CGVAK Software & Exports Ltd - Niche Microcap IT

CG-VAK is providing cutting-edge solutions for more than 25 years to companies around the globe.
They are a group of around 300 people thriving on the 3 tenets “IDEATE, INNOVATE, CREATE”.

They help transform businesses and organizations by delivering Digital Innovation, Product Innovation, and Modernization at business speed.

They are growing continuously quarter after quarter as well as Year after Year.

Mcap - 175 Cr. Promoter Holding is 53.64%. The free float Market cap is around 81 Cr

In my opinion, what is the differentiating factor is considering the size of the company:


The company is managed by a well-experienced Board of Directors who have vast experience in creating many success stories in varied businesses.

They have over 30 years of business experience including 23 years in the IT business, Manufacturing and International trade. The business units are headed by Vice Presidents and Managers who are well-qualified and experienced in their respective fields.

Qualitative thought: A brief description of each member on their website Management Info. Very few companies under a 200 Cr Market Cap provide this information.

Resource retaining is always a challenge for any IT company. If we see this company’s top-level management, all are associated with this company for a long time which is eventually benefiting to company

Company Reviews from Employees




The company did its highest-ever quarterly sales with a decent margin of 22.66%

Sales: 14% CAGR over 3 years. 54% CAGR over TTM
Profits: 36% CAGR over 3 years. 57% over TTM
Margins: Maintained over 22% for 3 consecutive years. At their highest margin of 25% this year.


  1. Last 3-4 quarters, each quarterly revenue number has been their highest ever. Benefits of operating leverage kicking in
  2. Oct 2021: 90 cr Market Cap company buying a 15 cr office with 25 cr cash on the balance sheet
  3. They are hiring aggressively - 287 employees v 240 YoY AR 22. Saw many LinkedIn and Twitter Hiring Posts
  4. Promoter Buying - They are buying from the open market every quarter for the last two years


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 the rest as rent as detailed in the third-party transaction) which is around 21% of TTM net profits

Investment disclosures

Initial entry at around 286 Rs.
Invested: Allocated around 7% of my Portfolio at an average of 315 rs.
Want to take the allocation to around 10% if everything goes well

Please feel free to add/correct any information if I missed any.


Any reason why they are a micro company even after 25 years? In 28 years Cognizant became a 30B USD company.


Thank you for the write up! Had a few questions. Would be great if you can answer some of those.

  1. Who are the clients of this company?
  2. Which Geographies do their export their products to ?
  3. What percentage of sales is domestic and what is the export percentage.
  4. Are their margins comparable with their peers ?
  5. Are these margins sustainable going forward too?



What is the Durable competitive advantage for this company, is it sustainable over long period of time, why the business is doing which more established players are not doing.

Low debt/ zero debt is another advantage… What advantage it had in technology to sustain it for a long time…

Disc: Tracking…

North America contributed 80% and the Rest of the world 20%.
I don’t know about other questions. It’s a microcap with very less information.
We can keep it on track. Let’s see what it does in the coming years.

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  • The company is continuously giving dividend since 2012
  • Very little revenue comes from ITeS, majority revenue comes from software services.
  • Company acquired 45 new customers in FY22 and acquired 15 new customers in Apr-Aug 2022
  • Repeat business is good, 90% revenue comes from repeat customers. The contracts are yearly in nature.
  • The company is aggressively looking to expand into geographies other than US
  • Company has acquired land and building (10,000 sqft) in Coimbatore at the cost of 17.5cr. Company is still not using this property, how to use this land is in planning stage. New premises can accommodate 700 employees when fully constructed and used.
  • Revenue split by segment - Healthcare (23%), BFSI (8%), Telecom (18%), Technology, Hospitality, Real Estate, Transportation - 1-2% each.
  • Order book as of date of AGM was 26cr, 22cr to be executed in FY23.
  • Sales pipeline is pretty good as of now, there are recession predictions - so let us see.
  • The company is more of fast follower, we wait, watch and then follow quickly.
  • Number of employees as of AGM date - 307 (parent company alone), 15 (onshore employees ?)

Disclosure - Invested, not a buy/sell recommendation, please do your own due diligence, noa a SEBI registered analyst


The company is mainly into offshore software services in areas USA, Canada, Australia,
Europe and the Middle East. Out-sourced Product development (OPD) market space
continues to be the key focus area for the Company. I think the company is providing
services to clients in countries such as USA( which brings 80% of the revenue )
using ( low-cost ?)resources from India. Their offshore software development services
include right from developing, deploying, and supporting while their clients focus on their
main business.

2500+ successful projects, 1100+ satisfied customers, 35+ finest of technologies

From Mar-2014 to Mar-18, the company had flat sales of 30 Crores. From then
onwards, sales have increased from 30 in Mar-18 to 77 in Mar-23 on a consolidated basis
and from 14 to 55 on a standalone basis. Operating profit has grown over the same
period and OPM is 22-24% over the last 3 FYs. Whether margins are sustainable or not
need to be seen.

Risks: As mentioned in the main post by @Manojeet_Das , it is regarding the remuneration. If we look at the RTP transactions reported the remuneration is around 1 Cr and the lease is 0.37 Cr for the period upto Sep-22 and the respective figures for the period Oct-Mar 23 are 1.8 Cr and
0.38 Cr.

If the company uses its building and land which it acquired, then will this lead to a reduction in lease expenses need to be seen. Did they mention anything in the AGM @rupeshtatiya sir?

Regarding remuneration: This is the information that I have found in ARs. In FY22, the
ratio of remuneration received by G Suresh is 25.82 to the median remuneration
received by the employees. In FY21 the ratio is 32.26. I have compared this with the
Danlaw Tech India Ltd which at present has 251 MCap and the ratio is 28.8 in FY22. So I think the remuneration is not a red flag, what do you reckon @Manojeet_Das sir.

In FY21, the remuneration is reported to be around 181 lakhs( increase of 39%
compared to FY20 ) , and for FY22 the remuneration is similar. I think FY23
remuneration has increased which they have proposed in FY22 AR.

Number of employees: 287 employees v 240 YoY AR 22. Their website now shows that
it employs over 525+ professionals. They are still hiring through LinkedIn and seem to
be offering permanent WFH as an option.

Promoter buying: The promoter, S Latha has been buying shares and increasing their

Overall promoter holding 53.75 Mar-23 vs 53.64 Dec-22

The company is now available at P/E of 15.2 against the 5 year median P/E of 12.8 and
3 year median P/E of 14.2. If the company maintains the same growth over next 2-3
years, then we can expect good upside in the stock price. Other seniors please share
your views regarding the valuation and the current opportunity.
IMO, currently it looks good, as lot of Micro-cap and small Caps are reaching all-time

Disclosure: No positions yet, but looking to add at this price. Not a buy/sell recommendation.


@neo13 Renumeration is always on the higher side in all microcap companies, so it shouldn’t be construed as a Red flag but we need to look more from the moat perspective. Will the margin be sustainable on longer basis and how the company would fair against other gaint IT companies.

Disclaimer: No position, tracking


CG-VAK AGM on September 27, 2023.

I will be travelling on this date. Sincere request to Rupesh and others tracking this stock to please share your notes if you’ll plan to attend.

Thank you in advance.


The results are not so impressive…
Revenue is flat and PAT is down by 22% …
Could anyone elaborate what’s the reason for this bad results.


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I had attended CG-VAK AGM23 conducted through VC, following are some notes. -


  • Negligible revenue from ITeS, 98% from IT services

  • Focus in the areas of Mobile, digital transformation

  • 36 new clients added during the year

  • US and Canada - majority business is from these geographies

  • Have clients in 10 more countries

  • Repeat business from same clients - 96%

  • 43cr from NA, RoW - 11cr

  • Every year some award winning work is delivered by the company

  • There is feeling of slowdown - still looks like business as usual - there is cautiousness around decision making

  • Growth trajectory to continue

  • 333 employees - 19 in US

  • Don’t create capacity until we have pipeline. Hoping to exit with 360-380 employees in Mar 24.

  • Should have started construction for new office. Pandemic changed way - everyone is yet to come back to office. Doing some groundwork. Won’t start construction until majority people are back.

  • Order book - 37cr

  • Sectors - Healthcare, retail, telecom

  • BFSI - some business

  • We are into niche market space where ticket sizes are small. These are small/medium businesses which biggies can’t service. Majority of these are owner managed businesses and have high expectations

  • Margins dropped due to cost of manpower

Disc - Invested, no transactions for several months, not a buy or sell reco.


thank you for your valuable input

Disappointing results for CGVAK

Net profit of CG-VAK Software & Exports declined 43.44% to Rs 1.81 crore in the quarter ended December 2023 as against Rs 3.20 crore during the previous quarter ended December 2022.

Sales declined 9.07% to Rs 18.94 crore in the quarter ended December 2023 as against Rs 20.83 crore during the previous quarter ended December 2022.

10 years DCF using FCF -
assumption :- discount rate - 13% , growth rate - 3% and fcf will grow @ 10%

Fair value comes at 356 and cmp is 400

5 year potential targets using sales growth:-

OPM are on upward trend

and that’s because other costs are down

RoE, RoA upward trend
financial leverage getting down
decent sales growth also

But can it continue this growth rate will have to watch out for.

i don’t know what it does i am trying to find out like what are growth factors
it mentioned that most of its revenue from repeat customers
and that it serve to companies where the big guys can’t ( low ticket size i guess )
doesn’t give much confidence tbh

if anyone can help to decode what it does and how it does it and what are growth opportunities

disclaimer:- holding and view biased
recently purchased also

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