Key Takeaways

Aurionpro's expansion into U.S. and Europe and strategic acquisitions could significantly boost its international revenue and market reach.
Consistent R&D investment and AryaAI integration likely enhance product innovation, competitive advantages, and potential market share growth.
Expansion into new regions and strategic acquisitions pose risks to Aurionpro's revenue growth and earnings due to execution and integration challenges.

Catalysts

About Aurionpro Solutions

Provides technology solutions in the transaction banking platform, customer experience, smart city, and smart transportation areas in India and internationally.What are the underlying business or industry changes driving this perspective?

Aurionpro Solutions has witnessed strong demand across its segments, particularly in banking and fintech, and Technology Innovation Group (TIG). This broad-based growth is expected to continue, enhancing future revenue potential.
Expansion into the U.S. and Europe markets and strategic acquisitions like Fenixys are poised to broaden Aurionpro's reach and could significantly increase revenue from international clients.
The company's consistent investment of over 8% of revenues in R&D highlights its commitment to innovation, likely leading to enhanced product offerings and a stronger market position, which could improve margins over time.
Significant wins in the Transit segment, including projects with major metro systems in India, along with robust demand in the data center space, are expected to drive continued revenue growth.
The integration and rollout of AryaAI, the explainable AI platform, could boost competitive advantages and efficiencies in product offerings, potentially increasing earnings and market share in high-stakes industries.

Aurionpro Solutions Earnings and Revenue Growth

Aurionpro Solutions Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Aurionpro Solutions's revenue will grow by 29.6% annually over the next 3 years.
Analysts assume that profit margins will increase from 16.0% today to 18.1% in 3 years time.
Analysts expect earnings to reach ₹4.3 billion (and earnings per share of ₹76.39) by about May 2028, up from ₹1.7 billion today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 50.5x on those 2028 earnings, up from 43.6x today. This future PE is greater than the current PE for the IN Software industry at 30.0x.
Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 14.94%, as per the Simply Wall St company report.

Aurionpro Solutions Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Expansion into new regions such as the U.S. and Europe carries execution risks, which may impact the company’s future revenue growth if not managed effectively.
The focus on high R&D investments, while crucial for innovation, could limit net margins if these investments do not translate into successful product launches or immediate returns.
The reliance on a few key segments, such as Transit and banking, could lead to revenue instability if demand in these sectors decreases or if competition intensifies.
The strategy of pursuing strategic acquisitions, like Fenixys, to enhance growth may introduce integration risks, which could affect the company’s earnings if these acquisitions do not deliver the anticipated synergies.
Large exposure to fast-growing but emerging markets in Asia and India might pose a risk to revenue stability due to potential political or economic volatility in those regions.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of ₹2200.0 for Aurionpro Solutions based on their expectations of its future earnings growth, profit margins and other risk factors.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₹23.8 billion, earnings will come to ₹4.3 billion, and it would be trading on a PE ratio of 50.5x, assuming you use a discount rate of 14.9%.
Given the current share price of ₹1426.9, the analyst price target of ₹2200.0 is 35.1% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.