Sasken - Not so good company but can be good investment?

Stock Opportunities
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End jun14 company had 150crs+ of cash. That is Rs70 per share. Then they have got rs250crs from spreadtrum. Assuming 30% tax leaves you with atleast rs80/share. So company has rs150/share of cash. Out of this they paid rs1.5/share dividend and will pay rs20/share in oct 2014. So much cash in the hands of an honest promoter who gives dividend and has a history of buyback and share is at rs250.

So should Ashish Dhawan selling or Anjan Lahiri quitting worry investors? Yes, but isnt this still value pick.

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Company should pay another rs60/share of dividend or a buyback of 120 crs.

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Hi Venkatesh,

In my extremely humble opinion, Ashish Dhawan selling was based on his private knowledge of Anjan quitting, he showed his dark side by doing it and these kid of “investors” shouldn’t be paid much attention. He was on board of Hexaware too, till late last year. I have read 1-2 article detailing his investment philosophy, nothing concrete, i guess because of money power these kind of people get to know the people who matter and do trading based on insider info.

Yes, in my humble opinion, i think Anjan leaving should be noticed. Sasken now is a company which isn’t able to grow business, has apparently no sales strategy, existing business is struggling and is left with old management which again hasn’t shown any mettle in growing the business. If it doesn’t grow, it wont get re-rated. Your calculation is correct, i guess u should add 10 crores more as CFO generated for June qtr as well so company should have 155-160/- per share as cash.

They should do a special dividend again, possibly 20/- with the result of June qtr and then probably they should think of either diversifying or more client mining.

They can be an easy target for a predator too but that will good for us i guess

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Ashishji

Silicon Automation Systems was founded by Rajiv C Mody, Krishna Jhaveri, Badru Agarwala and Suresh Dholakia. Initially it focussed on IP and had a good run until 2000. With telecom crash, the company lost significant revenue and started looking at Enterprise apps. Until 2004/05, had a rough patch and stabilized with the IT boom. Got listed and has been a mediocre eversince.

1). IP Products: SAS was founded with focus on IP products. Badru Agarwala, left SAS (not sure when) and founded Axiom in 1999, that focussed on Semiconductor design solution. Subsequently Axiom was sold to Mentor Graphics in 2013.

Jhaveri and Mody continues with Sasken, while other promoter Suresh Dholakia exited. (Google Suresh Dholakia, if you want to know more about his subsequent ventures. Suffice, it’s not very relevant for Sasken).

I strongly suspect Badru as the brain behind early IP Product success of SAS. I do not have any hard proof and my conjectures are purely circumstantial based on the timing of his exit, SAS focus / success on IP products afterwards, Badru’s 2nd success with Axiom etc.

A quick look at Axiom literature on web, leads me to believe that IP Products around Silicon Design Ecosystem did well at least around 2006-2009 phase. And they did possess IP Products for which Mentor Graphics acquired them. Contrasting this with Sasken’s between 2006-2013 period, the IP product portfolio did not grow well. Given the pedigree and the space, I do not see much difference between erstwhile SAS and Axiom. What separated them, is the quality of management and relentless pursuit of their core competence

2). Sasken’s services pursuit was again not in comparison with peers. Over a 10 year period of 2005-14, TCS grew from 9,774 crores revenue to 81,809 crores. Infosys grew from 7,130 to 50,133 crores. Sasken grew 241 crores to 448 crores (peak 697 crores in 2009).

To me, the Management is not clear in its vision (products / services) and is not capable of executing growth to match industry average.

Am not sure if any CEO material worth his mettle, will check Sasken for now, given Anjan’s short stint and the open bickering of the management. So that points to Mody running the show with his confidant coterie. Unlikely this will see any radical vision or progressive roadmap, and performance will be as lacklustre as pre-Lahiri’s era.

Fully concur with Venkateshji’s calc on cash in hand(with Ashishji’s update). However unless the potential cash is unlocked, it may not give significant value to investors. One more special dividend is unlikely in the near future, as otherwise they could have easily increased the current special dividend. IMHO Acquisition possibilites, quality of acquisition and the post merger benefit realization are not high, given their past record. Buyback is possible, as another salvo to prop up share price. (And they may know the attraction is until they have the cash in hand.) My assessment, it may be a trading bet for dividend stripping (OFSS case does not augur well). However does not possess the triggers for a long term investment.

1 Like
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Fully concur with u brahmaji :slight_smile:

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Has anyone looked at this recently. I think they have announced another buy back sometime back.

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The biggest mistake Mody did was not to sell around 2000 when he could have got good valuation due to good branding of Sasken around that time. I remember Sasken was dream company and job for many IT professionals around 2000. it was also a pay master at that time. The company was in IP development mostly and had a buzz about it. Mody had branded Sasken as a future of Indian IT. In hindsight it is clear that was all hype and optimism mostly.
But I am surprised he is still stubbornly hanging to this company and not sold it. He has given himself long runway and still cannot take himself off the ground.
Mody reminds me of another stubborn fellow who is running Geometric software.

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Sasken Communication Technologies settles arbitration with Spreadtrum Communications

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/E3D60320_6EE7_45FB_8DE1_4163853347DA_091848.pdf

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Sasken’s arbitration settlement should have brought $45 million by March 31. This 300 crores works out to 50% of current market cap (600 crores), increasing the cash position significantly.

  1. Short term opportunistic bet?
  2. Why market has reacted negatively after initial euphoria?
  3. Did they get the money by Mar 31?
  4. what will they do with this money? Historic record is not too great.

Venkatesh / Ashish: What are your views on this?

Disclosure: No positions. Negative views on Management capability (though management integrity is above par, from what I hear in this thread) and business model. But arbitration award / market cap ratio seems interesting for opportunistic bet.

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Sasken Technologies Embarks On ‘5x5 Vision’

The company identified potential growth areas and built newer skill sets for the future in the financial year 2016-17, Chief Executive Officer and Managing Director Rajiv Mody said in the firm’s annual report.
They have outlined a “5x5 vision” to achieve sustainable growth over the next five years. The focus areas will be:

  1. Automotive electronics
  2. Semiconductors
  3. Communications
  4. Industrial automation
  5. Consumer segments

Here are the other highlights from Sasken Technologies’ new strategy:
a. Cater to customers in various high growth industries.
b. Create a growth oriented and agile organisation.
c. Position as “chip to cognitive” company.
d. Work on cutting edge technology in the industrial automation space.

Disclosure: Invested

1 Like
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HDFC Pick of the Week
HDFC Pick of the Week.pdf (231.9 KB)

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Sasken has come with a decent set of quarterly numbers. Mgmt has a target of $250 million topline by 2021, more than 3 times the current topline. Though this looks quite far fetched, it could be worth tracking. PAT margins are at 15% and valuations still looking good at less than 2 times book. @desaidhwanil, your views on the results would be welcome. Thanks.

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@vinkash,

Yes, decent set of numbers but in order to achieve their goal of tripling revenue in 5 years, they need to do much better than this! Market is not convinced about their aspirations getting fulfilled…and rightly so! :grinning:

1 Like
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If the market would have been convinced abt the aspirations price would have far higher than the cmp, Even if they can repeat the latest set of number every quarter, that means they are growing at one of the highest growth rates in the industry!

With reliable technologies like IoT, this counter is surely ignored by market

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Sasken has re-branded themselves

that’s their new logo

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Just wondering why is screener showing negative PEG ratio

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YOY growth is looking good- Studing this one for now

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Hi dhawnil,

Do you still hold sasken?

Regards,
Milind

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Pretty poor results. Revenues down 16% QoQ and 9.4% YoY. PAT down 10% YoY and 40% QoQ. Attrition as well is quite high.

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Another poor set of results. A poor set of q3 numbers was expected along with global slowdown. Sasken is investing in all the right places in my humble opinion (Opened an automotive center of excellence in Detroit for a major customer.)

While IOT, Android and QNX software development and Smart learning is the way forward for the company, I see them missing the $250 million revenue by 2021. Even half of that will be a big achievement unless a huge client or multiple new customers comes on board in 2019.

While, their products and services are impeccable, their investments are being made at the right places. It remains to be seen how their execution bears fruition beginning 2020.