Generally, the resignation of a CFO is definitely concerning. However, I’ve looked at it from a different perspective (whether it is for better or worse/ am I right or wrong, I don’t know).
Look, the company does a topline of only ~100 crores and has a market cap of ~200 crores. If as a working professional I get a chance to move to a bigger, better company with a more challenging role and better monetary benefits, I’ll take it. Then what stops someone else from doing the same? They may do it either for their personal ambition or for the welfare of their family or maybe both. When I worked at a company doing a topline of INR 30-40 crs, my goal was to move a bigger company, I did eventually end up working with a company doing a topline of INR 80,000 crores. For me the reason was two-fold, making better money and cutting my teeth with the best, maybe it is the same situation here or maybe it isn’t, we will never know. The management isn’t going to tell us for sure.
If it is of any solace, I have met a bunch of seasoned micro-cap investors and they rate Dr. Sane highly and don’t find anything amiss. Furthermore, the company has some seasoned and successful investors as Mukul Agarwal invested in it. Dr. Sane and the seasoned investors have far more to lose than I do, so I’m comfortable holding my position here (for now!). Also, overall the stock has been butchered and has fallen 51% from its 52-w high. It only needs a flicker of some positive news to take it up.
Though, in all honesty I’m more concerned about the management missing their guidance for FY24. In their last con-call Dr. Sane had suggested they’ll “very easily” grow their topline by 20% and also show margin improvement. However, in the last call with Arihant Capital it turns out the topline promised for FY24 has now conveniently moved to FY25. This to me is rather concerning for a company this size. I will try to attend the con-call and check with the management the difficulties they’ve faced in meeting their guidance this year.
Apart from the above, the stock continues to be a hold for me and I’ll continue to monitor their execution over FY25.