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Friday, February 19, 2010

Thinksoft Global Services Ltd:Buy/sell/hold,growth prospects and recomendation,news and results,target price and analysis,views and outlook

Penned the thinksoft note longtime ago but with concurrent somehow cudnt got it posted.Avoid thinksoft bigtime.

Scripscan:Thinksoft Global Services Ltd

Story:If am not mistaken these scrip has been a 5 bagger over the last few months thanks to blatant rigging by some bombay based operators.Operator activities are still to be seen no matter how bad or good the environment be.Consider Thinksoft Global Services Ltd, a testing services company focused on the Banking, Financial Services & Insurance (BFSI) vertical.Couple of bombay based operators are busy pushing the counter hard bigtime.Now a fall is inevitable and that would suggest that their accumulation has fizzled out and they have become active to exit the company.The company has high dependence on few clients with more than 90% of the revenues coming from top 10 clients. Top 10 clients contributed 92.66% in FY2009, 94.85% in FY2008, 96.99% in FY2007, 97.64% in FY2006 and 94.64% in FY2005. Top client contribution for FY2009 was 26%.The services of the company are part of the discretionary spend of any client. There has been a slump in the discretionary spend by clients all across verticals. While it seems to have bottomed out, how fast the discretionary spend will pick up is not clear.Thinksoft is focused on only one vertical i.e. BFSI. The vertical has seen a major impact due to the challenging economic environment and will remain very sensitive to fluid global economic environment.I would suggest investors to exit the counter and move on to better growth oriented companies where there are lot of safety and which are runned by great pedigrees.At present price of 500 rs its discounts the price by a mind boggling 39 times its trailing 09 earnings.A marketcap of over 450crs is no way justified for these company.Of the small software companies focused on BFSI space, Nucleus Software, a product company is trading at TTM PE of 13 times and Saksoft, a testing services cum product company (similar sized company in terms of revenues) is trading at TTM PE of 6 times. Nucleus Software would command a higher PE as it is product centric as against Thinksoft which is a services company.Avoid and exit thinksoft global and switch to a nucleus or a subex for better returns..

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