SYSTANGO
Market cap…~450 cr
A Digital engineering services company.
Available at good valuation P/E 25
Topline /bottom-line uptrend
OPM ~30%
zero debt
Offices at India, UK, USA
Mobile app.development
Data engineering, AI/ML/Cloud
blockchain…and much more
A story that just started.
Disclosue…Invested.
I am an avid follower of Systango (Invested)for last 9-10 months. I track them from head to toe on a daily basis through internet, glassdoor, ambition box, indeed, personal contacts, investors, you tube, various forums etc. I will summarise my tracking observation as soon as I find some time.
Hi Do they actually manufacture all they have listed on their website or branding chinese equipments bought in bulk. As for the consumables the margins are maintained high by the hospitals while suppliers dont get a kings share.
Ideally one would want both topline and bottom line to increase. I just checked the margins have increased primarily due to lowering of material cost( which will not continue to slide for ever) from 61% to 47% while their employee cost has gone up from 8.14% to 13.33%.
Thank you for the summary @DocDhiru
Since this is a typical services company I think PE of 25 is a standard not cheap. So I don’t think we can expect a lot of PE rerating here. And the management also talks about increasing the hourly rate to improve margins. But I am also in the IT field in Germany currently and there is a big slow down at the moment, so I don’t think it will be easy to increase the hourly rates at least in near term 6 months.
But company plans to do a revenue of 25 million USD, so approx 200Cr by end of 2025. TTM is 57 Cr. (looks a little ambitious!) And if they maintain the same margin around 28-30%, expected PAT is around 45-50Cr in the best case scenario.
Not invested. Just tracking
Why the company is paying such low taxes around 14-16%?
Its actually over ambitious target. Nevertheless they seem to be investing in grooming people which can probably payback once the slowdown is over. In your opinion is it purely a service company?
Yes, this is definitely a services company for sure. In the concall the management talks about hourly rates which is the classic model for service based software consulting companies.
do someone knows about any new project or technology or cost cutting technique that make it different from another peer companies??? @Investorscientist @ankur_bhatia
I went through their site and they do offer projects in latest technologies like promt engineering(AI), blockchain(though it hasn’t lived up to the hype yet), etc. But sadly in the services industry the trend catches up really quickly. And suddenly you will find most companies offering these. The main differentiater for such kinds of companies is the ability to provide services for lesser hourly rates and have good customer network to make sure that all employees are occupied. And that’s why most of these companies have offices in India as salaries for developers are low there. Recent trend is also to have offices in Eastern Europe region (Poland, Romania) as salaries are lesser compared to say UK or Germany and moreover they work in the same time zone.
The management mentioned that they want to acquire a company in UK with the IPO funds. I think that is definitely a step in the right direction. This will help them get customers in the EU market. But one thing to remember is that unlike product companies they don’t have any operating leverage. In product companies increasing the users of the product rapidly increases the PAT But for them only realistic way for them to increase the revenue and PAT is to hire more people and get them billed most of the time.
This was totally based on my experience in working in a very similar company here in Germany for the last 6 years.
Very articulate response. Yes they try to offer a bit more than only service but a long way to go. Have done a background check with their clients who seem to be happy with the overall approach of the management. Being a Rathi for the employees they are bit tight on expectations but at the same time give lot of exposure to newer technologies. This company may have some gestation period before they spurt out. H2 is expected topline of 65 Cr. but 200 CR plus is coming year is over ambitious. Vinita is very very hardworking and ambitious. At times you need a over ambitious person at the top to drive the system. Ashish Kacholia who has 3.1% stake ( as per last trendlyne) may have increased now is also supposedly guiding the management, Its very difficult to compete on service alone but being a UK parent company they have recognition especially among startups. Hopefully they should do well in a couple of years. Disclosure: Invested and may be biased. No recommendation intended.
Did you find any more updates on this business Adeshwar Meditex…
Just that the previous promoter has left the board of directors. Still don’t know why the previous promoter sold or whether the new promoters plan to shake up the business in some way so that the growth goes up by a lot.
Which companies are under radar right now for average up or investment in smallcap space?
Aries agro
Hemant instruments
Rico auto
Good company for studies on valuation and growth
All E technology …IT, AI/ML, Microsoft business partner
Rox hi-tech…IT, Digital AI/ML, Medical automation
Sungarner…Solar panel, battery, inverter
ORIANA POWER…Solar energy solutions to industrial and commercial customers
Advait…Green energy, power infra
Hi green carbon…tyre recycling, green energy
Arham tech…Electronic manufacturing
Paragon fine chemical…Speciality chemical
All are newly listed and good company for study.
@Investorscientist @DocDhiru Ashok kacholia’s stake is rising by every quarter . Is it signal for bull rally in the systango ???
@puran_tak …i think healthy company valuation as compared to its peers and business prospects is driving force.
@DocDhiru Could you please share a few listed peers? I would like to study them as the company definitely looks interesting with quite a bullish guidance. I shall then post my notes here with some comparison with the peers. The ones that I have in mind are based on my knowledge from Germany are are listed in Europe, but that won’t be of any relevance for comparisons in terms of its valuation in India.
Hi Ashish Kacholia last increased stake in Sept 2023. I do not have information beyond that. Being a SME their growth story will unfold only in May 2024 when they post their H2 results. They may take bit of hit from European recession. Do not have sufficient data to comment on bull rally, let us hope that no operator is actively involved in the stock.
