A very good IT company
Nagarro: And it is cheap and nice too.
Description
Nagarro SE, a digital engineering company, provides digital engineering and technology solutions in North America, Central Europe, rest of Europe, and internationally. The company was founded in 1996 and is based in Munich, Germany.
Insiders
44% of the shares are being held by insiders, is a great porcentage. They did not issue a lot of new stocks, so they have a good deal with the stockholders and they do not have cash doing nothing too. They said that they hope to grow more than the estimates.
Some metrics
The company has a Capex/Sales of less than 5%, it is too slow, that is good. It has a ROCE higher than 40%, so we can estimate that in the long term it is able to grow 40% per year.
Average EBITDA growth estimated is 50%. The company has an EBITDA margin of 15%, which is not bad.
Valuation
Now, the company has a forward EV/EBITDA of 16x, which is a good price. If the estimations are right, the company should have an EBITDA of 187 for 2024, with a multiple of 20x (its average is more than 30x), we would have 3.740. If we subtract the net debt, we would have a target EV of 3.720. Dividing this with the number of shares, we would have a target price for 2024 of €270. The actual price is €125, so we have an upsite of 116%. This is a CAGR of 40%.
Catalyst
-Organic growth
-Accretive acquisitions
-More mainstream analyst coverage