Neither inflation nor recession concerns this stock. It flies way above any stock market storm. The mid-July 2008 stock price is within touching distance of the 52-week high. The Price to Earnings Ratio is just 21.12 even in the face of meteoric rise in market capitalization. The Earnings per Share are 4.31. Sales have grown by more than 25% over the last five years. The Gross Margin has not only topped 75% during this period, but inches ever upwards as well. The Interest Coverage is more than 45, relatively high Debt to Equity notwithstanding.
The company writes code for insurance and financial services companies. Such specialized software has become the mainstay of any company that has to service large numbers of customers in real-time and at affordable costs. The vital nature of the business is one reason for this stock to shine so brightly in an otherwise lackluster market place. Business management excellence is the other performance driver.
The stock holds five important lessons for anyone who dreams of making it big in the business world:
1. The management focuses on close collaboration with clients. It makes cash by becoming indispensable to the companies and banks it serves.
2. Innovation in this company does not end with its software. The management is creative in crafting strategy and staying ahead of the competition.
3. The management team is an expert at fishing for the best of its peers. The company has both the cash and the intellectual resources to land great catches in terms of acquisitions.
4. The company leverages global operations to the hilt. It has strong presences both in the markets of mature economies, and extensive back-office operations in the new growth centers of India.
5. The management has the courage of conviction to buy back stocks when unfounded rumors buffet prices.
The Chief Executive Officer funds and runs eminent social responsibility projects in his home country, and from his own resources. We can learn from such impeccable ethics as well.
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