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Friday, February 3, 2012

Zylog Systems Ltd:-Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

Scripscan:Zylog Systems Ltd

Story:Zylog System (also called ZSL) is in IT business for last 15 years and has a good list of clientele in its portfolio. For a 15 year old company in IT, Zylog has not performed very well. However, its performance has been good for last 5 years. Current revenue at 916 crore is pretty good if you consider the rate at which it’s growing. It went IPO in 2007.Zylog system has seen excellent growth in last 5 years at a CAGR of 30%. The profit has grown by 33% CAGR in last 5 years. One concern is its zero growth from 2009 to 2010. However, the company grew well in FY2011. The FY2011 revenue is Rs 916 crore.Net profit margin, even though it has come down from 14% to 11%, it is still good as most of the IT firms have faced margin pressure because of slowdown in US and Europe. Current and quick ratios are fine. Most of the IT companies have robust current ratio and quick ratio.Debt-Equity ratio is higher for a software company. Usually most of the IT companies generate enough cash to run the operation of the company. However, interest coverage ratio, which shows company’s ability to pay its debtors, is excellent at 13. We need not worry about the company’s ability to pay the creditors.PEG ratio shows enough room for appreciation. The company is growing at 30% CAGR for last 5 years and he PE is still in single digits. This could be a bargain at this price for a horizon of 3-5 years.

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