Amid a volatile market, a small-cap IT stock has managed to catch the attention of investors with a sharp surge in its share price.
Nucleus Software Exports had been languishing in CY22, losing nearly 32% of its value during the year. However, things took a different turn when the company announced its Q3 FY23 results.
On February 14, the stock was locked at the 20% upper circuit at ₹480 apiece after the company posted a whopping 375% surge in its consolidated net profit at ₹38 crore for the October-December quarter as compared to ₹8 crore in the corresponding quarter of last year.
During the July-September quarter, it clocked a net profit of ₹11 crore, indicating a rise of 245% QoQ.
The revenue from operations during the quarter came in healthy at ₹169 crore, an increase of 38.5% compared to ₹122 crore in Q3FY22. Sequentially, the revenues were up by 30%.
The company managed to cap its operating expenses at ₹121 crore during the quarter, which helped its operating profit jump by 700% YoY to ₹48 crore from ₹6 crore in Q3FY22. The EBITDA margin expanded by nearly 2300 bps to 28% and 1900 bps sequentially.
The EPS (Earnings Per Share) improved to ₹14.32 from ₹2.77 in the year ago quarter. At the prevailing price, the stock trades at a price-to-earnings multiple of 15.9x, which is much lower compared to the industry P/E of 51.4x.
Nucleus Software Exports has a market capitalization of ₹1,247.8 crore. The company provides lending and transaction banking products to the global financial services industry.
The company's software today powers the operations of more than 200 financial institutions in over 50 countries, with digital lending and transaction banking solutions across multiple lines of business. Its products facilitate more than 26 million transactions per day, managing over $200 billion in loans, and enable more than 300,000 daily users, according to media reports.
On the financial ratio front, the company has zero debt, Trendlyne data showed, while it had an ROE and RoCE of 8.97% and 11.61%, respectively, in FY22. The company spends most of its earnings on dividend payments as the payout ratio stands at 42%. In the past one year, the company declared an equity dividend amounting to ₹7 apiece.
Taking the current market price, the dividend yield stands at 1.51%. In addition, the stock is trading at 2.6 times of its book value.
Meanwhile, YTD, the stock has increased from around ₹384.65 to the current level of ₹480.15, showing a 25% rise. In the last three years, the stock delivered a return of nearly 60% as compared to the Nifty Smallcap 100, which gave a return of 52.41% in the same period.
The stock hit a 52-week high of Rs. 499.8 apiece on February 16, 2022, and a low of Rs. 351.4 on June 21, 2022, implying that it is currently trading 33% above its 52-week low and is just 5.81% away from its one-year high.
The promoter owns 73.3% of the shares in the company, while foreign portfolio investors own 2.6%. Regular shareholders own 24.1%.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.