I’ve done some basic triangulation to know that SI productivity can never rival the productivity of that of an IP owner. there’s quite some distance between what’s possible and what the company claims.
I am not of the school of thought that one has to chase the company to get an answer. i go by publicly available information and focus on materiality and probability.
This happens all the time and that is one of the reasons why I have been very skeptical with the numbers here. I have been a freelance IT consultant for 12 years now and get pulled into all sorts of projects where the outsourcing company has bitten more than it can chew in terms of skillset. The most recent one was a hosted bitcoin wallet implementation where the company had projected themselves as blockchain experts but had zero talent in that technology. If that’s not comical enough, their clients had no idea what they wanted either, which is how they ended up with this company. Companies like these pay a hefty premium to the consultant who can pose as their employee for the projects’ term. There is no way outsourcing can be better in terms of margins when it comes to niche skillsets.
@varadharajanr your right, SI productivity (measured as revenue per employee) will always be lesser than that of a product company and that is exactly what you are seeing with 8k Miles Software. Thanks for reinforcing my point…
8k Miles Software is not an outsourcing company. The vast majority of the revenue (as compared to SI revenue) is product licensing. It is a product company that earns limited SI revenue by deploying their own products.
Kellton Tech is an SI/AO/IT Services company;
has 1400 employees as compared to 300 of 8K Miles
has revenue per employee of 56Lakh as compared to 2.8 Cr for 8K Miles
Off course, if you believe that the 850Cr topline of 8K Miles is fake/inflated then these numbers don’t mean anything. That’s a very different discussion, but going by ‘publicly’ available information this 2.8Cr is what you get.
Also,
productivity metrics, billing rates, and cost rates are not publicly available information. This is highly confidential information that companies keep strictly under lock and key as it gives then competitive advantage while bidding.
Even if you talk to company individuals they will not give you this information. Imagine how the bidding process will go if your competitor is having knowledge of your billing rates, cost rates, and productivity metrics.
The answers to all these questions can only be speculative and there will always be a unending difference of opinion while we are speculating. I don’t know what the truth is behind all these governance issues and I don’t want to speculate, hence I am choosing to comment only on the publicly available financials information assuming it is accurate.
This most important assumption I am making is that the GHG resignation issue and the sale/theft of shares issue does not have a material impact on the reported numbers. I have tried to find a material impact to the best of my limited knowledge but couldn’t find any. I actually bought this book called ‘Financial Shenanigans’ by Howard Schilit and have been reviewing and re-reviewing the company financials basis directions from the book.
If we have a qualified forensic accountant on this board that can call out issues with the financials, I would really appreciate it.
@siddharthadhamankar
“publicly available financials information assuming it is accurate”.
That line sums up the trust factor of supporters of the management.
All are in speculative mode because the management deliberately doesn’t want to clarify.
When you say “assuming it is accurate” tells how unsure even you are .When the management quality becomes questionable,every utterance of theirs is scrutinised and taken with a pinch of salt.Today what they say doesn’t carry the conviction it should,and what they do not say raises more questions.
Many actions of management do not have financial implications but have trust implications and when trust is lost that is the end of the story.
We will exchange views and see how the drama unfolds.
I met SV early this year and at the end of the meeting it was clear he was in trouble.But never expected the price to drop below Rs300.Respect your views.
when you say ‘it was clear he was in trouble’ can you please shed some light on what exactly transpired that made you come to this conclusion.
How do you know that 8K Miles Software earns a vast majority of revenue from product licensing?
Their revenue from operations as per the Notes to Accounts in the FY 18 annual report ‘primarily comprises of income from IT Enabled Services, which is recognised on rendering the service as per the terms of the contract with customers’ (page 145). There is no revenue from licensing any product.
Further, to correct, 8K Miles has 800 odd employees as per SV in the Concall for Dec 2017 results. Not 300. There is a figure of 197 on page 40 of the above annual report, that is for the standalone entity.
Below are current issues reported
Stock trades at 1.8 PE and 0.5 BV as per latest earnings. Company paid 59 cr taxes last year. Loan to 8k miles media will be zero by Dec 18.
Promotor promised to provide audited results for all US subsidiries which is nit done yet. This may help stopping downwards pressure. Company cant be fraud as promotor still hold 48 % stake. He coukd have pledged all in April ane stayed in USA, was very easy to do fraud.
I will keep a balanced view here which risk reward ratio high assuming financial numbers are genuine.
It has been observed that many members are posting without adding any value to the stock discussion. This deteriorates the quality of posts. All are request to think before posting whether it adds any value. Too much of one side posting will be viewed as spam and will be deleted and strict actions will be taken on the offenders.
Noted… maybe they discount the license fees in lieu of higher hourly rates. I believe their business model is based on the value added by their products/assets, so the intent is always to deploy the asset regardless of the billing mechanism - I understand this is speculation, so I will ask this question via email and get back to this group if I get an answer.
based on your 800 count the revenue per employee is 1.06 Cr. and that is a problem because…?
Share holding pattern as on September 30 is out
SV holding is 47.38%
Any thoughts on why possibly DSP, Jain and Tandon have either retained or increased their shareholdings? These must be operating on rational basis…with numerous quantitative and qualitative inputs, analytical tools/models to assist their decision making. How to reconcile seemingly well informed comments on this forum majority of which question 8KMS in every which way possible and what these folks are doing? It will be awesome to get comments that are, as always, as objective as possible…and not speculative. Thanks…
How can one be sure that they are acting on a rational basis and not just trapped? From the mid-August around 340 levels, volumes have been very thin except for a couple of days and lack the depth for institutional dumping.
An analogy here may be drawn with KSK Energy which became a penny stock from 100 level; but people continue to hold and even add thinking if it’s so bad, why do HDFC MF and ICICI MF continue to hold it?
More often than not, common sense is better than complicated analytical models.
Thanks for sharing the SHP, in fact Sandeep Tandon’s holding has gone up (I don’t know why it does not show up in SAST).
There is however an additional sale of 25,00,000 shares sold by SV and debited from his demat account on Oct 1 as per the Insider Trading data. This is over and above the 25,70,000 of his shares that he says were done without his consent / knowledge.
These shares were ‘disposed’ for ~ Rs 48.1 crores and at a price of Rs 192.25. This price was the price in BSE as of Sept 28. Thus his stake would have been reduced further by 8.19%.
The source for this information is this link - with fields filled in as ‘8K MILES SOFTWARE SERVICES LTD’ for the Security Name and beginning and end dates as 01 Jan 2018 and Oct 21, 2018 respectively.
The corresponding CSV file is shared here BSE InsideTrading722102018 8K Miles.xlsx (11.5 KB)
(saved as Excel Workbook as VP does not allow upload of CSV files). If you filter for SV and net off acquisitions and disposals you will find the following (I have put a minus sign for acquisitions):
Net total shares debited (by way of net of Disposals and Acquisitions) from 20 March 2018 until 11 July 2018: 25,70,000.
This matches with SV’s claim that 25,70,000 shares were ‘illegally’ sold by the brokers and refuted by atleast one broker
Total shares debited (by way of net of Disposals and Acquisitions) on 01 Oct 2018: 25,00,000.
So it seems shares over and above the claimed 25,70,000 were sold at the price on Sept 28 (it hit lc then) and debited on Oct 1, 2018. This should reflect in OND SHP, unless similar numbers are acquired.
From the trades and the Sept 30 SHP, bulk of the buyers were Individuals less than Rs 2 lakhs. So it appears that the ‘illegally’ invoked shares were hitting the market from the Sell side. And if an additional 25,00,000 have been ‘disposed’, it seems to me there’s much more to come.
@PrasadJ I have queried DSP mutual fund on their conviction behind 8k miles last week on Twitter and am awaiting their response
Article in BQ - https://www.bloombergquint.com/business/fraud-forgery-and-other-suspicious-transactions-involving-8k-miles
The bse historical data on yahoo shows only 2k volume on 28 sep.
These are off-market trades (the 25,00,000 shares of SV shown as disposed on 01 Oct) just as many of the earlier ones, you will notice their deliveries are also less than the amount shown as disposed.
If this 25 lacs share’s (off or on market) sale on 1 Oct 18 is true then wasn’t he speaking untruth when he said, i think, on bloombergquint just a few days back that he hasn’t sold any qty of 8kms share/stock (he was taking the position that what two brokers have sold aren’t his sales…is a fraud)? Or am i missing something?
@PrasadJ @devaki.tripathy
I got a phone call from DSP mutual fund regarding my query on Twitter
They responded that 8k miles forms only 0.34% of the DSP Small Cap portfolio and 0.09% of the DSP opportunities fund portfolio. Earlier it formed 1% of their portfolio itseems(not sure when was it)
They were only hoping that fundamentals will get better and price will start going up.
It seemed from the tone of the conversation that they had no particular conviction behind holding it and they were not too worried either as it formed very minor portion of their portfolios
