IT Stock Below Rs 100: High Promoter Holding Stock Has 116% Potential Upside, Scrip At Upper Circuit; BUY?

With a market valuation of Rs 709 Cr, Digispice Technologies is a micro-cap IT firm. For its varied customers, which include B2B players as well as those who live in rural areas, the firm offers a variety of financial services. Through its digital platform, DigiSpice Technologies (Digispice) connects the underbanked individuals to the formal sector through a nationwide network of 1.5 million businesses. In addition to remittances and the marketing of third-party loan products, it now handles around Rs 55 billion in Micro-ATM (MATM) and Aadhar-Enabled Payment Systems (AePS) transactions, which account for 17.2% of all such off-us transactions in India.

On Friday, the shares of Digispice Technologies ended at a 2% upper circuit limit at Rs 30.39 apiece. This came after the broking firm Ventura Securities Limited witnessed a 116% potential upside on the stock from the current market price to a target level of Rs 65 per share in a target period of 2 years. The IT stock made a 52-week-high of Rs 52.70 on (01-Jul-2024) and a 52-week-low of Rs 23.25 on (27-Mar-2024).

Digispice Technologies Share Price Target

"We initiate with a BUY for a price target of INR 65 (55.1X FY27 P/E) over the next 24 months representing an upside of 141% of the CMP of INR 27.0. Primary risks to the business are poor collections and consequent deterioration in asset quality," said the research analysts of Ventura Securities in a note.

"Digispice consistently generates stable cash flows with minimal capex. Consequently, we have applied the DCF methodology to calculate the intrinsic value for FY27. Using the DCF methodology, we have arrived at the FY27 final valuation of INR 65 per share (55.1X FY27 P/E)," the brokerage further added.

Bull Case & Bear Case Scenario of Digispice Technologies

Ventura Securities has prepared likely Bull and Bear case scenarios for the FY27 price, based on revenue growth & margin expansion of Digispice Technologies which are as follows:

Bull Case: The revenue of the company is expected to grow at a CAGR of 9.5% for FY24FY27E & the margin is expected to expand by approximately 250bps from 38.5% to 41.0% for FY24-FY27E.

Bear Case: The revenue of the company is expected to grow at a CAGR of 5.3% for FY24FY27E & the margin is expected to expand by approximately 170bps from 38.5% to 40.2% for FY24-FY27E.

Digispice Technologies Financials

On a consolidated basis, the company reported revenue from operations of Rs 108.86 crore in the September 2024 quarter dropping 3.36% from Rs. 112.64 crore in the September 2023 quarter. From Rs. 2.61 crore in Q2FY24 to Rs. 7.40 crore in Q2FY25, the company's net loss went up by 183.77%. EBITDA plummeted 84.14% from Rs. 13.49 crore in September 2023 to Rs. 2.14 crore in September 2024 period.

Disclaimer

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