SaaS companies funded by VCs and PEs are doing incredibly well in the US and many in India as well. ( Slack, zoom, Dropbox, shopify, freshworks … you know the works)
SaaS for the purpose of this topic defined as : Companies that provide a off the shelf of customised solution that is hosted on prem or in the cloud but is paid for by the customer on a monthly / periodic subscription basis
I have been trying to find out if there are opportunities in the Listed space in India.
I am not sure if There are any Pure PLAY SaaS companies in Listed Universe so far but there are a few that are trying to make a transition from License Sale of Software to Monthly Subscription for Cloud hosted solutions
Intellect Design : Banking Software License Sales, Offering Cloud and SaaS solutions now
Majesco : SaaS Player in insurance space . Spun off from Mastek a few years back
JustDial - Sells Listings but also had a software for MSMEs that did not do well
India Mart Intermesh - Sells Subscription to list products on their website - Should we call it Listings like Just dial or SaaS since this is subscription advertising / Leads and is expense for a business that is not necessarily renewed at the end of subscription
Infosys has a subsidiary called Edgeverve that sells finacle - They used to sell Licenses but am not sure if they sell Cloud Version of Banking software now. Its a smaller part of Infy
Accelya Kale : Aviation industry software License Sales. Cloud Revenue not broken out in Results. Q4 Results not shown on website
Two years back, I wrote this article about the potential of investing in public saas companies like a mutual fund. An equal allocation in all these stocks would have given a return of 111.48% in 2 years (or 45.42% CAGR).
Infoedge is the best SaaS play, not only they have been successful in running Naurki; the company is also incubating other SaaS in-house (99Acres + Jeevan Saathi + Siksha), while investing additional cash in other SaaS startups.
I’m also Tracking Ramco system. It grabbed my attention when heard the news vijay kedia bought new shares in the company. Although past performance is not that satisfactory but Kedia is known for picking stock based on management & turn around story.
Please share if you have any updates or done any research
I watched this company for 20 years and it has not gone anywhere. It used to make ERP products for Indian market which to their credit they were able to migrate to SaaS model with advent of cloud. But big gorilla SAP getting aggressive across globe, they can only hope to get left over business.
I have realized that tech services in only India’s play, tech product is predominantly a north american game with few companies from europe chipping in. Chinese are good but it another closed ecosystem.
Also, this company’s one of major focus was aviation especially MRO. Aviation being in uncharted territory they will struggle unless they can compensate that with other verticals.
Unless there are fresh triggers which I am not aware of, this has lost 95% of value since dotcom euphoria
Updating this thread after almost a year to see how this trend of SAAS has played out.
More companies have started breaking out SaaS revenue number or atleast ARR number comprising of subscription, AMC and any other recurring revenue in their quarterly results.
Price performance of some of these companies since the original post has been stupendous on a YOY basis ( intellect, majesco, IndiaMART, newgen) many if not all are trading close to all time highs
Some companies have started seeing institutional interest. Most notably intellect design, where there is increased analyst coverage and vanguard bought a large chunk of shares at 700+ . I read somewhere that when market cap crosses 5000 crore it starts meeting minimum size criteria for many institutional investors
Will add more observations on other companies as mentioned by other members on this thread over next few days like Ramco or ORACLE financial.