Exceptional performance from Intellect Design has lead to premium valuations; non linear growth trajectory is key attraction

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Intellect Design, is a BFSI focused software product company with technology edge in providing digital solutions. In the recent past it has invested heavily into improving the quality of its product and on sale and marketing which has lead to high revenues. The financial performance is dependent on license revenues which are lumpy in nature and therefore there is volatility in earnings. Valuations are on the higher side based on reported performance; however, management is confident of non linear growth given the thrust given on winning contracts in the developed world. Order visibility is good and higher share of annual maintenance charges will lead to annuity revenues and higher operating profit margins. We have a neutral weight rating given the risk return profile – 12-05-2021 Price: 707.00 Rating: Neutral Weight Recommendation: Hold

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