise on quality. The price has shot up a lot in a short time making the current valuation look very expensive at the moment. Nevertheless, Ramco Systems is one stock to watch out for in the IT product space.
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