Subex is a software/IT products company. Based in Bangalore, this innovator company offers products and services mainly to telecom service providers. This company pioneered the concept of ROC and implemented it successfully. For more info check, http://www.subex.com/
NUMBERS - THE LATEST
Market cap: 190 crores CMP on Day15 Mar2015: Rs 11 BV: 11 rs.(approx)
Revenue FY14: 340 CR Net profit FY14: (11 cr)loss FV: 10
POSITIVES - MULTIBAGGER POTENTIAL
1. Subex is a turn-around story. Last 2 quarter results are clear indication that the company is turning around.
2. Two tranches of FCCB conversion in the last 6 months indicates the confidence of the bond holders.
3. From a cash loss of around 9 crore in FY13; the company has done a cash profit of 46.99 CR in FY14 (check latest annual report)
4. In an interview to talkRA(in 2014), the CEO has indicated that Subex intends to become a USD 100 million revenue business with a operating margin of approx 25%; stock at current market cap is available very cheap.
NEGATIVES - POSSIBLE RISKS
1. Short term volatility(wild swings) in the stock price.
2. Inability of the marketing team to win as much new business as they anticipate.
INTERESTING INFO
1. The tagline of Subex2.0 as indicated in the latest AR is: Strong foundation, Sustainable growth; clearly indicates the top management confidence.
2. FY14 revenue break up: License & implementation(40%), Managed services(27%) and Support(33%)
3. Surjeet Singh, the current CEO of Subex was the CFO of Patni and played a significant role in its eventual buy out.
4. Even after the debacle the company experienced post its acquisition of Syndesis, the executive leadership, most notably, Vinod Kumar, Ashwin Chalapathy, Shankar Roddam, Ganesh and Sekharan stayed with the company.
MY TAKE
Subex is one of those rare successful indian software/IT product companies that developed original/patented products which have been adopted by large global clients across various countries. Subhash Menon, the founder and his core team truly deserve credit for this.
In the Subex1.0 version, the management did almost everything right in its first half, and then made a few mistakes(mainly wrongful/miscalculated acquisitions) in the second half. The stock price hit a life time high of 800 rs in 2007 and a life time low of 5 rs in 2013.
Now Subex2.0. The turnaround of this company has also been quite unique. The effort was admirably led by independent directors Sanjeev Aga and Anil Singhvi with full backing of the anchor investors(foreign) who held substantial stakes in the company. Selecting of Surjeet Singh as CEO was one of the masterstroke.
The most notable aspect in this entire journey is the loyalty and confidence of the 2nd level management of the company. Despite hardship and challenges, they stuck on with the company. Last but not the least, most of the clients stayed on with the company in spite of the uncertainity.
Depending on the magnitude of the turnaround, and successful implementation of strategy, this stock can go much much higher. Even by a conservative estimate, there is a potential of 400-500% profit from current levels.
A high potential multibagger!!
Disclosure: I own shares in Subex.
For personal advice and/or consultation; you can contact me via zorbayogi9@gmail.com
Important Note: Potential multibaggers are those stocks which have potential to give 200 - 1000% profits. Obviously such returns take time. Probably 2 - 3 years or more. Short term volatility is the reality of the stock market and that will always happen. Near term movements(upside and downside) are impossible to predict. Only invest funds that you will not need for the next 3 - 4 years. As long as you buy a stock for the right reasons and are convinced about the future prospects of the company, there is no need to worry if the share price goes down and stays down for a period of time after you buy; provided you have followed the cardinal stock market mantra BUY LOW AND SELL HIGH.
Very important note: The objective of this blog is to share knowledge and info about multibagger ideas/opportunities. Neither is this a trading website nor an analyst website nor a Buy/Sell call website. For stock market success, always do your home work, own analysis and make your own decisions.
NUMBERS - THE LATEST
Market cap: 190 crores CMP on Day15 Mar2015: Rs 11 BV: 11 rs.(approx)
Revenue FY14: 340 CR Net profit FY14: (11 cr)loss FV: 10
POSITIVES - MULTIBAGGER POTENTIAL
1. Subex is a turn-around story. Last 2 quarter results are clear indication that the company is turning around.
2. Two tranches of FCCB conversion in the last 6 months indicates the confidence of the bond holders.
3. From a cash loss of around 9 crore in FY13; the company has done a cash profit of 46.99 CR in FY14 (check latest annual report)
4. In an interview to talkRA(in 2014), the CEO has indicated that Subex intends to become a USD 100 million revenue business with a operating margin of approx 25%; stock at current market cap is available very cheap.
NEGATIVES - POSSIBLE RISKS
1. Short term volatility(wild swings) in the stock price.
2. Inability of the marketing team to win as much new business as they anticipate.
INTERESTING INFO
1. The tagline of Subex2.0 as indicated in the latest AR is: Strong foundation, Sustainable growth; clearly indicates the top management confidence.
2. FY14 revenue break up: License & implementation(40%), Managed services(27%) and Support(33%)
3. Surjeet Singh, the current CEO of Subex was the CFO of Patni and played a significant role in its eventual buy out.
4. Even after the debacle the company experienced post its acquisition of Syndesis, the executive leadership, most notably, Vinod Kumar, Ashwin Chalapathy, Shankar Roddam, Ganesh and Sekharan stayed with the company.
MY TAKE
Subex is one of those rare successful indian software/IT product companies that developed original/patented products which have been adopted by large global clients across various countries. Subhash Menon, the founder and his core team truly deserve credit for this.
In the Subex1.0 version, the management did almost everything right in its first half, and then made a few mistakes(mainly wrongful/miscalculated acquisitions) in the second half. The stock price hit a life time high of 800 rs in 2007 and a life time low of 5 rs in 2013.
Now Subex2.0. The turnaround of this company has also been quite unique. The effort was admirably led by independent directors Sanjeev Aga and Anil Singhvi with full backing of the anchor investors(foreign) who held substantial stakes in the company. Selecting of Surjeet Singh as CEO was one of the masterstroke.
The most notable aspect in this entire journey is the loyalty and confidence of the 2nd level management of the company. Despite hardship and challenges, they stuck on with the company. Last but not the least, most of the clients stayed on with the company in spite of the uncertainity.
Depending on the magnitude of the turnaround, and successful implementation of strategy, this stock can go much much higher. Even by a conservative estimate, there is a potential of 400-500% profit from current levels.
A high potential multibagger!!
Disclosure: I own shares in Subex.
For personal advice and/or consultation; you can contact me via zorbayogi9@gmail.com
Important Note: Potential multibaggers are those stocks which have potential to give 200 - 1000% profits. Obviously such returns take time. Probably 2 - 3 years or more. Short term volatility is the reality of the stock market and that will always happen. Near term movements(upside and downside) are impossible to predict. Only invest funds that you will not need for the next 3 - 4 years. As long as you buy a stock for the right reasons and are convinced about the future prospects of the company, there is no need to worry if the share price goes down and stays down for a period of time after you buy; provided you have followed the cardinal stock market mantra BUY LOW AND SELL HIGH.
Very important note: The objective of this blog is to share knowledge and info about multibagger ideas/opportunities. Neither is this a trading website nor an analyst website nor a Buy/Sell call website. For stock market success, always do your home work, own analysis and make your own decisions.
Looks like the Lion is back
ReplyDeleteI was taking a break.
DeleteHope to be more active this year :-)
Cheers!!
Please provide ur fresh view on FSL....Though my waiting time is 2 years ...I have little fear on its performance in the past 4 months..Looks it is not performing well ....Any road blocks u see ..share ur current view..
ReplyDeleteFirstsource is still a potential multibagger. Absolutely nothing wrong with it.
DeleteIdeal time for a multibagger is 2 - 3 years. Sometime even longer. The objective of a multibagger is to get 100 - 500% profit (at least)
As long as you have bought a good quality company, at a good price, no need to worry.
Checking weekly/monthly/quarterly price movements will never be helpful.
Best Regards!!
I have Trigyn ..how long shld i hold this ...the stock price crashed for no reason ..any expcted rate in 2016
ReplyDeletefsl and subex also holding
ReplyDeleteFirstsource is a gr8 quality company.
DeleteA sure multibagger. Only a matter of patience.
Best Regards!!
sir u didt reply for trigyn
DeleteNIL promoters holding pls clarify and texmo can be added at cmp as it has reduced from 18 (your reco) to 10 today
ReplyDeleteGood question about SHP, Parth!!
DeleteThe promoters own almost nothing and they are mostly irrelevant to the future growth of the company.
After the Syndesis acquisition debacle, their FCCB holders ended up as the largest shareholders. One of them is NML, subsidiary of Elliot and another is QVT capital. There are a couple more.
These investors along with the independent directors affected the turn-around.
After the debacle and stock crash, all other FIIs, DIIs and HNIs including RJ dumped Subex.
In the recent SHP, I see a Vishanji Dedhia. Sounds like an NRI HNI.
Future is most definitely bright. Just got to see how effective the turnaround will be; and how high the stock will go over the next 2 - 3 years.
Best Regards!!
Sir, please share your views on your previous recommendation basant agro?
ReplyDeleteHi Raj,
DeleteIf you post your question on the Basant agro blog page, I will consider responding to it.
RegardS!!
I am looking for this stock long time purpose sit
DeletePlease tell ur view on Texmo pipes..Currently holding stocks @18 ..I'm good to wait 2 years...Shall I average it at CMP or just hold...Please suggest...Any thing going wrong with this script??
ReplyDeleteDear Zorba,
ReplyDeleteYou have always picked wonderful stocks in the past and almost all of them have given wonderful returns. Thank you for that.
Subex also is a very very interesting pick. Overall it looks very promising and should give decent return if turn around goes as per expectations. However I have two issues with this stock.
1. Debt of Rs. 690 crores is extremely high for a company with market cap of 190 crore. Even if business does very well, it will take lot of time to get rid of debt. And if things go bad, it might become sub 1 rupee stock in no time.
2. Promoter holding is just 0.57% which is a dangerous situation to be in, I mean if promoters don't have any faith in company why should anyone else have. I noticed that in one of the comment you have explained it. But, if there are new investors on the board who are steering the company, then they should make sure that they get listed as promoters.
Please share your view on these points.
Regards,
Sachin
My friend, It is all a matter of perspective, view points and approach.
DeleteIf my approach were to be negative, I could have responded by saying,
Sachin, If you feel that Subex will go to 1 rupee, then u should not buy this stock (btw, if it goes to 1 rupee I will buy 2 lakh shares minimum)
How ever, as I think that Subex will go much much much higher, I will continue to hold my stock TIGHT. And will also buy more/accumulate on dips. Two years from now, we will know who is right.
In my next message, you will me positive approach response :-)
Regards!!
Zorba sir,
DeleteI am not doubting your analysis or approach, in fact I am really amazed looking at how you pick stocks and how most of them have performed so well.
I am a newbie to market and learning to pick good stocks.
This is the reason I was asking for your views on these two points.
Thanks!!
Dear Sachin,
DeleteYour questions are logical and relevant. How ever the way you have presented them makes it sound very negative and pessimistic. That is still okay with me, as it much better than some silly questions that people ask, like, Why is this stock going down ? and Why is that stock not going up ?
Let us first discuss the debt of 700 crore (approx). This debt was not taken by the company last year or the year before that. It is important to understand the history of that debt.
In 2007 Subex bought a Canadian company Syndesis, for USD 165 million in cash. Approx 800 crore. That was the undoing of the company. They ended up raising USD 180 million through FCCB route. That acquisition turned out to be a big debacle and almost sunk the company.
Don't forget that the market cap of the company around those time was 12,000 - 14,000 crore.
After that a lot of water has flown under the bridge. The company has displayed a remarkable and appreciable turn-around.
In the last 6 - 12 months, some of the investors/FCCB bond holders have been converting their debt into equity at reasonable terms which demonstrates their confidence on the company turn around.
Under today's circumstance, though 700 crore debt sounds large, it is not that big a risk compared to the future potential and prospects of the company.
Hope this answer, most(if not all) questions about the debt.
Best Regards!!
Coming to your 2nd question,
DeleteThe top investors/stock owners in Subex are mainly VC/hedge fund/PE kind of investors. And the objective of these companies is to invest in a company, and make huge profits. Most of them are foreign companies, and they invest in 60 - 80 companies across the world.
Now why would they want to become promoters of any company ? That is neither their objective nor desire. Also, it does not make sense.
That is the precise reason that they have backed up the independent directors completely to turn around the company.
And so far, the independent directors have done a fabulous job with the help and support of the top and middle management of the company.
This is a unique case in the indian stock market.
So 3 cheers to the independent directors, the investors, company top and middle management.
This company will go gr8 guns over the next 2 - 3 years. And I have no hesitation what so ever in holding this company stock and sitting tight.
CheerS!!
Final response on this topic:
DeleteYou should always buy stock in a company, only when you have done enough home work, and are fully convinced about its future prospects based on rational analysis and assessment.
If you are not convinced, then there are 4000+ companies in the stock market.
Decision should always be yours.
Good luck :-)
Thank you for such a detailed explanation.
DeleteHope to learn much more about investing in stock markets from you :-)
Thanks,
Sachin
Welcome, Sachin.
DeleteFeel free to ask questions, when ever you have any :-)
Kind Regards!!
Bought some shares today in small quantity. Will try to add more in future. :)
DeleteSir,
ReplyDeleteCan you comment on Trigyn Tech? Is it still a hold?
Regards,
Rahul
Rahul,
DeleteIf you post your question on the Trigyn Tech blog page, I will consider responding to it.
RegardS!!
Hello
ReplyDeleteGood to see you blogging again .
West Coast Papers , Nalco , Amrutanjan can become Multibaggers from here !!
Any views on them ??
Hi Rahul,
DeleteAs there are over 4000 stocks in the indian stock market, at any point in time, there could be 30 - 40 potential multibaggers. And for obvious reasons, I do not want to keep them all on my radar.
How ever it is not so important how many potential multibaggers you find or discover. What is important is, what you do with them. In other words "How much profits can you maximize with a potential multibagger" :-)
I would rather have 2 potential multibaggers and make 400-500% in each one of them, rather than having 5 - 6 and ending up making 20, 30, 40% in them.
Currently my top 2 are Subex and Firstsource.
About the companies you mentioned, I have no idea.
If you have done enough/adequate home work on them and believe that they will become potential multibaggers, than you should make a decision whether you want to own them.
Best Regards!!
Hello sir
ReplyDeleteI accidentally came to this blog, u r doing a great job, god bless u.
I am a medico near Ooty, I tried stocks in 2000 when I was an intern, invested part of my stipend, went dormant for 15 yrs, now my stock have grown tall can't believe it.
Now its second entry for me, will follow you.
With regards
Dr sasi
Gr8 to hear from you, Dr Sasi.
DeleteIf you pick the right companies, buy the stocks at a cheap price, and then go dormant for 5/10/15 years, the kind of profits u can make is amazing. It will be gr8 to hear which stocks u picked (at what price) and how high they went after 15 years.
By the way, if you make the right decisions(and few mistakes); stock market is a gr8 place to make loads of money. How ever, if you have a proper plan and implement it with discipline, you can also make a fortune here in 10 - 20 years.
All the very best for ur 2nd entry!!
Kind Regards!!
Dear zobra...
ReplyDeleteI really think lyco internet limited is potential multibagger..look how company is growing rapidly....need ur expertview....we have whatspp group for all expert financial analyst...would be happy if u join us .. 9535802307
Mr zobra..
ReplyDeleteThere is another multibagger datson lab..
Chunk of big positive new...fii is very interested in this stock + pharma future is good in india...+ fccb conversion ensures faith in company....wat u say about datson lab....waiting for ur honest view
Hats off, Dr Ravi.
ReplyDeleteEicher turned out to be your best stock pick. In a span of 15 years, you multiplied your money 800 times (approx); and that makes it a profit of approx 70,000%; truly mind boggling.
Can you try and imagine what would have happened if you had bought approx 1000 shares of Eicher at that time ?
Finally at what price did you sell Eicher?
CheerS!!
Thanks for complements sir, but it was fluke i cant take credit for it.
ReplyDeleteSir I am dr sasi not Ravi
With stipend money that was max I can spare for investment sir
Haven't sold anything sir still holding all
Bought subex and basant agro sir, with your guidance hope can go greater heights
With regards
Dr sasi
Dr Sasi from Ooty :-)
DeleteIt is all a matter of perspective and view points.
Your view point is, mainly because you were not very sure of what you were doing 15 years ago, had no clear objectives, u term it as a fluke.
How ever if you see the result/consequence after 15 years, some of your stocks(not all) turned out to be gr8 stock picks(stock selection); you had bought them at a very very cheap price, and you held on to them for a long long term.
Unknowingly, you did a lot of right things. And hence got success.
With u gr8 success in ur 2nd term as well in the stock market.
Best Regards!!
Dear Yogi sir,
ReplyDeleteI am really impressed after reading your site....( i had posted on trigyn few days back). Sankhya Infotech.. What are your thoughts ?
Regards,
Rahul
Dear Rahul,
DeleteResponses for Trigyn, you will find on the Trigyn blog page.
About Sankhya infotech, I have no idea. So cannot comment.
If you have at least 5 (very specific) reasons as to why you think the stock can be a potential multibagger than I can take a deeper look.
Best Regards!!
Ok sir. Thanks. I really appreciate your professionalism. No spoon feeding. "Do homework and come to class". That's your concept. Thumbs up. :-))
DeleteRegards.
AS YOU SAY HOLD STOCKS FOR NEXT 2-3 YEARS BUT RECESSION IS ABOUT TO START .ALL YOUR STOCKS ARE EXPORT OREINTED THAN ALSO THEY FALL V.BAD BEFORE THE FED MEETING. PLEASE HELP ME GET INTO WHAT YOU MEAN TO SAY BY 2-3 YEARS AND
ReplyDeleteHOW SITUATION DIFFRENT FROM DECEMBER 2007.......???
Dear Param,
DeleteFirstly, why do you type ALL CAPS (in capital letters).
Secondly my philosophy on long term investment is simple.
1. Identify a good quality company (available at a cheap price)
2. Buy as much as you can.
3. Wait for 2, 3, 5 years to make huge profits.
This is like planting a sapling and waiting for it to grow as a plant.
Thirdly, I do not make comments on recessions, US fed decisions, past situations and the future. You need to find someone else to answer those questions.
Next time, if you type in ALL CAPS you will not get any response.
Regards!!
no caps sorry,
ReplyDeleteThanks for the compliment sir
ReplyDeleteDr sasi
Dr Sasi,
DeleteWhat is your email ID?
There is a potential multibagger opportunity about which I wanted to discuss with you. Specifically about their products, as it co-insides with your line of work, and you will be able to perhaps provide a perspective.
Alternately you can write to me at zorbayogi9@gmail.com
Regards!!
This time you gave possible risks for the stock(subex). Though you don't want to guess the market and I respect your principles, but how to know that the stock is done with your ''sell high'' parameter and its time to sell.......
ReplyDeleteone more thing I was holding texmo since you reccomendedbut when it fell more than 50% than I thought something is wrong. how to know its just market correction not a fundamental weakness....
regards.....
When to sell?? is always a big question, especially when it comes to multibaggers. There is no easy answer to that.
DeleteWhether I buy 1000 shares or 10,000 shares; I always view it as if I am buying the entire business.
So if one has bought an entire business, when would be the best time to sell??
Here are 3 options/possibilities:
1. When ever you are happy that you have maximized your profit from that business.
2. When ever some one offers a ridiculous amount to buy that business(happens quite often in the stock market)
3. When you feel that the potential of this business is over, and there is no more bright future.
Good luck!!
Sir,what are your views on the fccb outstanding of the company. There will be a substantial increase in the paid up equity of the company which can drag the eps down significantly .
ReplyDeleteHi Rajesh, What you say is correct. FCCB conversion is a reality with Subex and therefore the EPS will go down.
DeleteHow ever, the stock at current valuation is deeply deeply undervalued. So from current levels, there is a huge potential to make fantastic profits.
Regards!!
Sir, today I have entered @14.30 in Subex Ltd having 3000 shares. After reading your informative views about this company and various comments on queries being asked. I am looking to hold positions for long term about 2-3 years. Can we expect that company will do well in future?
ReplyDeleteThanks for exposing subex to me sir, its because of u I went for it.
ReplyDeleteSorry sir, just now saw ur message to me on this board, will mail to you.
Welcome, sasi kumar.
Deletebest regards!
Sir please your view upon subex after Q2 2015 result .... Can I still hold ..also your view upon orchid chemical.. SCI Ltd. Kopran... Tera software thanks
ReplyDeleteHappy new year sir
ReplyDeleteSubex news good management win award 2015... Fccb conversation continue manage so debt free so long-term Investor for patient. Mai last 9 month buy every price accumulation... 10 to 15 buy buy
Enjoy, Sir!
DeleteHi Zorba,
ReplyDeleteWhat's your take on Country Club ?
Thanks,
Chetan
Hi sir
ReplyDeleteAfter long time
Subex is paying me for the patient holding, thank u, god bless
welcome, sasi kumar.
DeleteHappy minting :-)
sirji, it made 52 week low...can we add more?
ReplyDeleteHi Zorba,
ReplyDeleteHope all well.
I have studied meticulously on subex, but have some doubts which i will present as question, pls clarify if you have any idea abt it.
But one thing you mentioned that they have NML capital as their major shareholder but in the shareholding pattern i cannot find that name. Are they holding under somebody else name ? bcoz i can find QVT, Barclays and Angel but not NML cap.
any idea abt it ?
secondly when they convert the FCCB into shares their debt will auto converted to shares. Correct me if i am wrong, is it correct, after conversion they do not have to pay the interest and their debt will reduce ?
Thanks
NM
Subex last quarter result excellent profit so eps up hua rerating hoga
ReplyDeleteHello Sir,
ReplyDeleteWhat is your current view on subex trading around 9rs.
Zorba Sir
ReplyDeleteI am serving in the Indian Army and unfortunately invested in opto circuit approx 6000 shares @ Rs.30/-. What should I do now. I can hold for 2-3 yrs. OR suggest me any other good stock to recover my losses and hard earn money
Regards
Sub S'S Chauhan
9167555406
Subex buy for long term multibagger hai targets 27-42-51-(70-80) buy hold tight
ReplyDeleteZorba sir I have bought some shares of nag arjuna oil refinery last year at 5. The stock is still range bound. If you do track it can u give me some advice about whether I should hold or sell. Thank u.
ReplyDeleteChange new CEO
ReplyDelete