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INVESTMENT INSIGHTS

Check Before You Invest : Watson Software Ltd

BSE: 516090 NSE: ISIN: INE950B01016
  |   Sector:  IT & ITES   |   Industry:  IT - Software

Snapshot

Q.1 Which industry/sub-sector does Watson Software Ltd belong to?
Watson Software Ltd belongs to the IT & ITES sector, operating specifically within the IT - Software segment.
Q.2 Is Watson Software Ltd a good quality company?
Watson Software Ltd is a quality company, based on a 10 year financial track record.
Q.3 Is Watson Software Ltd undervalued or overvalued?
Watson Software Ltd appears Undervalued, as its key valuation ratios are below with their past averages.
Q.4 Is Watson Software Ltd a good buy now?
Watson Software 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 Watson Software Ltd?
Watson Software Ltd revenue growth is -28.6% for FY-2007 , which is above its 5 year CAGR of -62.7% , indicating faster growth.
Q.2 Gross Profit margin of Watson Software Ltd?
Watson Software Ltd Gross profit margin which is the profit after deduction of direct costs, is -7.5% for FY-2007 , which is below its 5 year median of -2.2% , indicating decreasing margins.
Q.3 Operating Profit Margin of Watson Software Ltd?
Watson Software Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is -28.31% for FY-2007 , which is below its 5 year median of -2.21% indicating decreasing margins.
Q.4 Net Profit Margin of Watson Software Ltd?
Watson Software Ltd Net Profit Margin is -7.53% for FY-2007 , is below with its 5 year median of -2.21%, indicating decreasing margins.
Current Level Historic Median
Gross Profit Margin -7.5 -2.2
Operating Profit Margin -28.31 -2.21
Net Profit Margin -7.53 -2.21
Q.5 Return on Asset of Watson Software Ltd?
Watson Software Ltd Return on Asset is -0.07(x), which is in line with its 5 year historical median of -0.07(x), indicating stable asset utilization efficiency.
Q.6 Return on Equity (ROE) of Watson Software Ltd?
Watson Software Ltd Return on equity is -0.09% for FY-2007 , which is in line with its historical median of -0.09%, indicating the business is making similar use of its shareholders capital.
Q.7 Return on capital employed (ROCE) of Watson Software Ltd?
Watson Software Ltd Return on capital employed is -0.08% for FY-2007 , which is above its estimated weighted average cost of capital(WACC) %, indicating value creation.
Q.8 Cash conversion cycle of Watson Software Ltd?
Watson Software Ltd Cash conversion cycle is 15632 , above its historical median of 198 , indicating deteriorated working capital management. However, you need to compare this with its peers in the industry.
Current Level Historic Median
Asset Turnover 0.01 0.02
ROE -0.09 -0.09
ROCE -0.08 -0.08
Cash Conversion Cycle 15632 198
Q.9 Debt to Equity ratio of Watson Software Ltd?
Watson Software Ltd Debt-to-Equity ratio is 0.06 , 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 Watson Software Ltd?
Watson Software Ltd Debt to cash flow from operations is 58.04 , 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 Watson Software Ltd?
Promoters hold 21.14% of the Watson Software Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

Q.1 Revenue growth of Watson Software Ltd vs industry peers?
Watson Software Ltd revenue CAGR is -62.74% , compared to the industry median CAGR of 2.48% , indicating stable growth and maintaining its market share.
Profit Metrics
Current Level Industry Median
Revenue 0.1 23.6
Gross Profit - 1.9
Operating Profit -0 1.2
Net Profit - 0.8
Operating Efficiency
Current Level Industry Median
Asset Turnover 0.01 0.45
ROE -0.09 4.09
ROCE -0.08 6.4
Cash Conversion Cycle 15631.65 36

Valuation & price assessment

Q.1 Stock return of Watson Software 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 - - - -
Q.3 Valuation ratios of Watson Software Ltd vs historical?
The current P/E is similar 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 - 0.00 22.96
Price to Book 0.27 0.27 2.61
Price to Sales 216.83 216.83 4.40
EV to EBITDA - 0.00 17.20

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