Looks like a great play fundamentally - margin expansion story with scale should play out. Increasing share of SaaS is a big positive for long term investors.
My concerns currently are:
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Macro slowdown in EU/US and the impact it may have on BFSI tech spending. Would it lead to an impact on Intellectâs topline growth? Temenosâ stock (a key competitor) has seen massive correction on the back of macro concerns whereas Intellect has remained largely steady
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There are new competitors coming up in the segment - such as Mambu - who are giving a tough fight to Temenos. With relatively smaller size of Intellect and thus smaller R&D spend - how is Intellect able to compete effectively (for the long term)
Overall still looks interesting but would love to hear if anyone has thoughts on these points.
Aug 01, 2022
Detailed rationale and outlook by Candor Investing
Slow down bodes well for Saas companies, as institutions cut on costs. Moreover with inovation from startups at there heel it is more of a need of the hour. US has been a challenge and that still remains out of reach for Intellect. If they can get a few good accounts it will change the game for them. Favorably poised towards Reward. Time is ticking and competition is not sitting idle.
Behind paywall. Any summary?
Valid arguements. I too of the same view that all things considered - it looks interesting.
The deal pipeline has also held up well thus far. Probably a tough quarter or two ahaed (given the commentary around margin pressure) but things should pick up thereafter.
Even Oracle FS and Mastek which belong to the same sector have witnessed bigger corrections than IDA. Will be interesting to watch out if the current levels sustain or whether bigger drawdown is in store.
Although one mitigating factor is higher share of sales coming for India, Middle East and SE Asia than other IT players.
Still in the current macro hard to imagine that there would be no impact on new deal wins in EU/US.
The individual who wrote this article is totally against the prospect of IDAâŚwhats the views of membersâŚIs it time.to sell or trim.positions considering continuous fall as also geeting out of Gartner Quadrant??
Investment decisions should not be based on newspaper articles or stock price during a sectoral bear run. I would suggest you read past 3 concall transcripts to get an idea what to expect in near and midterm future and decide based on your own judgement .
Also read posts 418 & 419 in this thread for Gartner related stuff.
Disc. Invested at higher level and dissapointed that my quota for IDA is already full.
This looks like a very balanced article to me. In fact, it is a buy recommendation. Are we talking about the same article?
Rs 631 a share is not cheap or a bargain to pay for Intellect Design, but given the growth potential, it seems to be a reasonable price to pay for this company.
I follow the writer on Twitter and was quoting his statement thereâŚHe has already exited his positions. Earlier he was a proponent of buying but now he says that the management commentary and onground performance doesnât match up. He also states that he is working in the same sector and knows a lot and says there are lots of headwing. The products offlate arent doing as good as others.
I also know the handle and being from IT sector myself,keep an eye on his posts. But frankly , IT is a vast sector and the guy may stay in Germany and work in IT, he surely is not the one stop shop for IT investing ideas. Problem with Twitter is that you need to keep posting stuff to keep your followers . As I see it,this guy is good for judging mid to large orgs but very impatient all the same.
I have been following IDA for a year now and I wonder how anyone says mgmt does not follow through . They have been most transparent and clearly guided for margin pressure and uneven QoQ results as the business has not reached the stage where they have enough pool to bag bigger orders.Managemet has always said look at YoY not QoQ . This guy must show his expertise so he said "I said so,delayed deals etc. ââ but as I see it he had not read the concall transcript himself .
As I see it,these guys had a good run because of the 20-21 bull run and drummed their own picks as everything went up ,then poked fingers at whichever they did not have and then sold those picks which did not holdup and pointed fingers again.While I agree with this guys comments on HM and Tanla,I think he has wrong ideas about IDA and Mastek. IDA is a longterm investment and if one can not stomach the sinuaoidal QoQ PAT profile even when knowing the businss well,then its indeed better to exit .Mgmt has clearly guided for few quarters of lower OPM due to hiring resurces to catch bigger projects,so company is not likely to start outperforming .If one does not have trust in the management after reading the concall transcripts,its better to look somewhere else.
Disc. Invested.
If Iâm not wrong this guy also criticised two very small companies with great financials namely Infobeans and CG-VAK. Never liked his only one-directional idea about Tata Elxsi and LTTS.
Canât take the heat even when stated with facts. Lol
So well written post and this is why you should never follow people and their ideas on Twitter. This so called IT specialist has been writing against IDA since long time, he may be partially correct, but it looks like a case of sour grapes more than anything after stock ran up 40 times from covid lows to ATH back in April '22. Such people make fun of other people, who are obsessed with short-term price movement, but blow trumpets of âtold you soâ at the first opportunity of seeing the prices crashing of the stocks which are on their agenda list. IDA is certainly one of them. Check his posts every time IDA falls like he is so obsessed with it. But this so called expert fails to understand that Nifty IT Index is down as a whole and it is not stock specific. Why is he not pointing fingers at his favorites like LTI/LTTS? IDAâs competitors like Temenos and OFSS are down by 57% and 42% respectively from ATH. IDA is also down 42% following its peers, but all the hate against only IDA, do you see agenda, eh?
Just so every body understands how their stock bias works, this same guy has been a big supporter of Newgen, stock is down 45% from ATH. I donât have the link of the interview, but Dipan Mehta of Elixir Equities beautifully explained why Newgen is a poor investment. Now have you ever heard this guy writing anything against Newgen? You sure must have seen positive things about it, if the stock had run up but since thatâs not the case, all we can feel is pin drop silence and no posts so far. He is saving his face, canât do anything about it. Same with his other investment ideas, LTI and LTTS (both down 43% from ATH). If he saw all these things coming, why dinât he sell Newgen/LTI/LTTS?
My request to everyone is please make your own judgement and conviction in the stock market and donât follow people blindly. Nobody is doing charity here, please understand this. Nobody knows anything, itâs just a case of shooting in a dark room full of animals and getting a couple of them killed. Donât forget, 2020-21 bull run made these guys âexpertâ, not their skills.
I read some Glassdoor reviews about Intellect. Most of the reviews are positive, but few of the poor reviews say that the technology used is still old. It also says that Intellect has not upgraded much from the software they got from CitiBank.
Does anyone know if there is any truth to these allegations?
Intellect has been around for 8 years and has been developing products over this period. Technology evolves continuously. One does not re-platform/rewrite everything in one go. There are release or refresh cycles. One waits for critical mass or customer demand before refreshing the technology stack. In addition, there will be customers on older versions that need to be supported too. Intellect has been continuously investing in refreshing its technology stack. It wouldnât be as new as some of the new entrants such as Mambu or Thought Machine but it does not seem old.
I actually was thinking on the same lines. But I didnât want to assume anything. So, I want to be sure that when they invest on their products, they donât just invest to move them from licensed to cloud, but actually rewrite parts of the products in their releases.
Any idea on the technologies/frameworks used? Can take a look.
You can watch the videos on https://www.intellectdesign.com/convergence-2022/. They give an idea of the technology stack used. Roughly 8 years ago all products had a client-server based monolith architecture. They moving to a MACH based approach - microservices, API, CloudNative and Headless.
https://www.sitecore.com/blog/headless/what-is-mach-architecture
They also have invested in machine learning for document recognition
Most companies will throw a lot of buzzwords. A lot of times they will just have a thin facade/API wrapper over legacy code. So it is very hard to gauge the true level of modernisation from presentations.