The sales growth is marginal.
This specially when last year sales were affected due to covid.
Profitability has increased significantly primarily due to curtailing of SG&A costs.
If you go through their quarterly presentations, you will find that they are two primary challenges
- Their sales growth has been low in the last two years. In 18-19 some india PSUs merged and they lost some big deals. In 19-20 there was covid in last quarter. In 20-21 there was lockdown on first quarter.
There is always a reason but underlying thing is that their sales haven’t grown. This in an environment where all other companies have been Ble to sell digitally.
- Their customer churn has been high. Their annual active clients have been in the range of 550-560 in the last 2 years even though they are adding 50-60 new clients every year.
The business model has potential and is scalable. The only question is sales growth.
This is the same problem that faced intellect design arena and they turned it around brilliantly.
Companies response on sales growth is ( from conf call)
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They are hiring more sales people.in developed economies. This is yet to kick in
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They are focusing on saas sales in usa which has more upfront cost and lower initial revenue but longer lifetime value.
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They have tied up with global system integrator a for selling together. This has resulted in some sales this year but will get traction in coming year.
Disc: invested from lower levels and bought more during covid dip.