Nucleus Software hits record high, stock zooms 132% in 2 months

The stock was locked in the 10 per cent upper circuit band at Rs 664.70 on the BSE

Shares of Nucleus Software Exports were locked in the 10 per cent upper circuit band at Rs 664.70, also its record high, on the BSE on Monday in an otherwise subdued market. In the past two months, the stock of the IT software products-company has zoomed 132 per cent after it reported strong earnings for the quarter ended June 2020 (Q1FY21). In comparison, the S&P BSE Sensex was up 3.8 per cent during the period.

Nucleus Software's consolidated net profit more-than-doubled to Rs 36.3 crore in Q1FY21 on the back of strong operational performance. It had posted a profit of Rs 16.6 crore in the corresponding quarter of the previous year. Consolidated revenue, however, remained flat at Rs 128.4 crore as against Rs 124.1 crore in the year ago quarter. Profitability surprised significantly as it improved 600 basis points sequentially at 26 per cent.

One of the leading providers of lending and transaction banking solutions to the global financial services industry, the company won 6 product orders while 8 module implementations went live worldwide during the quarter.

It also announced addition of a range of powerful new solutions to its market leading with FinnOne Neo digital lending platform. It added myLoan, a new AI powered conversational chatbot for loan self-service, and introduced Sales Assist to provide quick digital loan sourcing at retail stores, auto dealerships, lifestyle stores and other points of sale.

The company also launched the latest version of its award winning lending solution - FinnOne Neo 5.0. This solution offers advanced capabilities to completely digitize and automate the complex lending processes as required in an increasingly virtual world, accentuated by Covid-19.

"Management commentary improved materially as it witnessed better bookings and have healthy pipeline across product offering. However, management refrained to call it as New Normal and expect a potential risk of trend reversing again.  However, we are enthused by sustained demand momentum and tighter cost management which has helped in revival our estimates largely back to pre-Covid levels," analysts at Dolat Capital said in result update. The stock was, however, trading above brokerage firm's target price of Rs 450 per share.