Currently, IMO the higher margins are due to
- Its tech stack is skewed towards niche technologies in AI/ML space.
- lean pyramid structure of employees
- 100% offshoring model.
- lower selling costs as a lot of clients are acquired via word of mouth.
This is possible for companies only till a certain scale (say ~500 employees). Usually in smaller companies a few key seniors can get clients from word of mouth lowering selling costs, upskill their teams and keep the structure lean. Once you get beyond a certain size this is very hard to scale.
Look at their investor presentation, their focus ahead involves
- Aiming for hybrid delivery model by aiming to open onshore delivery centers in North America
and Europe. Covid era posed operational challenges which delayed execution on this front but
it remains a key focus area for next 12-18 months time frame. - Target Enterprise Customers by leveraging techno-functional expertise of senior lateral hires
in different industries.
this would reduce the margins. Plus senior talent is very hard to recruit and retain in this market.
@iyeron has already mentioned
Projections based on historical performance and guidelines is an easy one and good to have. However, it is more meaningful to get a pulse of the sustainable margin figures
I am not disputing the superior execution and good corporate governance. Investing is all about probabilities. KSolves could still grow at a faster clip if they can keep the lean structure for a bit longer, but the odds are stacked against them as they grow bigger. One need to factors in the macro headwinds and the recent reduction of the stake by management. You will see many IT companies of similar size in the peer group. Just check their growth trajectories.
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