Shares of this micro-cap IT stock engaged in providing IT and integrated services, including smart city solutions, and e-governance surged 18 percent on Friday after the company reported a 20 percent YoY increase in revenue and strong revenue growth in its latest quarterly results.
Price Movement
On Friday, Tera Software Ltd.‘s share price hit an intra-day high of Rs.120 per share, marking a 17.67 percent increase from its prior close of Rs.101.98 apiece. Over the past year, the stock has delivered impressive returns of more than 150 percent.
Financial Performance
The uptrend in the stock price was driven by robust financial results, with increases in net profits and revenue from operations.
With a market capitalization of Rs.147 crores, Tera Software Ltd. reported consolidated revenue of Rs.25.34 crores for the quarter ending September 2024. This marks a 20 percent increase from Rs.21.17 crores in Q2 FY24 and a 2 percent rise from Rs.24.46 crores in Q1 FY25.
The company saw a remarkable improvement in net profit to Rs.1.37 crores in Q2 FY25, up from a net loss of Rs.0.49 crores in Q2 FY24. On a quarter-on-quarter basis, PAT decreased 59 percent from Rs.3.34 crores in Q1 FY25.
Tera Software Ltd. has shown remarkable growth in liquidity and earnings ratios. Its price-to-earnings ratio stands at 21.5, significantly lower than the industry average of 40.3. The company showcases a strong current ratio of 2.00 and a debt-to-equity ratio of 0.25, reflecting solid liquidity.
In terms of return ratios, the Return on Capital Employed (ROCE) and Return on Equity (ROE) stand at 7.79 percent and 3.78 percent, respectively.
Business Segments
Tera Software operates across three key business segments: Integrated Solutions, Technical Division, and Projects Division. For the quarter ended Q2 FY25, the company generated approximately 68 percent of its revenue from technical services and 32 percent from its projects division, showcasing its strong focus on delivering specialized IT solutions.
Recent Orders
Paschimanchal Vidyut Vitran Nigam Limited (PVVNL) Project: Tera Software has secured a Spot Billing System Project from PVVNL valued at Rs.169.66 crore, focusing on door-to-door meter reading and bill collection for 28,22,226 consumers in Meerut, Saharanpur, and Noida over three years.
Dakshinanchal Vidyut Vitran Nigam Ltd. (DVVNL) Project: The company has also been awarded a Spot Billing System Project by DVVNL for Rs.166.32 crore, which includes similar services for 27,87,780 consumers in Agra and Aligarh for a three-year period.
Shareholding Pattern
According to the September 2024 shareholding pattern, Tera Software Ltd. is primarily owned by retail investors, who hold 52.46 percent of the stake, while the promoters hold 47.53 percent of the company’s shares.
About the Company
TSL is a professional service provider in the IT industry, known for executing Build-Operate-Transfer (BOT) projects across 22 states in India. The company operates over 3,000 outlets nationwide and focuses on delivering hardware and software services through long-term contracts primarily with government organizations. .
Written by – Siddesh S Raskar
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