Bravura Solutions Limited

BVS Details

Appointment of CFO: Bravura Solutions Limited (ASX: BVS) provides software products and services to clients operating in the wealth management and funds administration industries. With effect from 1 February 2022, Mr Brent Henley has been appointed as CFO, Executive Director and Joint Company Secretary.

FY21 Financial and Operational Highlights:

• BVS posted a fall of 11% in revenue to $243.0 million because of lower revenues in the UK caused by significant COVID-19 uncertainty in the market. Reported NPAT for the year amounted to $34.6 million, reflecting a fall of 14%.
• BVS recorded an EBITDA of $49.3 million as compared to $57.8 million in FY20, reflecting a fall of 15%.

Revenue and NPAT Trend (Source: Analysis by Kalkine Group)

Key Risks: The company operates in a very competitive environment, and the rising market share of peers could impact its financial health. BVS operates in multiple geographies, which leaves the business exposed to a risk arising from adverse movement in foreign currency.

Outlook: The company has a total addressable market (TAM) in the UK, and Australia of ~GBP1.2 billion per annum and ~$1.0 billion per annum of client IT spend, respectively.  For FY22, BVS expects to report NPAT growth to be in the mid-teens relative to FY21 adjusted NPAT of $32.3 million.

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of BVS is trading near its 52-week low level of $2.020, offering a decent opportunity for accumulation. The stock of BVS has been corrected by ~14.81% and ~25.27% in the past one and three months, respectively. The stock has been valued using a P/E multiple-based illustrative relative valuation and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight discount to its peers’ median P/E multiple, considering the falling bottom line and high debt-to-equity ratio. For the purpose of valuation, peers such as Hansen Technologies Ltd (ASX: HSN), Pushpay Holdings Ltd (ASX: PPH), Reckon Ltd (ASX: RKN), and others have been considered. Considering the expected upside in valuation, decent addressable market, growing business margins, optimistic outlook, and current trading levels and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing price of $2.070 as on 07 February 2022.

BVS Daily Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices

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