Looking for a growth stock? Pay attention to Sqs India Bfsi
05-05-2016 • About Sqs India Bfsi (
$SQSBFSI) • By InTwits
Pay attention to Sqs India Bfsi as a growth stock. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Sqs India Bfsi showed fast growth in the last financial year. Sqs India Bfsi's revenue surged on 23.4% in FY2016. The growth also happened in EBITDA of 16.8% for the same period.
If we look for the longer period Sqs India Bfsi showed fast revenue growth of 17.8% from FY2013 to FY2016 annually. EBITDA surged on 17.1% from FY2013 to FY2016 annually.
Sqs India Bfsi ($SQSBFSI) financials for the last 5 years
| mln. INR | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Revenue | 1,214 | 1,614 | 1,944 | 2,142 | 2,642 |
|---|
| Revenue growth, % | | 32.9% | 20.4% | 10.1% | 23.4% |
|---|
| SG&A, % | | | | | |
|---|
| EBITDA | 129 | 303 | 399 | 416 | 486 |
|---|
| EBITDA growth, % | | 135.2% | 31.6% | 4.3% | 16.8% |
|---|
| EBITDA margin, % | 10.6% | 18.8% | 20.5% | 19.4% | 18.4% |
|---|
| Net Income | 114 | 194 | 300 | 216 | 369 |
|---|
| Net Income margin, % | 9.37% | 12.0% | 15.4% | 10.1% | 14.0% |
|---|
| |
| CAPEX | 35 | 251 | 25 | 28 | 31 |
|---|
| CAPEX/Revenue, % | 2.86% | 15.5% | 1.30% | 1.31% | 1.19% |
|---|
| Debt | 0 | 143 | 119 | 96 | 0 |
|---|
| Cash | 235 | 293 | 395 | 555 | 854 |
|---|
| Net Debt/EBITDA | -1.8x | -0.5x | -0.7x | -1.1x | -1.8x |
|---|
| |
| ROIC, % | 12.1% | 27.0% | 29.4% | 30.6% | 39.9% |
|---|
| ROE, % | 15.6% | 23.7% | 30.6% | 20.6% | 35.0% |
|---|
Profitability and return on investment
There was no change in EBITDA margin in FY2016, it stayed constant at 10.4%. If we look for the longer period EBITDA margin decreased slightly on 0.400 pp from 18.8% in FY2013 to 18.4% in FY2016.
Sqs India Bfsi shows attractive ROIC at 39.9% for the last 12 months which assumes stable development model. During the last three years it surged - it was 27.0% in FY2013. It's average level of ROIC for the last three years was 33.3%.
The company showed fast Net Income margin growth of 3.90 pp from 10.1% to 14% in FY2016. If we look for the longer period Net Income margin surged on 2 pp from 12% in FY2013 to 14% in FY2016.
Sqs India Bfsi operates at ROE of 35.0%. It's average ROE for the last three years was 28.7%.
Capital expenditures (CAPEX)
In FY2016 the company had CAPEX/Revenue of 1.19%. The company's CAPEX/Revenue dropped on 14.3 pp from 15.5% in FY2013 to 1.19% in FY2016. It's average level of CAPEX/Revenue for the last three years was 1.27%.
Leverage (Debt)
Having such a fast growth profile the company keeps negative net debt at -1.8x Net Debt/EBITDA. In the last 3 years Sqs India Bfsi showed fast leverage growth of 1.26x from -0.50x in FY2013 to -1.76x in FY2016.
Valuation vs. comparable companies
The market closed today at 20.4x EV/EBITDA for Sqs India Bfsi which is 17% lower than 24.5x IT Consulting & Software peer group avearge calculated on the basis of 102 companies. At the end of trading day today Sqs India Bfsi traded at 29.1x P/E which is 83.6% higher than 15.9x IT Consulting & Software peer group avearge calculated on the basis of 7 companies.
Peers in IT Consulting & Software
Below you can find Sqs India Bfsi benchmarking vs. other companies in IT Consulting & Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Ramco Systems ($RAMCOSYS) | 9.3% | 7.3% | 9.9% | 37.0% | |
| Cyient ($CYIENT) | | 20.6% | 17.8% | 24.0% | 13.1% |
| Empower India ($EMPOWER) | -3.7% | -13.2% | -32.6% | 23.9% | |
| Hexaware Technologies ($HEXAWARE) | 34.3% | 17.3% | 13.0% | 21.0% | |
| Tech Mahindra ($TECHM) | 6.8% | 25.2% | 174.0% | 20.1% | |
| |
|---|
| Median (21 companies) | 16.5% | 20.4% | 14.0% | 8.1% | 13.1% |
|---|
| Sqs India Bfsi ($SQSBFSI) | | 32.9% | 20.4% | 10.1% | 23.4% |
Top companies by Gross margin, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top |
|---|
| Tata Consultancy Services ($TCS) | | | 47.4% | 42.4% | 43.9% |
| Infosys ($INFY) | 41.3% | 98.1% | 35.9% | 38.3% | 37.4% |
| Mindtree ($MINDTREE) | 31.5% | 36.2% | | 34.8% | 32.4% |
| Wipro ($WIPRO) | 29.2% | 30.4% | 32.0% | 31.6% | 30.4% |
| |
|---|
| Median (4 companies) | 32.7% | 36.2% | 35.9% | 36.6% | 34.9% |
|---|
Top companies by EBITDA margin, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Oracle Financial Services Software ($OFSS) | 35.3% | 35.2% | 37.4% | 39.7% | |
| Infosys ($INFY) | 31.6% | 27.9% | 26.3% | 27.1% | 27.1% |
| Tata Consultancy Services ($TCS) | 29.5% | 28.6% | 30.7% | 26.1% | 28.2% |
| Wipro ($WIPRO) | 19.1% | 20.9% | 22.4% | 22.3% | 21.1% |
| Mindtree ($MINDTREE) | 15.1% | 19.8% | 20.6% | 20.3% | 17.7% |
| |
|---|
| Median (25 companies) | 15.1% | 16.5% | 18.3% | 12.3% | 17.7% |
|---|
| Sqs India Bfsi ($SQSBFSI) | 10.6% | 18.8% | 20.5% | 19.4% | 18.4% |
Top companies by CAPEX/Revenue, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Ramco Systems ($RAMCOSYS) | | 22.1% | 15.3% | 12.4% | |
| Niit Technologies ($NIITTECH) | 5.9% | 4.6% | 6.1% | 7.9% | |
| Financial Technologies (India) ($FINANTECH) | 8.6% | 11.2% | | 6.5% | |
| Mindtree ($MINDTREE) | 2.5% | 4.5% | 5.0% | 5.6% | 3.4% |
| Tech Mahindra ($TECHM) | 5.4% | 2.6% | 5.0% | 5.0% | |
| |
|---|
| Median (20 companies) | 3.9% | 3.2% | 3.5% | 3.1% | 3.4% |
|---|
| Sqs India Bfsi ($SQSBFSI) | 2.9% | 15.5% | 1.3% | 1.3% | 1.2% |
Top companies by ROIC, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Tata Consultancy Services ($TCS) | 48.6% | 48.4% | 50.2% | 40.5% | 44.4% |
| Hexaware Technologies ($HEXAWARE) | 33.5% | 39.2% | 34.7% | 35.7% | |
| Mindtree ($MINDTREE) | 24.9% | 34.6% | 36.2% | 32.0% | 28.9% |
| Tech Mahindra ($TECHM) | 15.4% | 20.1% | 43.0% | 29.7% | |
| Cmc ($CMC) | 26.2% | 33.2% | 35.3% | 26.0% | |
| |
|---|
| Median (30 companies) | 19.6% | 20.4% | 22.9% | 20.6% | 20.5% |
|---|
| Sqs India Bfsi ($SQSBFSI) | 12.1% | 27.0% | 29.4% | 30.6% | 39.9% |
Top companies by Net Debt / EBITDA
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| 3I Infotech ($3IINFOTECH) | 8.5x | 20.3x | 27.7x | 14.7x | |
| Ramco Systems ($RAMCOSYS) | 8.8x | | 27.6x | 4.2x | |
| Onward Technologies ($ONWARDTEC) | 2.4x | 2.2x | 4.1x | 1.9x | |
| Kpit Technologies ($KPIT) | 0.3x | 0.5x | 0.7x | 0.4x | -0.3x |
| Mphasis ($MPHASIS) | -0.1x | 0.2x | | 0.2x | |
| |
|---|
| Median (23 companies) | -0.0x | -0.2x | -0.2x | -0.2x | -0.3x |
|---|
| Sqs India Bfsi ($SQSBFSI) | -1.8x | -0.5x | -0.7x | -1.1x | -1.8x |
