I had never heard of this company called “8K Miles Software Services” till an alert flashed on my radar that DSP BlackRock Micro Cap Fund had bought a massive chunk of 3,03,529 shares of this company.
DSP BlackRock Micro Cap Fund is managed by Vinit Sambre & Jay Kothari. On a YOY basis, the fund has given a spectacular return of 98.5%. On a 6 month basis, the return is a fabulous 56%. The fund has outperformed its peers ICICI Pru Value Discovery Fund (83% YOY), HDFC MidCap Opportunities (76% YOY), Sundaram Select Midcap (71% YOY) etc.
A look at the latest portfolio of the DSP BlackRock Micro Cap Fund shows that they invest mostly in top-quality and well managed companies. Their top ten holdings are made up of well known stocks like Indoco Remedies, SRF, Symphony, IDFC, Capital First, etc.
8K Miles Software Services is the Fund’s latest pick.
8K Miles is a micro-cap company with a market capitalisation of only Rs. 200 crore. It calls itself “an internet company that is focused on building solutions around cloud computing”.
You need to be a computer whiz to understand the business model of 8KMiles. They recently issued a press release announcing “the availability of EzIAM, an enterprise grade IDaaS powered by CA CloudMinder and Amazon Web Services”. They also claim to offer “cloud consulting, engineering and migration services to help companies leverage the power of cloud computing”.
Financially, 8K Miles appears to be on a smooth wicket. For the June 2014 quarter, 8K Miles reported a consolidated sales turnover of Rs 21.00 crore and a net profit of Rs 3.15 crore. This compares favourably with the sales turnover of Rs. 10.37 crore & profit of Rs. 1.97 crore in December 2013. The sales and profit figures for March 2014 quarter were Rs. 18.12 crore and Rs. 2.76 crore respectively.
8K Miles is not a cheap stock if you look at their P/E of 54 times and P/BV of 9 times. However, this need not be alarming because most internet companies (like Just Dial) quote at exorbitant P/Es. The return ratios are not very impressive though the good thing is that the company is virtually debt-free.
8K Miles appears to be having a business model that is somewhat similar to that of Stampede Capital. It may be recalled that Amitabh Bachchan, the Bollywood doyen, recently bought a huge chunk of 1.1 lakh shares of Stampede. That company is also involved in things like “financial cloud solutions” and “Bitcoin Mining”, which prima facie appears to be what 8K Miles also does.
Personally, I am not able to come to grips with 8K Miles’ business model or prospects. However, given that DSP Micro Cap Fund has trusted it with its funds, there may be hefty gains in the offing. I suggest we keep a close eye on the stock. If it begins to report spectacular results, we can consult a computer whiz to decide whether to buy a chunk or not.
A few thoughts here..
http://www.slideshare.net/ndharmawat/quiz-response
Can’t understand that P/E is 54 and only just dail which is strictly not an IT company is used for comparision. I question the veracity of BSP Fund Manager to buy this stock. I doubt whether any retail investors would buy this stock at current valuations. RS Software is 100 times better stock than this one.
I absolutely agree with you Krish. This could be one of the stocks whose story is like “out there” and you don’t know whether to trust it or keep your money safely in your pocket. Considering Asia’s newfound love for e-business, particularly in the two largest countries, we could be seeing a more steroidal version of the dot-com bubble here than what we saw in the west more than a decade ago!!
The stock has already moved up.
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This stock reminds me of the movie The Wolf of wall street where the insignificant SME companies were hyped by the stock brokers . On what logic is the stock price growing makes me wonder?
Hope you got the answer now