Saksoft Ltd - Rs.75.50

Saksoft Ltd. was originally incorporated as Saksoft InfoTech Ltd. in November 1999 but later changed Saksoft Ltd. in September’02. It is a specialized provider of business intelligence, business performance management, software solutions and Quality Assurance/ Testing to the Banking, Financial Services and Insurance (BFSI) industry. It has expertise in developing custom applications in retail banking, credit card applications, lending, trading, clearing and settlement systems. In short, it is a full service provider offering products, custom application development, testing, operations support etc besides offering resource augmentation services both onsite and offshore to its clients. Being a mid-size IT company, Saksoft provides high-end services at the strategic level and is able to fill the gap for banks and FIs for their niche requirements, which usually big IT companies do not find appealing given their size. Saksofts’ various application and systems like SakC2C Program, SakAssure Program, SakXtend Program, SakSupport Program are well-accepted by the BFSI industry.

Currently, Saksoft has two offshore development centers in India viz. in Chennai and Noida with a total capacity of 750 seats. It also has offices in New York, London, Frankfurt and Singapore. Within a short span of time, it has built-up an enviable clientele of 42 customers comprising leading global banks and financial institutions such as Citibank, Morgan Stanley, Standard Chartered Bank, Development Bank of Singapore, ABN AMRO Bank, Deutsche Bank, Compcredit, TransUnion, Franklin Templeton etc. As of now 70%, of its total revenue comes from America, 8% from Europe, 15% from India and the balance 7% comes from the rest of Asia. Recently, Saksoft signed a partnership agreement with Atos Origin, a global IT services company with strong presence in Asia to market Veri-sens - a business intelligence solution of Saksoft, to retail banks in Malaysia, Thailand and Philippines. The company is undergoing an interim assessment for the coveted CMMI Level 5 by KPMG and the certification is expected soon, which will give it a definite edge over its competitors.

In coming years, BFSI is expected to be the number one industry in terms of IT spending. Similarly, application development, application maintenance, testing, outsourcing, business intelligence and 3rd party testing services, in which Saksoft operates is growing significantly. Hence, the company is poised for substantial growth in future. Last year only, the company came out with its IPO of 25 lakh shares at Rs.30 per share and was oversubscribed by about 39 times. And within a year its share price touched a high of Rs.158 and a low of Rs.64. For FY06, its top-line increased by 40% to Rs.26 cr. whereas its’ bottom-line jumped 60% to Rs.9.20 cr. representing a Net Profit Margin (NPM) of healthy 35%. On a consolidated basis, its turnover and net profit stood at Rs.49 cr. and Rs.9.30 respectively. For FY07, on a consolidated basis it may report total revenue of Rs.60 cr. and net profit of Rs.14 cr. i.e. EPS of Rs.14 on its equity of Rs.10 cr. Investors are recommended to buy it at current levels as the scrip can easily appreciate 50% to about Rs.120 in 6-9 months.