Have few thoughts of technology changes and “Intellect” in general.
Technology evolution- First, the technology is all-most gets developed in the California, and the early adopters, particularly in the US use it.
Earlier, the technology used to come quite late in India, but due to rapid strikes made by IT industry in general- Indian IT companies are aware technology or use much earlier now. They start developing a new solution or upgrading their product with new technology much earlier now.
For companies like Intellect, they are refreshing all their product to make them “Digital” ready.
I understand “Intellect” has many products catering to the Financial service market, and they are actively upgrading them to be Digital. However, the Digital Focus is not coming at a cheap price. They are investing 10+% of the revenue in their R&D today and the equal amount is in marketing. To make the matter worst, they have many products-some of them have a huge traction and some of them are early stage (loss-making in simple English)- even the company acknowledged that.
I am sure one day they will get good traction, but I am not so sure if they could crack all products. Even if they managed to crack the market, the technology- Digital for example- may change to something new. If the technology change (Robotics, AI, or something which we might not have heard today), is significant- which is often the case- then the company- “Intellect” in this case, is back to drawing board reinvesting in upgrading into the new product.
When Intellect bought the company from Citi and launched “Intellect” in 2004, one would have thought- I certainly did- that they would develop a product which will be remunerative for an investor. Fast forward 13 years, the product is still in development phase, they are still “investing” in R&D and Marketing, and surprisingly still making losses (despite capitalising expenses).
As an investor, I wish the company calibrate investment and generate consistent cash- (as is the case with Accelya Kale). But for a company like Intellect, which keeps investing is so many products at the same time, hoping to generate Profit and positive cash flow is still a long hope.
Would I love to hear from a fellow investor about their thought process about Intellect in particular/IT product company in general? (despite capitalising expenses).
Dis- I have tracking position.