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Gentrack Group Ltd (GTK)

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Gentrack Group Ltd (GTK)

From what started as a relatively small investment has developed into being what is closest to me to being a ten bagger for me in non-mining areas. There does not seem to have been extensive coverage of GTK here and while I have some knowledge of their activities lack of further reading makes me a little cautious Their value now is to me a significant part of my portfolio. Being in nz I know little about their directors. I have thought of being perhaps a coward and selling half. What are your thoughts? It appears to be a stock which could be considered for your active growth portfolio or emerging coys portfolio thank you

Answer

Hi,

Firstly, just a reminder that this answer is general advice only and we aren’t taking into account your personal circumstances.

Gentrack (GTK) is a company we looked at a while back, viewing it as a great company with positive prospects however it was too small to land in our portfolios. All of a sudden the billing and client management software company has grown significantly over the last few years, and its share price has followed the path. The 1H result earlier this week was stronger than expected, delivering Revenue growth of 21% and EBITDA  of $12.3m.

One concern was Free Cashflow which was soft, though their outlook commentary suggests this will moderate into the 2H. Revenue guidance was lifted 17% and EBITDA upgraded 9%, clearly in an upgrade cycle and making the most of it. While the PE ratio screens expensive, the company has only recently swung into positive earnings and we see significant growth justifying the price.

Near term, we aren’t keen to chase it after a solid run, though it is a great business that is starting to mark its territory. We did cover the stock a few times back in 2021 here.

Jules Cooper covers the stock, with his latest report here: GTK Research Shaw and Partners.

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Gentrack Group (GTK)
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