Stock in Action - Intellect Design Arena Ltd

Stock in Action - Intellect Design Arena Ltd
Stock in Action - Intellect Design Arena Ltd

Fundamental & Technical Analysis
by Tanushree Jaiswal Last Updated: Feb 27, 2024 - 05:47 pm 179 Views
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Intellect Design Arena Stock Movement of Day

Intellect Design Arena Ltd Intraday Analysis

1. In terms of technicals, relative strength index (RSI) of Intellect Design stock stands at 57.3, signaling it's trading neither in overbought nor in oversold zone. 
2. Intellect Design stock has one-year beta of 0.91, indicating some low volatility during period. 
3. Stock is trading higher than 10 day, 20 days, 50 days, 100 days, 150 days & 200 day moving averages.

Intellect Design Arena Ltd Strengths

1. In last 9 years, only 4.78 % trading sessions saw intraday gains higher than 5 % .
2. Company has become debt free for first time since last 5 years. (Source: Consolidated Financials)
3. Company has spent less than 1% of its operating revenues towards interest expenses & 51.29% towards employee cost in year ending 31 Mar, 2023. (Source: Consolidated Financials)
4. Decrease in Cash from Investing    Company has used Rs 177.39 cr for investing activities which is YoY decrease of 55.56%. (Source: Consolidated Financials)

Probable Rationale Behind Intellect Design Arena Ltd Surge

Intellect Design Arena, leading financial technology company, has recently witnessed significant surge in its stock price. This surge can be attributed to various strategic initiatives, partnerships, & technological advancements undertaken by company. Here's comprehensive analysis of factors driving this surge:

Innovative Initiatives
1. Intellect Design Arena's establishment of innovation centre at Gift City, Gandhinagar, aimed at offering global fintech services, demonstrates company's commitment to innovation & expansion.
2. Integration of fintech research engineers with eight global hub cities signifies Intellect's endeavor to leverage global talent & expertise to drive technological innovation in financial sector.

Strategic Partnerships
1. Deployment of Intellect's Corporate Treasury Exchange (CTX) platform by Société Générale, prominent European financial services group, has significantly bolstered company's market presence.
2. CTX's live implementation in French banking sector promises enhanced cash pooling, real-time liquidity optimization, & automated investment of excess cash, further solidifying Intellect's position as provider of cutting-edge financial solutions.

Technological Advancements
1. launch of Intellect's first principles technology suite, eMACH.ai, for technology-savvy bankers in Middle East & Africa, underscores company's commitment to driving digital transformation in banking sector.
2. eMACH.ai empowers financial institutions with comprehensive suite of tools, including microservices, APIs, & events, enabling them to build future-ready technology solutions & enhance customer experiences.

Market Penetration
1. Intellect's strategic wins & partnerships, such as recent order from Indian Bank for its eMACH.ai powered cash management system, highlight company's growing footprint in Indian BFSI industry.
2. Company's Omni-channel access, extensive coverage of payments, & comprehensive bill collections platform position it as preferred partner for banks seeking digital transformation.

Financial Performance

Period Q3 FY24 Q2 FY24 Q-o-Q Growth Q3 FY23 Y-o-Y Growth
Total Revenue 634.35 619.05 2.47% 546.92 15.99%
Selling/ General/ Admin Expenses Total 338.81 325.67 4.03% 297.15 14.02%
Depreciation/ Amortization 34.25 33.73 1.53% 31.05 10.30%
Total Operating Expense 537.67 530.92 1.27% 481.29 11.71%
Operating Income 96.68 88.13 9.70% 65.63 47.31%
Net Income Before Taxes 115.7 96.52 19.87% 84.4 37.09%
Net Income 84.31 70.44 19.69% 62.03 35.91%
Diluted Normalized EPS 6 5.03 19.28% 4.46 34.53%

1. Intellect Design Arena reported robust revenue growth in Q3FY24, driven by license & AMC revenues, although platform revenues exhibited weakness.
2. Company's strong funnel & significant deal wins underscore its promising growth trajectory & market potential.

Financial Analysis: Interpretation of Q3 FY24 Financial Metrics

Total Revenue
1. Q3 FY24 witnessed total revenue of ₹ 634 Cr, reflecting Q-o-Q growth of 2.47% & Y-o-Y growth of 15.99%.
2. Consistent growth in revenue indicates company's ability to generate higher income streams over time, signaling positive business performance & market demand for its products or services.

Selling/General/Admin Expenses (SG&A)
1. Total SG& expenses amounted to ₹339 Cr in Q3 FY24, with Q-o-Q growth of 4.03% & Y-o-Y growth of 14.02%.
2. While increase in SG& expenses may indicate higher operational costs, it's crucial to assess whether these expenses are proportionate to revenue growth & if they contribute to business expansion & efficiency.

Depreciation/Amortization
1. Depreciation & amortization expenses remained stable at ₹34 Cr, with marginal Q-o-Q growth of 1.53% & Y-o-Y growth of 10.30%.
2. Stable depreciation expenses suggest consistent asset utilization & management, which is essential for maintaining operational efficiency & profitability.

Total Operating Expense
1. Total operating expenses amounted to ₹538 Cr in Q3 FY24, reflecting Q-o-Q growth of 1.27% & Y-o-Y growth of 11.71%.
2. Marginal increase in operating expenses indicates prudent cost management strategies, ensuring that expenses remain in line with revenue growth & do not erode profitability.

Operating Income
1. Q3 FY24 reported operating income of ₹97 Cr, marking significant Q-o-Q growth of 9.70% & remarkable Y-o-Y growth of 47.31%.
2. Substantial increase in operating income signifies improved operational efficiency & profitability, driven by effective cost management & revenue growth initiatives.

Net Income Before Taxes
1. Net income before taxes stood at ₹116 Cr in Q3 FY24, reflecting robust Q-o-Q growth of 19.87% & substantial Y-o-Y growth of 37.09%.
2. Strong growth in net income before taxes indicates company's ability to generate higher profits, demonstrating favourable business conditions & effective financial management.

Net Income
1. Q3 FY24 reported net income of ₹84 Cr, with notable Q-o-Q growth of 19.69% & substantial Y-o-Y growth of 35.91%.
2. Significant increase in net income reflects improved profitability & shareholder value creation, reinforcing investor confidence in company's growth prospects.

Diluted Normalized EPS
1. Diluted normalized EPS for Q3 FY24 stood at ₹6, reflecting strong Q-o-Q growth of 19.28% & remarkable Y-o-Y growth of 34.53%.
2. Impressive growth in EPS indicates enhanced earnings per share, which is key metric for investors assessing company's financial performance & potential returns.

What Investor should do?

1. Investors should be encouraged by company's robust financial performance in Q3 FY24, characterized by strong revenue growth, improved profitability, & enhanced EPS.
2. Significant increase in operating income & net income underscores company's operational efficiency & effective cost management initiatives, which are crucial for sustainable growth.
3. Consistent revenue growth & profitability improvements reflect positively on company's business model & market positioning, making it attractive investment opportunity for investors seeking long-term value creation.

Cause of Immediate Surge

1. Intellect Design Arena's recent stock surge can be attributed to its relentless focus on innovation, strategic partnerships, technological advancements, & robust financial performance. 
2. Company's ability to leverage global talent, forge strategic alliances, & deliver cutting-edge solutions has garnered investor confidence, driving its stock price to new heights.

Conclusion

Intellect Design Arena's forward-looking approach, coupled with its strong market positioning & financial performance, bodes well for its future growth prospects & investor sentiment. As company continues to innovate & expand its footprint in global fintech landscape, it remains poised for sustained growth & value creation in long run.

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About the Author

Tanushree is a seasoned professional with 6 years of experience in the Fintech and Edtech industry.

Disclaimer

Investment/Trading in securities Market is subject to market risk, past performance is not a guarantee of future performance. The risk of loss in trading and investment in Securities markets including Equites and Derivatives can be substantial.
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