Stock jumps 5% after company uses “Inch wide, Mile deep” strategy to increase sales by 39%

With a market capitalization of Rs 2,847 crores, Saksoft Limited shares hit 52 week high and closed at the price of Rs 269.40, up 5% on Monday’s trading session as compared to the previous closing price of Rs 256.60.

In the past three months, the stock gained 86.8 percent from Rs 144.20 to current levels, and in the previous year, the stock gained 194.91 percent from Rs 91.35 to current levels.

One of the probable causes of the stock price’s consistent rise over time is that the company adopted an “Inch Wide, Mile Deep” expansion strategy in FY 20-21.

Strategy is concerned with identifying unique(niche) verticals of business that would give the best benefits for the company.

Saksoft Ltd has extensive expertise in the Banking, Financial Services, and Insurance (BFSI) area, which is regarded as its niche market, in addition to other vertical companies such as logistics, e-commerce, telecommunications, and healthcare. The Fintech business revenue has risen from 27% in FY21 to 35% in FY23.

After pursuing the strategy, there is a remarkable rise of 39 percent in revenues, a 37 percent rise in operating EBITDA, and a 30 percent growth in PAT for the full year and the company anticipates achieving $500 in revenue by 2030.

In Q4FY23, the operating income of the company surged by more than 31 percent from last year’s same quarter to Rs 182.1 crore. The net profit of the company zoomed by more than 41 percent from the corresponding quarter last year to Rs 25 crore.

The EBITDA level of the company stood at Rs 32.5 crore, witnessing a surge of more than 46 percent from the March quarter of 2022.

In the last six months, the stock has gained a multibagger return of 114.83 percent ranging from Rs 125.40 to the current price levels. If the investor invested Rs 1 lakh in the stock a year ago, their holdings would now be valued at Rs 2.14 lakhs!

Saksoft Limited is a leading player in providing digital transformation solutions to various businesses and the company is specialized in niche technology of BFSI that provides a comprehensive suite of business transformation, information management, application development, and testing services.

According to the company’s financials, net profit improved by 41% in Q4FY23 to Rs 24 crore from Rs 17 crore in Q4FY22. Furthermore, income from operations climbed by 31% to Rs 182 crore from Rs 139 crore in the previous quarter.

Profitability ratios have slightly identical.ROE has marginally increased from 19.86 percent in FY 21-22 to 20.26 percent in FY 22-23, while ROCE has risen from 24.07 percent to 25.21 percent during the same time period, and the company has zero debt-equity. As of FY23, the promoter owned 66.86% of the firm, while foreign institutional investors (FIIs) owned 4.76%.

Written by Omkar C

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