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INVESTMENT INSIGHTS

Check Before You Invest : Covance Softsol Ltd

BSE: 544361 NSE: ISIN: INE0R8101016
  |   Sector:  IT & ITES   |   Industry:  IT - Software

Snapshot

Q.1 Which industry/sub-sector does Covance Softsol Ltd belong to?
Covance Softsol Ltd belongs to the IT & ITES sector, operating specifically within the IT - Software segment.
Q.2 Is Covance Softsol Ltd a good quality company?
Covance Softsol Ltd is a quality company, based on a 10 year financial track record.
Q.3 Is Covance Softsol Ltd undervalued or overvalued?
Covance Softsol Ltd appears Overvalued, as its key valuation ratios are above with their past averages.
Q.4 Is Covance Softsol Ltd a good buy now?
Covance Softsol Ltd is not a good buy now, based on weak price trend analysis suggesting prices may fall. However, you need to check its quality and valuation before making a decision

Performance Analysis

Q.1 Revenue growth of Covance Softsol Ltd?
Covance Softsol Ltd revenue growth is 156.7% for FY-2025 , which is above its 5 year CAGR of 0% , indicating faster growth.
Q.2 Gross Profit margin of Covance Softsol Ltd?
Covance Softsol Ltd Gross profit margin which is the profit after deduction of direct costs, is 46.7% for FY-2025 , which is above its 5 year median of 5.1% , indicating increasing margins.
Q.3 Operating Profit Margin of Covance Softsol Ltd?
Covance Softsol Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 38.37% for FY-2025 , which is above its 5 year median of -8.96% indicating increasing margins.
Q.4 Net Profit Margin of Covance Softsol Ltd?
Covance Softsol Ltd Net Profit Margin is 36.14% for FY-2025 , is above with its 5 year median of 2.61%, indicating increasing margins.
Current Level Historic Median
Gross Profit Margin 46.7 5.1
Operating Profit Margin 38.37 -8.96
Net Profit Margin 36.14 2.61
Q.5 Return on Asset of Covance Softsol Ltd?
Covance Softsol Ltd Return on Asset is 7.11(x), which is above its 5 year historical median of 0.25(x), indicating improved asset utilization efficiency.
Q.6 Return on Equity (ROE) of Covance Softsol Ltd?
Covance Softsol Ltd Return on equity is 20.13% for FY-2025 , which is above its historical median of 1.13%, indicating the business is making better use of its shareholders capital.
Q.7 Return on capital employed (ROCE) of Covance Softsol Ltd?
Covance Softsol Ltd Return on capital employed is 13.25% for FY-2025 , which is below its estimated weighted average cost of capital(WACC) 14%, indicating value preservation.
Q.8 Cash conversion cycle of Covance Softsol Ltd?
Covance Softsol Ltd Cash conversion cycle is 164 , above its historical median of 0 , indicating deteriorated working capital management. However, you need to compare this with its peers in the industry.
Current Level Historic Median
Asset Turnover 0.2 0.05
ROE 20.13 1.13
ROCE 13.25 2.47
Cash Conversion Cycle 164 -
Q.9 Debt to Equity ratio of Covance Softsol Ltd?
Covance Softsol Ltd Debt-to-Equity ratio is 0.95 , which is above with the industry average of 0.01 , indicating higher debt levels in the industry.
Q.10 Debt to cash flow from operations of Covance Softsol Ltd?
Covance Softsol Ltd Debt to cash flow from operations is -12.55 , which is at a unhealthy level, indicating the business is not able to service its debt comfortably.

Ownership & governance

Q.1 Promoter shareholding and pledge status of Covance Softsol Ltd?
Promoters hold 71.68% of the Covance Softsol Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

Q.1 Revenue growth of Covance Softsol Ltd vs industry peers?
Covance Softsol Ltd revenue CAGR is 0.00% , compared to the industry median CAGR of 2.48% , indicating slower growth and losing its market share.
Profit Metrics
Current Level Industry Median
Revenue 28.4 23.6
Gross Profit 13.1 1.9
Operating Profit 11 1.2
Net Profit 10 0.8
Operating Efficiency
Current Level Industry Median
Asset Turnover 0.2 0.45
ROE 20.13 4.09
ROCE 13.25 6.4
Cash Conversion Cycle 164.02 36

Valuation & price assessment

Q.1 Stock return of Covance Softsol Ltd over the last decade?
Over the last 9 years, the stock has delivered a CAGR of 0% based on the current price.
Q.2 What return has the stock given over the last decade?
9Y 5Y 3Y 1Y
Share Price - - - 2948%
Q.3 Valuation ratios of Covance Softsol Ltd vs historical?
The current P/E is higher that its historical median.
Q.4 How do the current valuation ratios measure up against the historic numbers and the current industry numbers?
Valuation Ratios Current Historic Median Industry Median
Price to Earnings 13.01 8.17 22.96
Price to Book 3.44 2.02 2.61
Price to Sales 5.87 3.66 4.40
EV to EBITDA 9.18 5.59 17.20

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