My study on Silicon Rental:
Business:- computer hardware rental and trading.
FY24: Revenue 63 Cr
Service Revenue 50Cr
Trading revenue 13 Cr
In service revenue, they purchase some 5.2 Cr service due to which the margin came down to 48% from 70-80% I guess that is Service trade which is trading business only.
Now revenue split would be like
44 CR Rental Service,
6 CR Service Trading
13 Cr Hardware Trading
Employee cost:- 3 Cr
Other expenses: 4 Cr
Depreciation:- 21.5 Cr
So PBT from Service:- 15.5 Cr
PBT from Hardware trading:- 1 Cr
PBT from software trading:- .8 Cr
FY24:- PAT was 13 Cr
FY23 Service business was 36 Cr with PBT and PAT was 14 Cr & 11 Cr respectively.
Now coming to guidance 40% growth for 3-4 years in Service business.
Growth would be from Geographical expansion & new client addition.
So this year it could be 60Cr on face value. Management didn’t meet the guidance for Fy24 as the revenue was 63 Cr but service revenue growth was only 20% rest came from trading business.
Conservative side let’s consider serving revenue 50 Cr and rest to nil as I don’t have any visibility.
So overall revenue with 20% growth could be 52 Cr –
Emp. Cost 4 Cr
Other expenses 6 Cr
Dividend 1 Cr
Depreciation 24 Cr
PAT:- 17 Cr
Current E.value:- 235 Cr
Trailing PE:- 14
A lot of assumptions but I believe on the conservative side. Number are adjusted to round off I assume accurate to 90-95%.
Some positive:-
growing, debt-free company.
Good guidance
Dividend-paying micro-cap
1000 plus clients with big names like Tata, Reliance, Justdial etc
Not so good part:-
SME, so need to purchase in Lot
The website is not functional. Web pages are blank
Commodity business, anyone with money and execution can give competition
Management did con-call just after the IPO and stopped it later.
Management was not able to answer some of the questions related to key metrics in the last call so safe to assume that they don’t track it.
No professional management. CFO salary is close to 3 LPA very low lack.
Disclaimer:- I have recently invested, am biased, not SEBI registered, have no recommendations, a lot of assumptions and can go wrong.
If anyone can add any details on service purchase that would be great.
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