Tuesday 22 December 2015

Saksoft Ltd - Value Pick - Merry Christmas


The Ace Investor
Saksoft Ltd
  Listed on both NSE: SAKSOFT & BSE: 590051
Currently trading around 260 with a market cap of around 240 crores.
Promoters hold 73.47% stake.
It has a Debt of 40 crores.
Total Reserves are around 100 crores.

Saksoft Ltd is an Big Data and Analytic firm headquartered in India with a head count of 750+.

Saksoft offers services such as Information Management and Business Intelligence, Testing Services, Application Development Services and CLOUD services.

Company boasts of 100+ Clients in Info Mgmt and Biz Intel, Having completed 510+ projects and Experience in working with Government and Security agencies.

Company acquired 360logica earlier this year which commands a good market share in application testing sector and the acquisition aids Saksoft now to operate in this sector.

Company boasts of 15+ years of experience in App Development services, 80+ Apps completed by the company. The company offers complete solution from design to cloud integration for apps.

Company has ventured into the hottest sector of Cloud Computing where it offers wide range of services (IaaS, PaaS, SaaS)

All these cloud services are delivered via Internet and customers have nothing to worry about hardware/software or licenses to manage them.This features allow companies to run on opex only model and don't have to budget capex year on year basis, which translates to direct savings. This is the primary reason for increasing adoption with SME's and enterprises for cost-cutting and providing business flexibility and transformation at a rapid pace.

The company is focused on the Retail and E-Commerce sector.

Coming to the financials, Saksoft has witnessed great growth :-

As you can see from 120 odd crores the company has now grown to almost 240 crores company in 4 years.

In last 2 years there hasn't been any big growth in the top line of  the company. But as is into cloud computing and Big Data these sectors are really hot right now and the Massive Growth is expected to kick in for Saksoft pretty soon.

Company is having healthy 3 year ROCE average of 16+ , The company has paid dividend consistently since last 11 years and more.

Promoter holding is at 73.47%, FIIs hold only 0.52%, DIIs 0.98% and Public holding more than 1% shows us 9.56% is with some HNI investors.

So a huge chunk of 84.53% is already locked with these guys "OFFICIALLY" and promoters in almost all companies do hold more stake with their relatives having equity lesser than 1% which will not be shown on the shp, So let's assume another 5% goes there that makes it almost 90% equity is locked up there.

So out of 1,03,60,000 shares only about 10 lakh shares are available in the market.

We have seen how a recent Cloud computing story called 8K Miles has played out in the market.

From 50 bucks in 2013 today 8K Miles has touched 2000+ which is a gain of almost 4000% in just less than 3 years. 8k Miles had topline of 125 crores in FY15 and bottomline of 19 crores and current Mcap is 2200 crores. 

Another comparable company would be Kellton Tech Solutions which has rallied from 35 to almost 200 this year, Traded only on BSE Kellton is finding it difficult to go up because of the BSE quarterly/monthly/yearly circuit norms.

Kellton Tech which provides similar services such as ERP, Cloud, App development, Web Development had a topline of 240 crores in FY15 and Net Profit of 22 crores and its current market cap is around 800 crores and the current p/e is around 35.

8K Miles having 125 crores top line is trading at 2100 crore Market Cap which means Mcap/Sales is around 17 and Current P/E is 100+ whereas Saksoft current Mcap is around Sales which means around 1 and P/E is around 15 having higher sales and better management record.

But ofcourse, 8K Miles and Kellton are high growth companies but for Investors a good management record would be the first point for rating a stock.

Saksoft has only this year acquired 360logica for App Testing/Development so the growth of that sector is yet to hit the books.

Simple logic is that: Kellton would go higher if it was on NSE because the gap between Kellton and 8K is huge, and Saksoft would go higher to reach above Kellton for sure because there too the Gap is huge and Saksoft is on both NSE & BSE.

Saksoft is trading around 10% of valuations to what 8K Miles commands in the market.

Investment Guru Mr Ramesh Damani in a recent interview to the Share Bazaar APP was asked:
(source: Sharebazaarapp.com)

Mr Damani has said that his favorite sector would be Big Data Analytics which is where Saksoft operates.

It may sound like an over-statement but Saksoft Ltd is my bet as the Next Kellton and after that the Next 8K Miles.

Saksoft has broken out of a 7 year Cup & Handle pattern on daily charts, check image below.

All in All, Saksoft is a great Multibagger opportunity in market I think.

Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that i might have Saksoft Ltd in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.


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The Ace Investor

Sunday 20 December 2015

New Pick & New Announcement

I know everyone is waiting to read about a new stock on the blog.

Now i will share a new stock on our blog this Tuesday at 3:20 PM
during market hours (i.e. 22nd December 2015)

Not only that I also have one exciting announcement for you all readers.

There is a way we can work together. So let us explore that maybe?

Happy Investing & Happy Reading!

Wednesday 16 December 2015

How a Short Seller's Account Went to Negative $106K

(From: Investopedia)

Joe Campbell, a 32-year-old small-business owner from Gilbert, Ariz., liked to trade the stock market in his spare time, but recently got caught in a disastrous trade he will never forget. The story of his devastating short position in KaloBios Pharmaceuticals Inc. spread like wildfire in the financial press, after he described on a crowdfunding website how his $37,000 account balance quickly turned to negative $106,000 on the heels of unexpected news.

KaloBios in Trouble
KaloBios Pharmaceuticals, which develops antibody-based drugs to treat cancer, announced in a Nov. 13 press release that it planned to wind down operations because of limited cash resources. The release also stated that it had engaged restructuring firm Brenner Group to assist with the liquidation of company assets. The negative news attracted the attention of short sellers eager to profit from a further decline in the value of the company’s stock.

The Short Trade
Campbell was among the short sellers hoping to profit from the company’s demise. On Nov. 18, he sold $33,000 in KBIO stock in his E*Trade Financial Corp. account at an average price of about $2 a share. He then went into a work meeting, planning to hold the position overnight. He stated on his GoFundMe page: “I was holding KBIO short overnight for what I thought was a nice $2 fade coming.”

After the close of trading, KaloBios issued a press release announcing that “an investor group comprised of Martin Shkreli and associates together have acquired more than 50% of the outstanding shares of KaloBios, and that the company is in discussions with Mr. Shkreli regarding possible direction for the company to continue in operation.” (Shkreli, a hedge fund manager and entrepreneur, is the founder and chief executive officer of Turing Pharmaceuticals. He stirred up controversy in recent months after his company dramatically raised the price for a drug used to treat AIDS and cancer patients.)

KaloBios' Stock Soars
KaloBios Pharmaceuticals' stock soared by as much as 800% in extended hours trading on the news of Shkreli’s investment. When Campbell got out of his meeting, he received a message from a concerned friend who knew that he was short KBIO. At first he worried that he may have lost his entire account of $37,000. He quickly learned that the situation was even worse: The stock price had spiked to $16, and his account was now negative by over $100,000. After he called E*Trade, his short position was covered at an average price of around $18.50, resulting in a negative balance of over $106,000.

The stock continued to rise and surged the following week, after Shkreli stated on Twitter that he wouldn’t sell any more stock to those looking to short sell it, stating: “I spoke with my counsel & advisers and decided to stop lending my $KBIO shares out until I better understand the advantages of doing so.”

Because Shkreli owned such a large proportion of the shares outstanding, his decision made it hard for remaining short traders to exit their positions. The situation was reminiscent of the 2008 short squeeze in Volkswagen, when Porsche increased its stake in the company. Volkswagen’s stock price rocketed higher and short sellers struggled to cover their positions because of the lack of supply in the stock.

Crowdfunding Campaign
Reacting to the devastating loss, Campbell quickly launched a GoFundMe campaign asking for help with his massive margin call.

He was at least partially conscious of risk, stating that the $37,000 in his account was capital that he could afford to lose. He made it clear on his GoFundMe page, however, that he had made the false assumption that there was a safeguard in place to prevent his account from going negative: “Never in my wildest dreams did I imagine that Etrade would NOT have some sort of stop or circuit breaker in place that would automatically cut a position if the account went to $0.”

He ended by saying: “My plan moving forward is to liquidate mine and wife's 401k's and try work out a payment plan with Etrade. What an expensive lesson that was. I hope my story helps someone else from the same.”

The page received a range of responses from sympathetic to harshly critical. However, he was able to raise over $5,300 through 151 donations before removing the campaign.

The Bottom Line
Campbell’s trade was a highly risky one in three ways. First, it was a short trade without any hedge. With short sales, potential losses are theoretically infinite, because a stock price can continue to rise and rise. In the case of a long position, losses are limited because the price of a stock can only go to zero. Second, his trade was in a very low-priced stock. Penny stocks and those priced very low often see high levels of volatility. Finally, he held the position overnight when there is less liquidity and limited access to the market, making traders even more vulnerable to events such as unexpected news releases.

Tuesday 15 December 2015

Attention: New Value Pick

 I know everyone is waiting to read about a new stock on the blog.

But I had to personally exit the stock because of certain Red-Flags.

Now i will share a new stock on our blog next Tuesday at 3:20 PM
during market hours (i.e. 22nd December 2015)

Happy Investing!

Saturday 12 December 2015

India-Japan sign pact for Bullet Train project


India & Japan have signed much awaited Bullet Train (HSR) deal starting with Mumbai-Ahmedabad route.
The project would be worth over 95,000 crores INR and Japanese PM has also promised co-operation for Make In India.


Disclosure: Personally invested in Omax Autos.

Btw, New stock will be updated on our blog next Thursday at 3:20 PM
during market hours (i.e. 17th December 2015)

Thursday 3 December 2015

Vidhi Dyestuffs Mfg Ltd - Almost 400% in a year

Vidhi Dyestuffs Manufacturing Ltd
Vidhi Dyestuffs posted on the blog at 15.90 on 9th December 2014.
The stock has rallied to 78 today, Making a fresh all-time high.
In just one year the stock has moved up by 390%.

While Banks give you 7-8%, This small-cap has given almost 400% returns in a year.
Wise investors should take part profits in this and hold the free shares for further possible multibagger returns in the longer-term.

Value Investing WINS again...
Hope all the readers enjoyed!!!