CG VAK software and export limited- Small cap IT firm

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Hi All,

If would be good to know people’s views about the small cap IT firm named “CG VAK software and export limited”. Its around 180Cr market cap company, doing around 40Cr sales and 8Cr in profit. I was going through their financial data available on money control and screener and it seems they have been growing their revenue and profit decently and consistently. Their cash flow from operation is positive since 2013 while net cash flow is negative and erratic.

From their AR one major thing seems is the CEO and his wife are taking 2.2 Cr.-2.6 Cr (1.81Cr in remuneration and rest as rent as detailed in third party transaction).

Apart from that rest seems ok or not much of the information.

While software industry becomes very broad term, if someone can help understand what is the growth prospect, market size of the core business of this organisation - it will be valuable.

Thanks in advance
DJ

It would be good to get the views from others

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I checked the company first on the Screener.
The CAGR is good:
Compounded Profit Growth
10 Years: 27%
5 Years: 64%
3 Years: 36%
TTM: 54%
P/E is 16.5. The ROCE is 30.8 %. The ROE is 24.9 %. It is ROA however, which is impressive. ROA 3Yr is 17.8 %. The Operating margin is rising. For 2017, 2018, 2019, 2020,2021 and 2022, these are 1cr, 2cr, 5cr, 6cr, 10cr and 13cr. OPMs are also rising from the same 2017 to 2022 at 4%,7%, 14%,15%,22%,24%, and 25%.The reserves too are rising during this period: 11cr,12cr,16cr,20cr,27cr,36cr, and 43cr.
Net cash flow has however gone down from 4cr in 2021 to -1cr in 2022.
Its main business, 85%, is with North America.
The comapny is mainly into out-sourced Product development, which means that it is working like a contractor.
As per the company site,

the main areas of its work are:

  • Digital Marketing
  • Portals/E-Commerce
  • Creative UI/UX
  • Social

I checked up what UI/UX are. This is what I found:

The “UI” in UI design stands for “user interface.” The user interface is the graphical layout of an application. It consists of the buttons users click on, the text they read, the images, sliders, text entry fields, and all the rest of the items the user interacts with. This includes screen layout, transitions, interface animations and every single micro-interaction. Any sort of visual element, interaction, or animation must all be designed.

“UX” stands for “user experience.” A user’s experience of the app is determined by how they interact with it. Is the experience smooth and intuitive or clunky and confusing? Does navigating the app feel logical or does it feel arbitrary? Does interacting with the app give people the sense that they’re efficiently accomplishing the tasks they set out to achieve or does it feel like a struggle? User experience is determined by how easy or difficult it is to interact with the user interface elements that the UI designers have created.

Whereas UI designers are tasked with deciding how the user interface will look, UX designers are in charge of determining how the user interface operates.
The following 9 are its main competitors:
1.eFlair Webtech
2. Lollypop Design
3. NetBrahma Studios
4. Divami
5.YUJ Designs
6.Thence
7.Sparklin
8.FI Studios
9.Team Codesign
9 Best UI UX companies in India - The Hindu
None of the 9 companies is listed. At least I have not found them on the screener.
May be our friends can tell more about it.
Disclosure: Not invested. This is the first time I have heard of this company.

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Found this company through screener a month back. While the revenue growth and other business metrics seemed good, promoter remuneration and rent (as highlighted by you) was proportionately too high for me to put my money in this opportunity.
Having seen Sun TV network with a significantly higher sales and market leadership position (albeit in a different industry) suffering due to the same issue, i decided to Move on

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