Sasken has come a long way by de-risking its business that was once dependent only on few customers within a single segment to large set of clients across various verticals. In the initiating report on Sasken -Strong Sectoral Tailwinds, we highlighted that based on the business strategy of Sasken, it looks like the business uptick for the company is not far away.
We think that annual report of 2017 brings a lot of pointers indicating the direction the company is going to take. Below are certain pointers that we found interesting.
1) Sasken is focusing its attention on following 5 main verticals:
- Automotive Electronics
- Industrial Automation
- Consumer (Retail) segments
2) The company has invested significant time in improving skillset to grab opportunities in the newer growth areas.
3) Sasken has set a vision for its company to embark on a journey of growing 5 times in 5 years (called 5 X 5 vision). Though the target looks ambitious, the company thinks that their growth target is very realistic and achievable.
This vision stems from their engagement with a globally leading consultant and traction with their key customers.
4) The proposed visa regulation and Britain exiting from Europe (Brexit), will not have any impact on Sasken’s operation.
5) Sasken has been demonstrating its products and services at various showcases such as Consumer Electronics Show (Las Vegas), IoT World (London), Mobile World Congress and TU-Automotive (Detroit) among others.
6) Sasken is catering to customers in various high growing industries. The company has been building the right ability to service its clients in their Digital Transformation and Product Engineering requirements. Sasken being a reputed name should be able to get its own share of the pie.
On the valuations front, at the current market price of Rs. 412, Sasken is trading at a market cap of Rs. 705 crores with an operating profit before tax of ~Rs. 38 crores in FY17 with a strong balance sheet having cash of Rs. 385 crores. Looking at the current market cap and the large opportunity that it is looking at, we think there can be a huge upside for Sasken. Additionally, promoters and large shareholder's non-participation into the recently completed buyback is also indicative about their belief into the company.