Sharekhan's research report on Intellect Design Arena
Stock trades at reasonable valuation of 16x/12x its FY2022E/FY2023E earnings. Favorable industry tailwinds, anticipated improving financial metrics to aid re-rating of stock. The company focuses on increasing license-linked revenues, which is expected to improve profitability. Company turned net cash positive of Rs. 124 crore in Q3FY2021 from net debt of Rs. 102 crore in Q3FY2020. Huge addressable market, strong traction for mature products, rising annuity revenue, and improving margins would help company to clock revenue and earnings CAGR of 14% and 27% respectively over FY2021-23E.
Outlook
We initiate coverage on Intellect Design with a Buy rating, with a PT of Rs. 500 as it is well-poised to gain market share given its future-ready products with flexible modules.
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