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ASM Technologies - Engineering innovation

ASM Technologies : Engineering innovation

ASM Technologies is founded by Mr Rabindra srikantan in the year of 1992.

Company evolved over a period of time and divested their enterprise software services business and started focusing on their niche skills like product development Engg RnD,Automation solutions,product life cycle, IOT, Virtual reality etc.

Today company standing on a cross road with multiple optionalities under the able guidance of Mr rabindra srikantan.

Before discussing about the company and its fundamentals let us figure out what is Engg RnD and how this is differentiated from conventional IT businesses.Compared to IT service business it is a sticky business involves IP rights/patents etc.IT business focus cost savings whiles ERD creates revenue stream and operational cost savings.Key sectors using ERD verticals are Aero , Auto , Telecom , Defence etc.

Engineering RnD segment as a sector

100 bn USD is globally spent on outsourced ERnD. India account for 30 Bn USD business, unlike other IT segments china is the market leader here.Currently tailwinds are favouring indian companies due to multiple factors like

Growing RnD spent due to digitalisation / Electric vehicles / Automation / innovations / adoption of IOT (internet of the things) / Artificial intelligence etc.

# IP protection and trust factor favourable for indian companies

# A growing manufacturing base in india

# Large pool of engg talent

# Changing to Innovation mindset / Startup eco system

Some of the large companies who are spending big money for Engg RnD outsources are GE , Samsung , Cisco, Intel , Benz , Airbus , Boeing , Bosch and Volvo.

Major indian players are HCL technology, Cyient ltd , LTTS etc.

ASM Tech is a small kid in terms of revenue and scale of operations.

CMP : 160
Marketcap : 80 cr
TTM Revenue : 107 cr
TTM PAT : 10 cr
PE : 8

H1 revenue growth is around 35% yoy , there are not much public available informations to understand the reason behind this revenue growth.But if we carefully go through the credit rating reports available at screener.They clearly states about new orders in company hand also telling FY 20 poor profit figures majorly due to the unproductive days bcz of employee trainings for new orders received.

ASM credit rating report ICRA - Aug 2020

"Revival of margins over last few quarters, healthy order book and new product profile augur well for FY2021 - ASM’s profit booking has Revival of margins over last few quarters, healthy order book and new product profile augur well for FY2021 - ASM’s profit booking has depicted a lumpy trend in FY2020 due to higher employee expenses during the Q2FY2020 and Q3FY2020 due to employees being trained for an order received by the company. Order book from key clients continues to remain healthy with an addition of orders from new customers in Q1FY2021 augur well for the company. The q-o-q revenues and operating margins improved from Rs. 22.34 crore and -3.8% in Q3 FY2020 to Rs 26.1 crore and 20% in Q4FY2020 which it has maintained in Q1FY2021 due to healthy order execution.depicted a lumpy trend in FY2020 due to higher employee expenses during the Q2FY2020 and Q3FY2020 due to employees being trained for an order received by the company. Order book from key clients continues to remain healthy with an addition of orders from new customers in Q1FY2021 augur well for the company. The q-o-q
revenues and operating margins improved from Rs. 22.34 crore and -3.8% in Q3 FY2020 to Rs 26.1 crore and 20% in Q4FY2020 which it has maintained in Q1FY2021 due to healthy order execution "

80% of the revenue comes from top 3 clients.

  1. Applied materials (Leader in semiconductor industry)
  2. Infloblox (Cyber security and cloud company)
  3. Ruckus wireless (wireless LAN device manufacturer)

So basically this is a microcap illiquid company available at cheap valuations due to small scale of operations and high client concentration risks.
Nothing wrong with current valuations company have not done much in last 30 years of existance.Am not trying to figure out this is a cigar butt trade or not rather am looking at a long term view on this company on following factors and why i believe the company is in cross roads.

Promoter pedigree

Optionalities infront of the company

I will try to discuss one by one in coming days.

I also request the fellow boarders to study on the company and do some research and share your feedbacks.


Thank you shanid ji . Very interesting story…Seems a very investor friendly company. Can you please look at their subsidiary company business as per the latest AR stated that they have a innovative product which is a "breakthrough innovation " it may lead to ASM into next level of growth path. Disc: ( invested )

Optionality 1

ASM aquired a hydrolic machine fixture manufacturing company based out at chennai,company name is Forms and Gears.This company make fixtures which can be connected to physical machines at manufacturing locations and help to make the machine fully automated.Forms and gears have a prestigious client base like Toshibha Cummins M&M etc. ASM together with the help of Forms and gears launched SMARTFix 4.0 this particular machine set up will help you to impliment full-automation,data management,and A-I for your machines.
Currently company manufacture just 500 machines per annum and planning to scale up and expand current operations as per below media reports.


Optionality 2

Association with Semcon.

Semcon is MNC based out at sweden in the same field of Engg RnD with an employee strength of 2000 designers. One month back ASM announced aquisition of semcon india (Indian arm of semcon).

But as per semcon official announcement this divestment is strategic in nature to expand current capacity.Please see the below announcement.

1328459 (1).pdf (47.2 KB)


Had written this small intro recently on the stock :
ASM Technologies ( BSE Code : 526433) (Website :
• In the business of Engineering Design, Product Development & Digital Transformation.
• ASM has been providing solutions to semiconductor, hi-tech, automotive, aerospace, medical equipment, enterprise storage & networking, and consumer electronics industries.
• ASM has made Strategic Investments in emerging technology companies, whilst Co-Creating products in the areas of Cloud, Network, Cyber security, Electric and Autonomous Vehicles.
• Co-created 100+ products & engineered 200000+ parts
• Recently taken over Semcon India Pvt Ltd, the Indian offshore delivery centre of Semcon AB, Sweden ( & entered into a Global Co-operation agreement with Semcon.
• It’s (70% owned) subsidiary RV Forms & Gears Llp ( has introduced SmartFix4.0, which allows industry to get better throughput from machines & fixtures through Data Analytics & Artificial Intelligence.
• RV Forms & Gears Llp has also tied up with metal-cutting and digital manufacturing solutions giant Sandvik Coromant to provide turnkey engineering and digitisation solutions in the South Asian, South East Asian and Oceania region.
• ASM is a consistent dividend paying company, has paid uninterrupted dividends for over a decade, 2 interim dividends this year already of Rs 2/- each.
• MCap - 74 Cr, CMP - Rs 148/-, BookValue - Rs 110, TTM EPS - 19.93. TTM PE - 8
• Cons :
a. Fluctuating financial performance in last few years;
b. High client concentration - 82% revenues from 3 clients : Applied Materials Inc , Infoblox, Ruckus Networks (part of Commscope);
c. High industry concentration (90% revenues from 2 industries - Semiconductor, Telecom & Networking);
d. Stock is not very liquid & has already moved up sharply this year from its low of Rs 49

Disc :
• Invested, so +vely biased.
• This is not a buy call.

PS :
Two additional developments post writing the above

  1. Forms & Gears has bagged the Confederation of Indian Industry (CII) Industrial Innovation Award 2020 under the ‘Top 25 Most Innovative Companies’ category for its smart fixture device, SmartFix4.
  2. Company has called a board meeting to consider a bonus issue .

I have some questions
Is this in to design of semiconductor or manufacturing??
Whether Sasken Technologies is its competitor ?

Which are the large companies procuring from it.

And lastly what is the order book size currently.

Anyone please help with this information.

Before investing I would like to get above clarification.


Thank you Admin for re-opening the thread.

5 year financials of ASM tech.

**Intresting points on ASM tech financials. **

# Topline growth was 47% for FY 21
# Semcon aquisition happend in October 31st , only 5 months of operations in FY 21
# 20-25 years of un interrupted dividend history
# Company has investments in several startups



Company founded in 1992 and IPO came in 1994, nothing much happend in the past 25-30 years barring last 3-4 years. Lazy and conservative promoter ???

Margins were very volatile and never shown a consistent trajectory.

Debt increased substantially last two years

Company is doing several aquisitions in last 2-3 years. Aquistions led growth could be risky.

Company talks a lot about many things like AI, IOT, driver less cars, EV etc may be chances of biting too much beyond their capacity.

My take on the above risks

Promoter started in 1992 and scaled up operations but divested software enterprise division in FY 15 and decided to focus EnggRnD segment. He used entire proceeds from divestment for special dividend and debt settlement.

Last 3 years company did several investments and two aquisitions. Heavy employee additions in last one year (600 to 1100 employees) stabilising the new manpower and on job trainings for them affected margin profile. The real margin profile should emerge from this financial year onwards.

Debt increased but seems like in comfortable position company continue to pay hefty dividends almost gave out entire EPS for FY 21as dividends.

This promoter doesn’t seems like a guy who overpays for any aquisition, bought Semcon india at asset value (13 cr) and did 22 cr revenue in 5 months of operations in FY 21.


Disclosure : Hold substantial qty (more than 20% of pf) with average cost price of 110.


Engineering RnD segment - Growth figures
Some details from Onward Tech investor presentation.

• In a 2019 report by Zinnov, the market addressed by ER&D Service Providers stands at ~USD 80 Billion, at 8% Y-o-Y growth.

• The study analyzed the global Engineering R&D (ER&D) space and estimated that the Global ER&D spend by organizations worldwide stands at USD 1.4 Trillion in 2019 and is expected to grow at a CAGR of 7% to cross USD 2.2 Trillion by 2025.

• In 2019, Indian firms clocked $31 billion in ER&D service exports, according to NASSCOM.

• As the largest exporter of ER&D services, this has huge implications for India, and the opportunity could be as large as $100 billion.

• India is rapidly emerging as the destination for innovation and technology by tapping into its robust and thriving start-up ecosystem. Additionally, proactive and supportive policies are also an attractive advantage.

• Recent investments and government initiatives such as Make in India, Skill India, Digital India, and Start-up India have significantly contributed to establishing the country as an attractive destination for ER&D and innovation.

• India surpassed China in attracting funds for engineering R&D, clearly marking India as the next destination for high-end ER&D. Of the overall $100 billion spent globally on outsourced ER&D, India accounted for about $31 to $32 billion. Global companies across Asia are increasing investment in India to leverage the country’s advantages
in talent, cost, and policy support.

• According to Everest Group’s Global Locations Annual Report 2019, India accounted for almost one-fourth (23%) of the new centers set up globally in 2018.

• India, today, is home to more than 1,400 Global Capability Centers (GCCs) that conduct offshore product development and provide product engineering services for their headquarters. These GCCs represent some of the largest Fortune 500 companies that have their largest or second-largest R&D centers located here, including GE,
Samsung, Cisco, Intel, Daimler Benz, Airbus, Boeing, and Bosch.

• Currently, there are approximately 700,000 engineers involved in ER&D in the service a $100 billion market, we will need to add another one million engineers in the next five years.


■ ASM Ventures:

We are makingkey strategic investments in several
emerging technology companies, while co-creating innovative new products in future-focused areas like Cloud, forefront of cutting-edge technologies.and allow us to take advantage of the huge growth potential in these areas.

Some of our strategic investments are :

  1. Lavelle Networks: Leading provider of SD-WAN solutions
  2. RV Forms and Gears: Pioneer in Design Led manufacturing for working holding, lloT, Industry 4.0, Special Purpose Machines, manufacturing Engineering.
  3. Polylogyx Inc: Endpoint detection and response. Polylogyx was acquired by Eclectic 10 (
  4. Semcon India Pvt Ltd (now known as ASM Digital Engineering Pvt ltd) specialising in Digital Engineering, Vehicle Engineering, Value
    Engineering with marquee customers in Europe.
  5. Baro vehicles - Intelligent vehicles and automation

Thanks for the update

Can you have any details on the Semiconductor technology which the company has.

Also share if any other updates on guidance for next one year

ASM tech is an IT company into Engg RnD segment. They have a major client from semi conductor space otherwise I don’t think they have any semi conductor technology.

Company has not given any guidance as per my knowledge. So cannot comment anything on it.


Rabindra srikanta talks about his entreprenur journey little dated but informative.


ASM Tech AGM Notes

Last year we have ventured into semi conductor equipment / electronics equipment segment. We have been doing the design part, now we will do design led prototype and manufacturing in this space.

Two new geographies we have expanded this year are taiwan and Vietnam. Other geographies we have invested from last two years are UK and Japan. These new geographies should start contributing from this year onwards.

Smartfix 4 we started last year, from second half of this year we are expecting this to start contributing to revenue.

Semcon aquisition opened up new geography and new clients from automobile space for us, we will continue to support Semcon in EnggRnD segment.

Segmental break up of 25 cr revenue in digital space. Cyber security, Networking , cloud infrastructure and wireless. Roughly all contribute equally for this segment.

Product RND/ Product engineering largest contributor in revenue apprx 25% of total revenue.

Total 100 employees for Lavella and Eclectic centres (50 each). Eclectic opened office allready in bangalore and Lavella also progressing.

We will grow at the same rate of last financial year we are committed for growth. There is strong visibility for next 12 months, cannot comment on beyond that.

Margins will scale up with revenue. Lot of costs are fixed and we have been agressively venturing to new geographies and invested heavily in manpower and all. Normally there is a 3-6 months lag before a new employee start generating revenue. Going forward we are expecting to increase our employee productivity from the current levels. Expecting to achieve 20-25 lac revenue per employee. We also have a manufacturing segment so that needs to be factored before comparing with peers. **

NSE listing, Investor presentation and a conference call etc we are planning near future.

There was some connection issues at my end , missed many points, people who have attended can add other points


ASM Tech is managed service provider for EclecticIQ- A cyber security company based at netherland. As per news item they have started operations in bangalore.


Rabindra srikantan talks about digital transformation.


This twitter thread has good insights on EnggRnD segment of Indian IT industry.

Note : I have taken the permission from the author for publishing it here.

Take away

Contracts are very long term nature in Engg RnD

Work culture different from IT consulting jobs

Close working with manufacturing and lab setups

Tailwind for the secotor is driven by automation, EV and digitalisation.

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