Nucleus Software Q2 Review- Delayed Closure Led Revenue Miss; AMC Repricing Optimism Unaffected: Dolat Capital

Dolat Capital Report

Nucleus Software Exports Ltd. reported 0.8% QoQ decline in revenue (our estimate: 4.5%) at Rs. 2.1 billion due to delay in realisation/closure of certain deals, shifting to Q3. Geography-wise, India (58% of revenue) bounced strongly with 20% QoQ growth.

Ebitda margin stood at 25.3% (down 495 basis points QoQ) versus establish of 31.5% impacted by large investment in brand building and general increased travel that led to 40% QoQ jump in other expenses.

Order book stood at Rs 7.1 billion (down 7% QoQ, but +23% YoY) of which product/services order book stood at Rs 6.5 billion/Rs 0.6 billion.

Nucleus given its strong growth in order book, annual maintenance contract scale up opportunity, strong product potential and compelling valuations, we remain optimistic on the stock and maintain 'Buy' rating with a discounted cash flow based target price of Rs. 1,720 (implies ~16 times on FY26E earnings).

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