All E Technologies, making businesses ready for AI

Stock Opportunities SME Stocks
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So, Mr Ajay Mian was kind enough to reply to my query.

He attributed a slight decrease in product revenue, to the dip in software license cost. In his words, " In Q4 we had a slight decline in the product revenue, and increase in international Services revenue. "

Regarding the dip in employee benefits cost, here’s what he had to say, " Lesser employee benefits amounts will happen if there’s reduction in headcount, or if a pay component gets delayed or withheld (usually due to performance). This will usually be a combination of attrition plus some people being asked to leave due to performance reasons. If the person is from an international location, the impact will be larger."

Makes sense to me.

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I did login to the concall (though didn’t get to attend in full, so I will go through the recording). It seemed like a temporary blip - these things happen. Sometimes there are timing issues in being able to book revenue. I didn’t get the sense that anything has changed fundamentally.

Conversely, a bad quarter in a good business is great for an investor with a time horizon longer than others.

Discl: Invested

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57

The concall attributed the dip to Q1 quarter being used for logging expenses regularised from previous quarters.

Imo, the fall in share price is over reaction to the results, enabled by the low liquidity of the scrip.

There was no mention about when they are going to migrate to main board. They become eligible to do so this December as per previous criteria, but not sure about the new criteria set by NSE for SME migration.

Disclosure. Invested for long term.

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The company has been around for 25 years, but its growth has not kept pace with other IT firms in India. One possible reason is that the management seems comfortable with the way things are and often confuses being overly cautious with making the right decisions. This mindset shows up in several ways:

  1. The management states that the order book amount isn’t relevant to their business. This is surprising, since they offer implementation services, which are directly driven by the order pipeline.
  2. The company doesn’t share key metrics like utilization rates or revenue guidance. Instead, vague explanations are given. There seems to be little performance evaluation of the management. The CEO has even said that they’re all here “for life,” which suggests their job is secure irrespective of their performance.
  3. The company has avoided common industry practices like the onshore-offshore model and staff augmentation in the past. While that may have made sense early on, it’s concerning that they haven’t adapted in over 20 years.
  4. They’ve chosen to stick mainly with Microsoft technologies, claiming it’s the best option. But this limits their flexibility and has even cost them clients who needed SAP capabilities. In reality, such choices are usually made by the client, not the vendor.
  5. They raised money through an IPO to grow through acquisitions, but updates on this have become opaquer over time.
  6. In the last three years, their employee count has only gone from 350 to 360, showing lack of confidence in business prospects.
  7. The management has mentioned a goal of ₹1,000 crore in revenue, but haven’t set any timeline to achieve it. Without a clear plan, the goal doesn’t carry much weight.
  8. Their IP products are listed on Microsoft AppSource, but almost all of them don’t have ratings or customer reviews, which suggests low interest from the market. Interestingly, an Australian company called Corebiz, working in the same space, has a product with the same name—Edtech 365—as ALL E Tech.
  9. Lastly, their SWOT analysis slide barely mentions any threats or weaknesses. If the business model is so strong, they should not be so conservative.

Disclosure: Not invested

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59

With past 5 years AVG Cagr of sales growth at 20 precent (source: screener), they will take 10 years to become 1000 crore in revenue, unless they do a good acquisition.

Acquisition is bit concerning. I don’t think they have suitable firm for acquisition locally.

Another private company called Niveus Solutions, that provide similar service albeit for Google, was acquired by NTT data last year. They have 1k employees. The company is barely 10 years old. Alletech in comparison is conservative.

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60

Some really good points you have come up with. Has made me ponder and question myself since I had a more rosy tinted view of the management, having listened in to their concalls and interacted a bit over e-mails. They seemed genuine and sincere, but I also got the feeling that they are quite conservative - a bit too conservative, perhaps, as you pointed out. While it would stop them from making a brash acquisition, it may stop them from even taking calculated risks. It certainly is not to their credit that they have grown so little in all these years.

The point about holding themselves up to performance standards also resonated.

I shall wait and watch over next couple of quarters.

Discl: Invested for the long term.

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61

While agree to that during the concall, Ajay Mian clearly alluded that there is something underway in terms of Acquisition and refused to comment further. You do not have many SMEs with promoters having a phenomenal business clarity and understanding. Would love him to be a bit aggressive but perhaps that would come with time.

PS: Invested and biased.

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62

In case anyone is wondering about the impact of Trump’s executive order on H1B visas, as per Mr Mian, there is no impact since the company does not have anyone on H1B visa. They have folks on L1 and some American nationals on their rolls.

Edit: He also confirmed the same on the Arihant Capital Bharat Connect Conference. No direct impact, but the environment has definitely changed, and we cannot be not affected by the changes, he said. Prospects are taking longer to say yes, and the uncertain business environment would have an impact on the near and medium term. But the long term need for our services is intact and so is the value we are adding to our clients.

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67

In any case, I think they have minimal onshore presence.

Regarding his comments on external IT environment - if the share of US revenue reduces, it will impact their profit margin and net profit more sharply compared to revenue de-growth. This is something to be watched.

Is the recording from Arihant Bharat connect available anywhere?

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Hi, has anyone attended the Q2 concall? Was there any discussion on listing on the main board?

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Unless I missed it, they didn’t mention about moving to main board. I have a feeling it might take two more quarters, but was hoping that they would mention a word or two about it, as they are already presenting quarterly results instead of half yearly that most SME stocks follow.

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After long research and good correction. I took stake in this company,
short term pain is over and valuations are fair.
My attention got over towards this company due to the Reserve cash it is holding, wow this is crazy for a Mcap of 400cr, reserves are 135cr. and most imp mgmt is great.

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73

All E Technologies – a quiet business, a simple thought process (not a recommendation)

Most of us sit with Screener, Excel and ratios.
This post is an attempt to step back and look at the business as a living thing, not just a stock.

Why I started looking at All E Technologies

All E Technologies does not shout. No fancy AI buzzwords. No aggressive growth claims. No grand vision slides.
That itself made me pause.

Because in my limited experience, many businesses that blow up later usually look boring before they become interesting.

What this company actually does (in very simple words)

All E Technologies is not a product company and not a SaaS firm.
It is closer to a specialist mechanic for large companies’ software engines.

They help enterprises implement, upgrade, and run complex enterprise software systems.
Once such systems are implemented, clients don’t change vendors easily.

So this is a trust-based business, not a volume business.

Why growth looks slow (and why that may not be bad)

In enterprise consulting, you cannot grow faster than your people and delivery capability.
Many serious firms intentionally grow slowly to protect quality and relationships.

Why I find the current phase interesting

– SME listed but already reporting quarterly
– Improving disclosures
– No aggressive guidance
– No dilution
– Focus on execution, not hype

How a company like this can create wealth (if it does)

Not through sudden growth or rerating, but through slow compounding of trust, operating leverage, and better visibility over time.

Red flags that can break the story

  1. Key people leaving
  2. Client concentration
  3. Pricing pressure from large IT firms
  4. Inability to scale leadership
  5. SME governance and liquidity risk

Disclosure & disclaimer

I am invested in All E Technologies.
This is not a buy/sell recommendation. I may be wrong.

Request

I would appreciate counter-views, red flags, and bear cases from experienced members.

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