Intense Technologies


(Ashwini Damani) #220

The Pump and Dump is almost complete in this stock…

Obviously from time to time the promoter and operator (s) will still try to plant news and take stock up - but by and large the story is over.

I had asked many people to define, what the company actually does (in simple terms), and no one could explain.

Telecom companies have existed since 20 years plus and onboarding has been happening since ages.

  1. First question someone should have asked is, who is Intense Technology Substituting
  2. Why is the Telecom Co giving order to Intense
  3. Does Intense have networth and profitability criteria to successfully win tender of BSNL etc
  4. Why doesn’t any respectable shareholder hold shares in the company

5. When did they develop the product - what was the R&D Expense in the years preceeding to the year when they developed the same. Did the comment anything in the MDA & R&D Expense Details portion of the company in the previous year preceeding the announcement of new product

Forensic accounting is something else. I dont even want to go into details, its a company with Red Flags galore


(Ashwini Damani) #221

Some softer aspects

  1. Avoid buying stocks of those companies where some shady names appear.

  2. Avoid buying stocks of those companies which are being drummed up by investors who have often been wrong (intentionally or unintentionally)

  3. I keep a list of good investors and generally when they buy a stock, I dig deep coz I know, they must have done some due diligence. I always ask myself, why hasnt the good investor bought this stock, even when everyone is aware of the stock. He didnt buy even when its down from 200 to 40. This is a popular stock. Chances are this stock hasnt passed his filtering criteria

  4. Similarly I keep a list of shady investors and investors who arent good enough and dont even do proper work before buying a stock. Some are intentionally bad, and some are naive.

  5. Why would I trust an investor who buys PC Jeweller, Sankhya Infotech, White Agro, MRSS, Omkar, Lasa etc. Chances are either the investor is dumb or he has a sinister plan.

  6. One can go wrong once, he can go wrong twice, but if he keeps going wrong, then safe to ignore the investor and his picks


(narenarora) #222

Hi

Would it be possible to share the list of good and shady investors.

Thanks
Regards
Narendra


(rajdesai60) #223

OK but can we rely on the promoter declaring that Reliance Jio and HDFCbank is using their product? If yes then is it safe to assume that it’s product is good as Vodaphone Uk is also using its product? Can be come to conclusion about his product?


(Ashwini Damani) #224

Promoter of Manapasand also says so many things…why don’t we believe him.

Promoter words are to be verified independently…


(Ashwini Damani) #225

So there is a name missing in the shareholding list and it has been replaced by Centrum Broking. Looks like broker triggered margin call, and has the shares in their custody and is now sellling all the shares of that person.

Same thing appears in other counter i.e. Yuken and ITL.
Looks like the Pied Piper has a hole in his pocket and his broker is taking the margin shares in custody.
Broker will keep dumping the shares now to make good the losses.


#226

Link to my analysis of Intense Technologies management back in May 2017. In short, don’t go on long rides with incompetent management.


(vij) #227

Result out
55d0cbd8-73c0-4ec7-88c0-782ebd4b494b.pdf (2.6 MB)


(James Sebastian) #228

Looks like the story part continues and performance still lags behind. Revenue de-growth of 6% and there is big chunk in other expenses (approx 2.5 crores) to ensure lower profit and EPS comparing to year ago quarter. I am losing hope and patience in this counter. Not sure where is BSNL revenue gets accounted! @Shrihari How do you view the results? Looks like most others deserted this already.


(Storyteller) #231

Booked Loss after the result today at day’s high…:slight_smile: moved the proceeds to Transpek Industries. Lessons learnt and moved on. Only regret, since I had sensed pump and dump fairly early on, I should have exit right then. Hind-sight, the reason is clear : did not suspect the promoters. Yet, it was Pump and Dump. With this ends the churn of the portfolio of moving out of laggards and sick bay into stronger businesses. Thanks for your painstaking and exhaustive work. It helped. CHEERS


(Shrihari) #232

@james_kerala

Here is my detailed assessment of performance; as always, I would like to hear your and other shareholders’ thoughts.

The results are not up-to-the mark. As per the company, results cannot be compared quarter over quarter, instead they should be compared across fiscals. This is because the main driver of revenues, the software support/maintenance income, has seasonality. (Most of the annuities turn up in Q4, that is why Q4 FY 2018 looked so much better).

Comparing Q2 FY 2018 vs Q2 FY 2019 performance, both revenues and EPS have seen de-growth. This explains the lower circuit on Friday.

As always, in the press release, the company talks about how well they performed and how rosy the pipeline of contracts is. (You can open any press release for any quarter in the past, and there is a full page on how well the company has performed and will perform, which has never been the case!!). This, of course, demonstrates a lack of competence. A more competent and mature approach would have been to state: “We understand that we have not performed well and that the new contract license revenue run rate is not as promised. We are still optimistic about the future (if you really are, that is) because of the following reasons……. and therefore expect to grow at X% over this fiscal”. This would have demonstrated a grip on reality instead of peddling poor performance as “healthy performance”.

But then again, there are bigger problems than “How to phrase a press release/media release”……like, ………massive destruction of retail shareholder wealth, for instance :slight_smile:

So, where do we go from here?

I have decided to give this some more time for the following reasons (as always, I do not want to influence any one’s buy/sell decision):

Comparing H1 FY 2019 to H1 FY 2018, EPS has increased from -0.53 to 1.6. Trailing 12 month standalone EPS is now 1.86 –(-0.53)+1.6 = ~4. But consolidated EPS, assuming no changes from last year, will be around 2.5

On the plus side, given that the price has already reduced from 248 to ~40, it should find a bottom soon (In other words, the pump and dump is almost complete). On the flip side, given that Q2 performance is not good, the stock price might reduce in the near term and if NIFTY were to break 10000 to the downside, then the stock will break its previous lows, unless of course some news around new contracts comes in.

I think the stock price movement is less about financials/valuation and more about manipulation/orchestration. If you have read Parts 1-8 of my analysis above, then the case is strong that the stock has been pumped and dumped, or in other words, it has been manipulated. Whoever had to gain from the manipulation, has already gained. If more money has to be made, stock price has to go up, if that makes sense. In other words, I still believe the “accumulate-pump-dump-re-accumulate” theory described in Part 8 of my analysis above. Whenever the re-accumulation process is completed, the stock price should go up, unless the financial statements themselves are manipulated and there is much more than what meets the eye.

Finally, my intent is to present only “data-driven-analysis”, that is be unbiased and avoid unfair criticism. My objective assessment of the company is that

  1. They do have a good product (it has been recognized by Gartner and Aspire) which points towards a competent software development team.
  2. Further, they also have a good software support/maintenance team; that is why clients continue to pay annuities and keep re-using the product.
  3. The sales, marketing and business development teams are “under-performing”. Here is detailed analysis to justify the point: As per the company, the ratio of AMC revenues to new license revenues is 85:15. So, last year they earned 55*.15 = 8.25 crores in new licenses, that includes upsell/cross sell of customer experience related modules to existing clients. The company has offices and just one sales agent in Dubai, Florida, London and Singapore. Let’s assume they have just one sales agent in Hyderabad. 5 sales agents in total generate 8.25 crores annually, which is dismal. A sales agent’s CTC is around 150-200K USD in total, in developed countries. The sales agent is barely justifying his/her CTC. (I am assuming only one sales agent in India while the company has an entire marketing team). The promoter keeps giving the same excuse to justify the repeated poor performance: “He has just one sales agent in every continent”. But the data is telling us that this is not the problem. The problem is that the one sales agent is not performing as per expectations and if this were to be addressed, the revenues would have been higher. This problem can only be addressed by a competent management.

Long story short, I think highly of the employees of the company as per the analysis above. But the incompetence of the promoters/management just ruins it for everyone. The same company, but with better promoter/management quality, would have resulted in a much better outcome for shareholders. (This holds true for most companies that have destroyed investor/shareholder wealth)


(Storyteller) #233

Agree with your assessment of the promoters. Over the past one year, I had half a mind to tell them to sell the company or call up the Oracle Of Omaha…:). BSNL did not bother me much, a botched affair it seemed. It was the Quarter after quarter, failure in marketing their niche product that puzzled and bothered. This quarter too I was looking only for the success at the sale of their product abroad. Nothing on that front was the deciding factor for me to move on. Still holding 20% shares, but that is more like being prudent.


(James Sebastian) #234

Great views. You verbalised whatever I was thinking. Everytime when I read press release, I was searching between the lines of balance sheet to see those high performance. When I started investing in intense, what attracted me was the product. I already had an IT product background and I believed the next wave from India on high quality IT products.
But how is that possible when we have ‘pumps’ dumps and only story telling promoters.

Now unlike you I was not very good in reading and interpreting what’s not in print. @Leading_Nowhere had pointed out many red flags early on itself, but somehow I overlooked them. May be over confidence in stories told in concalls, transcript sharing , NSE listing etc for a small IT company. Then I believed the story told and thought bad times won’t last for long. A good tuition for a relatively new investor like me by losing capital and gaining experience.

As you listed all the positives were identified by me as well. But couldn’t see/believe negatives. Since my investment was a high percentage of my PF and highest amount I spent for buying any company. So the loss also huge as my average buy price is ~100. For now, I decided to hope for a pump by someone and exit by booking loss if it appreciates more than 50% from current price so that I can cut my losses.

Another risk for intense is they report only standalone in quarters and only annual results reports consolidated. Subsidiaries has costs, but revenue recognised in parent company. So we will not know how much expenses these near zero revenue earning subsidiaries will incur. Now I wonder if this also a clever strategy.

Now on Monday at 12 pm, may be a new story on conference call. I don’t know if I can attend. I would listen it later if I miss it. If anyone here are able to attend and ask meaningful questions it would be good.

Earlier on, being Hyderabad based company was listed as a risk. Are they proving it ?


(James Sebastian) #235

I like to use this thread to hear views of others on what they think on IT product company prospects from India in listed space. Is there any company you like where Product quality, reputation, management pedigree and execution skills math with ethical management ? In short high management and business quality meeting together? I don’t think we have a dedicated thread deal with IT product space.l, so I thought I will shoot the question here.
Also is there a IT service company able to consistently increase share of IT product space so that direct relationship of manpower to revenue is broken.

Disc: I hold Majesco as well, not very significant stake.


(M S S Murthy) #239

While I am an illiterate in so far as software is concerned I understand from many postings here and elsewhere the following .
The company possesses a good product .
There is a big market for such a product .
But no traction in sales .Where is the chasm .
Can any member knowledgeable in software and products space give a clue.
This is one company testing my patience and ability to withstand losses. Not that in the past 40 years I’ve experienced huge losses in many companies some of which like Uniscan and Sonics , Magna Group Companies, Reed Relays , have totally vanished . Sitting on Intense since it makes no sense to get out now .Crossing the chasm in sales , if happens, could offer a huge upside like what have happened to me when I’ve invested in TTK Prestige at Rs 11 or CCL Products at Rs 5 way back .Both were invested in quantities and have given me good base.


(James Sebastian) #240

The promoters failure to strengthen the marketing, sales and even licensing part mentioned by Srihari already.

Apart from the ones he listed, In conference calls from last year they were saying that they are looking for strategic partner. But replies on it’s progress were also feeble. Also moving from system intergrators to thier own marketing team was told, but recent conference calls point that they are moving back to old model at least partially.
So the challenges lies in those areas in my view.


(vkshetty9) #241

One more thing - the promoter % never increased… its till 18%


(M S S Murthy) #242

What I want to be enlightened is , is there is good enough market for ‘ customer onboarding ‘ , is there any competition . Advance thanks for any one who can clarify on this.


(Mandeepk) #243

Do you have any links to share Sir? I tried to google but did not get any reference around this.
Thank you


(James Sebastian) #244

Listened to Conf call from researchbytes. Thank you @Shrihari and @hrishikesh for asking some relevant questions. Here are my notes from the call. (No spell/grammar check. There could be errors and request you to verify it or wait for transcript to be officially out). Request others to add/point out anything missed out and more experts to say what can be read between the lines.

Came out of difficult year.
R&D investments -some AI in to some solutions, beta version broadbased testing
Subsidiaries are performing positively.

Managed services contract
Some revenue booked in Q2 (not very significant).
All Hurdles, With that order Ambiguities removed, Board approval for every line item. So change from 1.5 years.
Sustantial revenue expected in H2 (Q3 & Q4).
Added Patanjali as franchise network, launched attractive plans - wings on intense platform
Alternate eKYC solution proposed. (cumbersome process for onboarding)
All types of workflows are part of the solution now.
Some Advertisement revenue from BSNL is expected by Q4. (postpaid mobile already completed, Landline expected by Dec. Work already started.)

Revenue - 150 crore initial projection.
Out of that FY 19 - 20-25 Cr expected, FY 20 -Drop some as no migration revenue expected.
Tenure - extension of 2 year would be sought
If advt revenue kicks they should more, Not sure. Not much download expected
excluding advts - 115 crore - gross revenue expected
Management bandwidth freed and started working and investments in technology front
Business outlook - Year on Year - expected significant improvements

  • Investments in sales and Marketing are in progress and to yeild results
    SI - progress - SI sending people for training. Pipeline is building up. We have a pipeline.
  • Keen on americas and significant movements
  • Bargaining power improved compared to what it was.
    SI investments in Products - as a challenge
    60-40 for intense (40%)
    Jio ? - only little cross-sell and up-sell. Not much progress on selling next suit of products

Philippines order- Not part of 23 country order
23 country deal - 2-3 out of 1-2 expected closure this year

Any addition of clients -
2nd largest baknk in cloud
Insurance company added (HDFC?)
Global satellite company in UK
Telecom large customers bidding in progress and expected by FY-19
These are Product contracts
Costs will go up marginally - like 10%

Others Financials Assets:Less than actual as expenses are included
subsidiary breakeven expected this year
End of year - No surprises as part of expenses are accounted in standalone.
H1-18 to H1-19 is not apple to apple comparison
Revenue and expenses are included this year in standalone in proportion
Confident of collecting all receivables
No margin pressure as of now.
Employee Head Count - 357 vs 460 (last year)
Revenue guidance - Much bigger H2 expected.
India - we dont get right value compared to overseas geographies.