Saksoft Ltd (pick by The Ace Investor)

Discussion in 'Stock Picks Of Wizards' started by bazaariyan, Dec 22, 2015.

  1. bazaariyan

    bazaariyan Member

    Apr 23, 2015
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    Saksoft Ltd - Value Pick - Merry Christmas

    The Ace Investor
    Saksoft Ltd
    Listed on both NSE: SAKSOFT & BSE: 590051
    Currently trading around 260 with a market cap of around 240 crores.
    Promoters hold 73.47% stake.
    It has a Debt of 40 crores.
    Total Reserves are around 100 crores.

    Saksoft Ltd is an Big Data and Analytic firm headquartered in India with a head count of 750+.
    Saksoft offers services such as Information Management and Business Intelligence, Testing Services, Application Development Services and CLOUD services.

    Company boasts of 100+ Clients in Info Mgmt and Biz Intel, Having completed 510+ projects and Experience in working with Government and Security agencies.

    Company acquired 360logica earlier this year which commands a good market share in application testing sector and the acquisition aids Saksoft now to operate in this sector.

    Company boasts of 15+ years of experience in App Development services, 80+ Apps completed by the company. The company offers complete solution from design to cloud integration for apps.

    Company has ventured into the hottest sector of Cloud Computing where it offers wide range of services (IaaS, PaaS, SaaS)

    All these cloud services are delivered via Internet and customers have nothing to worry about hardware/software or licenses to manage them.This features allow companies to run on opex only model and don't have to budget capex year on year basis, which translates to direct savings. This is the primary reason for increasing adoption with SME's and enterprises for cost-cutting and providing business flexibility and transformation at a rapid pace.

    The company is focused on the Retail and E-Commerce sector.

    Coming to the financials, Saksoft has witnessed great growth :-

    As you can see from 120 odd crores the company has now grown to almost 240 crores company in 4 years.

    In last 2 years there hasn't been any big growth in the top line of the company. But as is into cloud computing and Big Data these sectors are really hot right now and the Massive Growth is expected to kick in for Saksoft pretty soon.

    Company is having healthy 3 year ROCE average of 16+ , The company has paid dividend consistently since last 11 years and more.

    Promoter holding is at 73.47%, FIIs hold only 0.52%, DIIs 0.98% and Public holding more than 1% shows us 9.56% is with some HNI investors.

    So a huge chunk of 84.53% is already locked with these guys "OFFICIALLY" and promoters in almost all companies do hold more stake with their relatives having equity lesser than 1% which will not be shown on the shp, So let's assume another 5% goes there that makes it almost 90% equity is locked up there.

    So out of 1,03,60,000 shares only about 10 lakh shares are available in the market.
    We have seen how a recent Cloud computing story called 8K Miles has played out in the market.

    From 50 bucks in 2013 today 8K Miles has touched 2000+ which is a gain of almost 4000% in just less than 3 years. 8k Miles had topline of 125 crores in FY15 and bottomline of 19 crores and current Mcap is 2200 crores.

    Another comparable company would be Kellton Tech Solutions which has rallied from 35 to almost 200 this year, Traded only on BSE Kellton is finding it difficult to go up because of the BSE quarterly/monthly/yearly circuit norms.

    Kellton Tech which provides similar services such as ERP, Cloud, App development, Web Development had a topline of 240 crores in FY15 and Net Profit of 22 crores and its current market cap is around 800 crores and the current p/e is around 35.


    8K Miles having 125 crores top line is trading at 2100 crore Market Cap which means Mcap/Sales is around 17 and Current P/E is 100+ whereas Saksoft current Mcap is around Sales which means around 1 and P/E is around 15 having higher sales and better management record.

    But ofcourse, 8K Miles and Kellton are high growth companies but for Investors a good management record would be the first point for rating a stock.

    Saksoft has only this year acquired 360logica for App Testing/Development so the growth of that sector is yet to hit the books.

    Simple logic is that: Kellton would go higher if it was on NSE because the gap between Kellton and 8K is huge, and Saksoft would go higher to reach above Kellton for sure because there too the Gap is huge and Saksoft is on both NSE & BSE.

    Saksoft is trading around 10% of valuations to what 8K Miles commands in the market.
    Investment Guru Mr Ramesh Damani in a recent interview to the Share Bazaar APP was asked:


    Mr Damani has said that his favorite sector would be Big Data Analytics which is where Saksoft operates.

    It may sound like an over-statement but Saksoft Ltd is my bet as the Next Kellton and after that the Next 8K Miles.
    Saksoft has broken out of a 7 year Cup & Handle pattern on daily charts, check image below.
    All in All, Saksoft is a great Multibagger opportunity in market I think.

    Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.
    Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI:
    “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”
    Disclosure: It is safe to assume that i might have Saksoft Ltd in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.

    Saksoft Website
    Saksoft Screener
    Saksoft 2015 Annual Report
    360logica takeover
    Sharebazaar APP's Damani Interview

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    The Ace Investor