There was some news in their linkedin post, about launching of app for detecting cataract with the help of AI, that may be the reason.
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This is something that almost all the IT outsourcing companies do. Nothing unique that gives them advantage to succeed in this.
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Highlights and Commentary on Q2 FY24
No commentary on Receivables though. Company doesnât seem to be affected much but receivables now 71 days.
I donât know whether it is common in IT Industry, but trend shows Receivables increasing way faster than revenues in past 2.5/3 years.
Commentary:
Microsoft Word - Cover Commentary (bseindia.com)
Results + 7 Rs interim dividend:
Microsoft Word - Outcome of Board Meeting 15.10.2023 (bseindia.com).
Disc: Exited earlier. Only tracking now.
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What fascinates me the most is how their revenue is going up by roughly (give or take) 2 cr every quarter for the last two years.
Giving eye checkup using AI App is a gimmick, which company is trying to catch fancy of investors in the hyped era of Generative AI. Now a days even school kids can make such app in a day, so not much in there.
Company reported EPS of Rs 7 and giving the entire amount as dividend, wonât they be needing money to expand their business. GPUs for generative AI wonât come cheap and company needs them so that employees can stay with the current state of the art which is changing almost every week.
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@lovekesh_thakur
Can you please explain more why you think their technology stack is immature and is a management gimmick?
I donât completely agree with that because developing apps with high scale request throughput with micro service architecture with Kafka/Kubernetes is the future where industry is heading. It definitely requires dev expertise (I am a dev myself, having worked with Microsoft, paypal, etc). I saw their latest investor presentation and based on the last few pages where they described case studies with some clients, it is definitely adding value.
As far as generative AI is concerned, I wonât comment as I have limited knowledge in that area and would actually side with your opinion that management is hyping it up. But for their development revenues, I would like to differ.
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Also on your point of giving away huge dividends and whether they require money for expansion⌠maybe you are right. But in some of these companies which develop high end solutions for their clients, the client is ready to pay more margin as there arenât too many competitors in India for that. In US yes, they will face a lot of competition but then the service cost from US company would already be quite high, so they would choose Indian company.
They donât need to retain profits today to expand tomorrow. For them expansion is as simple as hiring employees and handing out PCs to them. The incremental revenues from clients are sufficient to fund that much.
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How manage to recruit such high skilled employees comparatively cheaper and in small cities?
That I am not sure. I was actually looking at their employees on linkedin - seems like even 3-4 years experiences folks are being promoted to tech leads and senior software devs. This is not inline with the IT products industry. Their backgrounds like college, education isnât great either - (27) Search | LinkedIn
If company organises a concall, maybe we can ask all these questions
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Ksolves has tie up with Upwork, a well-known US based leading platform connecting freelancers and clients directly. The platform could be used to source talented freelancers at very competitive rates as well as acquire small and medium enterprises (clients) worldwide.
Source of this info?
Is getting Freelancers and Clients from Upwork good biz model? A company that commands PE of 43+.
The emergence of global delivery model with a work from home workforce has given rise to many successful companies such as Toptal, Crossover etc.
This model is a win-win situation for all parties involved - workforce gets a good hourly pay for their talent/expertise in dollars credited to their account on a weekly or biweekly basis while working from home, companies are able to attract top talents (experts in the relevant areas) across the world, charge clients with higher/equivalent billing rates coupled with a lower employee cost (CTC) and achieve workforce fungibility while the clients get top class service all along for the money paid. Most importantly, it allows all parties to be nimble footed in todayâs changing market and allows for optimum utilisation of resources - money, infrastructure, workforce etc.
This is unlike typical software companies saddled with a huge employee workforce, managing bench, utilisation etc. and paying a higher CTC with or without billing. Moreover, with rising job losses, billing pressure etc. things get more politicised at the ground level since each one looks to hold on to oneâs own seat.
So far Ksolves seems to be leveraging a hybrid delivery model trying to get the best of both worlds which is good.
It means not much barriers for entry. Every mofusill company can leverage this it looks. Really canât understand the valuations these types command.
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Checkout website of Kody Technolabs KodyTechnolab. Itâs another listed company and mind blowing. If i was in the market for vendor for App development, iâd be calling Kody guys, however not vouching for the information they are sharing on their website, but their website is a straight sixer.
Now coming back to KSolves, in my opinion (if financials are right) then it is a great business for itâs promoters. But the work being done by KSolves might be average at best. You can call them commodity software development company, which should not have such high PE.
The technology stack they are working on has intense competition in the market, anyone can learn these tools in 06 months and earn average salary, so they really need high quality talent which can do good work in web Development and such.
To attract and retain talent, they should be handing out ESOPS, higher salaries and invest in their technical learning, which company is happy doling out all the cash as dividend. Itâs as they consider their employees as commodity, which can be replaced with lesser cost.
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Theyâve given out dividends of 183% so far. Reserves stand at 17 cr against capital of 12. Though thereâs no benchmark for cash reserves, the basic thumb rule for IT companies is to have a strong reserve.
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Many well known IT companies are partnering with Upwork to incorporate a freelance model. Microsoft seems to have built a product too for the same.
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Hey @lovekesh_thakur
I am assuming you are from IT background⌠so asking you to checkout this - Search | LinkedIn (Kodylabs employees).
Just have a look at 5-6 profiles of their employees - do you think it is great? Isnât the skills of people here average too? In fact their co-founder Manav Patel is having only 8 years of experience compared to the leadership team of Ksolves all of them have 15+ years of IT experience. In fact, employees in Ksolves have better technical skills.
I am not vouching in favour of Ksolves, but asking you again⌠what makes you think they are doing average development? What is the benchmark here?
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Ksolves has 450+ employees as per latest presentation. Assuming 400 of those are technical staff (interns, junior engg, developers, lead etc), they generated roughly 90 crores of revenues, which comes out as 20-22 lakh revenue per employee, thatâs about 25000 USD per employee, which is on the lower side.
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companies needs degrees to sell to potential client, beyond that its hard work + execution. No degree can help. I have seen brilliant people from humble background doing tremendous work and folks with degrees living in a self created bubble.
Anything cooking in company? Growth is fine but companyâs presentation looks very fluffy and just filled with buzzwords like AI, ML, Cloud etc. Being sr software mysel, I am having second thoughts on till what point it will be able to manage such high margins.
On 1st Jan, stock zoomed 10+%.
Invested 4% with avg price 1075