Intense Technologies Ltd
NSE:INTENTECH
Intense Technologies Ltd
NSE:INTENTECH
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Earnings Call Transcript
Transcript
Other Earnings Calls
Ladies and gentlemen, good day, and welcome to Intense Technologies Limited Q4 FY '23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Siddharth Rangnekar from CDR India. Thank you, and over to you.
[indiscernible] Good afternoon, and thank you for joining us on Intense Technologies Limited Quarter 4 and FY '23 Earnings Conference Call.
Today, we have with us Mr. C.K. Shastri, Managing Director; Mr. Jayant Dwarkanath, Director; Mr. Anisha Shastri, Director; Mr. Anil Kumar, Chief Operating Officer of the company; Mr. Nitin Sarda, the present CFO of the company. The management will also be joined by Mr. Nayak, the outgoing CFO; and Mr. [ Lokesh ] from the finance team.
Before we commence, I would like to highlight that some of the statements made on today's call could be forward-looking in nature, and a note to that effect has been included in the earnings release made by the company and which is available on the stock exchange website.
We shall commence the opening remarks with Mr. Shastri and Ms. Anisha, following which, we will have an interactive question-and-answer session. I would now like to invite Mr. Shastri to give us a brief overview of the company's performance and his views on the opportunities and outlook ahead. Thank you, and over to you, Mr. Shastri.
Thanks a lot, Siddharth. Good afternoon to all of you. Thank you very much for taking time for this earnings call. It's always a privilege to interact and learn and engage with investors. You are the key -- critical people for us as an organization.
So some of you who do not know about Intense. Intense Technologies Limited has been a product and platform company into customer communications, digital engagements, low-code, low-code AI, data management and so on and so forth. We've been -- we have started off as an enterprise product company. We have marquee customers across verticals. Today, we -- hello, there is some beep, which is coming. Hello?
Yes, sir?
There is some beep, which is coming in between.
You're getting a second call, I believe, sir. We are not hearing any beep.
Oh, okay. So we have customers, marquee customers in banking [indiscernible] top banks like HDFC Bank, Axis Bank, IDFC First Bank, Yes Bank, the likes -- and similarly, the insurance, we have the top insurance companies. And in telecom, we have also very marquee customers like Vodafone, BSNL, Jio, so on and so forth. We're proud to tell you that we've been leaders in customer communications in this part of the world.
And it's -- I take pride in telling you all that we've been ranked globally #1 by Gartner for -- in the customer peer reviews, which is very, very important thing because this is what the customers tell about us. It's not that an analyst telling about us or signaling about ourselves. The customers have rated us in terms of technology innovation, in terms of support, delivery, and R&D and innovation. So that's gives us a very, very -- thing.
And as you all are aware that we have taken a very, very -- our solutions are mission critical. And we have done very large projects, some of them hitting every taxpayer in the country, every customer onboarded, every bill which you get; be it Jio, be it BSNL, be it the income tax. We have successfully delivered very large mission-critical solutions.
The year gone by has been a year of consolidation and investments for the future. The biggest question, a lot of our investors were asking is, "What is that you have this fantastic product, you are profitable?" We never had been in this kind of a situation to invest in growth. Today, we have INR 38 crores [indiscernible] with INR 47 crores in collections. So we had decided that the year -- FY '23 has to be a year of investment -- growth, investments for growth and future listing.
So that we have taken up a big mission called Project Butterfly. The whole idea of Project Butterfly is like how butterfly comes out of the cocoon -- and flies. We have set up ourselves with a 3-year goal with aggressive targets of growth of 30% year-on-year.
Towards that, we had to make a lot of investments that is reflected in our financials. As you might have heard, there's been a drop in profitability, though there is growth in the top line.
So our goal is to see that we grow at least 30% year-on-year with a minimum margin of 35%. Towards that, we have hired very good leadership team. We have hired Nitin Sarda, our new CFO, whose work with companies like Ernst & Young and he comes with a lot of experience in growth strategies. And along the table is we have Anil, who's our COO. He's got more than 2 decades of experience. One -- he worked with a startup to a major scalable company called Comverse, Kenan, and then he worked with services companies like Amdocs with over 20 years dealing huge P&Ls under him. He is leading our Project Butterfly, and they will share with you our plans and how we going to scale this organization and take it to the next level.
In terms of -- this is going to be a year of -- very, very confident that we have set ourselves achievable goals and we would be looking at having these targets, what we have set ourselves to, will be achieved as we go along. And 1 of the key pillars would be taking our large digital transformation projects because -- we have the wherewithal, we have the IP assets and cloud initiatives and all those details Anisha will be sharing with you as we go along. Over to you, Anisha.
Thank you so much, Mr. Shastri. Good morning. Good afternoon, everybody. I'm Anisha, Whole-time Director at Intense; and along with Mr. Anil Vengayil, who's also on the call, our COO, we run strategy and operations for Intense together.
This year that went by was a very conscious year of taking risk of transforming the organization. I know many investors, many well-wishers in the past have asked us saying, you're a cash-rich organization, but you're still always this covered. You're not investing in sales, you're not investing in marketing. Why is that? And so this year was absolutely in line with exactly that.
The last year, we started something internally called Project Butterfly. Project Butterfly is basically the strategy that we put in place for the organization with a 3-year horizon. Step 1 to Project Butterfly was repositioning our organization. As well, we were practically -- if you ask anybody in the industry as to what Intense Technologies does or who Intense Technologies is, they would say it's a customer communications company.
And so we were only known for our 1 product. This year, what we have done is we have expanded on that, and we have repositioned ourselves as a product and tech-enabled services company. Second, we have increased our portfolio offering and opened up a lot of new revenue streams.
For us, I'll be very honest with you, for us, international sales has always been a little bit of a challenge. And that's probably because India is more well known for services internationally as opposed to product. And so we added a bunch of tech-enabled services to be able to foray into international markets more strongly this time. The second is, Mr. Shastri also mentioned, we have a lot of really large customers to our credit. A lot of large logos. Pretty much all the top banks, insurance companies, telcos in the Indian subcontinent use our products.
And while each of those customers has the appetite to spend far more, we were only selling our license and a new services around implementing our licenses to them. What we have done this time around is we have completely opened up our portfolio of offerings. We have added vertically and horizontally, both to our portfolio of offerings.
So now instead of say, for example, just selling the customer communications product to a customer, there is a ton of data management that is required before it comes to our product, right? And that's a huge scope of activity as well. So we've added data management products to our capability and services to our capability. We've also -- what we used to do is we used to design the entire communication and then hand it over to other vendors to send out the communication.
Now we have also vertically integrated and partnered with organizations so that we can provide an end-to-end offering, including the transmission of the communication. So we have broadened our entire offering. Third is there are a lot of ancillary services that are required. For example, migration on cloud. Most customers today are looking to either migrate to cloud greenfield or move from one cloud to another, to manage their spend on cloud, et cetera.
These are all ancillary services that are directly in line with what we already used to provide, but we were missing out on those opportunities. So we've added a bunch of those revenue streams. Last year, we also invested in our very owned AI-based marketing automation product. This is a very natural extension to our existing UniServe suite. And we will also be offering this as a SaaS product subsequently in the year.
So adding all of these additional products and services around our existing products has given us the ability to farm our existing customers. Each of our customers have the appetite and ability to spend far more and they are spending it, just we have not been benefiting from it.
So this year, very consciously, we have put forward plans and measures in place to be able to farm our existing customers better. The third step has been to invest in significantly in sales and business development. So we have ramped up our business development team today, and we are seeing very good traction, very good response also for the investments that we have made in BD. We have hired senior sales leaders in the government verticals, like Mr. Shastri said, having already delivered a lot of large managed services project.
Today, we are much more confident than ever before of being able to take on Earlier, we didn't have the appetite as an organization. But now we have the appetite to be able to take on large multiyear managed services contract. And so to that skew, we have hired senior sales veterans in the government verticals to explore managed services opportunities in the government verticals. We have added blockchain initiatives for government. AI chatbot, WhatsApp chatbot-based services for citizens through government. So we have added a lot of these innovative solution offerings that governments today are very keen to take to citizens to help make citizens life better.
We have also invested in a senior cloud sales expert. We've invested in data sales experts. So domain-based sales experts who have the network and understanding of solutionized selling in the banking insurance domain. So we have added these senior sales leaders and the hope and intention is to see that, that very soon reflects in our growth potential. So with that, this is basically the 3-pronged approach that we are taking, repositioning ourselves, increasing our service offerings and opening up new revenue streams for our organization and investing in sales and growth. That has been the mantra for the last year.
And that may have reflected also in our books. But please note that it was a very conscious decision to invest in the future of this organization and to invest in growth.
Anil -- would you like to add something, Anil?
Thanks, Anisha. I'm Anil. Good afternoon, everyone. I'm Anil, COO of Intense Technologies Limited. You have summarized it well, Anisha. The foundation of Project Butterfly is to have a predictable revenue growth, which Shastri sir spoke about, around 30%, increase our margins. And also to increase the offerings to the market, the portfolio, as we transition ourselves into a tech-enabled company, we have a strong engineering DNA.
We have strong accepted products and platforms in our portfolio. And the idea is to allow these companies to use our platforms and the services that we provide. So we are investing in everything that Anisha talked about. We are taking our products into the SaaS world, which is where most of the investments are going worldwide. Banks and insurance companies are -- they are having too much of data with them, and there is a lot of scope for Intense to invest into data services. Banks are investing into AI services, artificial intelligence. So we have a play over there.
We are also investing into cloud services as most of these banks and enterprises move to the cloud. We see all of these synergies to what we do with our clients, and those are all good opportunities for Intense to go after. We are also looking at calibrated engagement in the public sector as government -- federal governments and the state governments are using cutting-edge technologies to deliver citizen services, key governance projects.
So we have already done a lot of large projects in the government sector, and we will have a dedicated focus in the public sector opportunities too. We will also foray into the international markets. We have a presence in Europe. We will make concerted efforts to penetrate into the American market and to the Asia Pacific region. We have already made investments into Australia and New Zealand. We have a sales team over there to pursue opportunities in that region. With all this put together, I'm of the strong belief that Intense will see significant growth year-on-year. And the services elements will enable us to increase our margins too. That's it, Anisha.
Thanks, Anil. So all in all, I'd just like to conclude by saying we're very confident in what strategy we have put in over here. our goal is to ensure that we see the kind of growth that this organization is capable of achieving. And we also want to get to a more predictable quarter-on-quarter growth. We want to get -- we want to make our revenue streams also more recurring in nature, more predictable in nature. And that's intention with which our entire plan has been laid.
Just to add to what Anisha said, as a company, we have instead of selling just license, AMC and services, we are moving even some of our existing customers into a complete holistic license, AMC and managed services kind of an opportunity to see that we have more predictable revenues.
Today, more than 60% to 65% of our revenues are in this model, which is there already.
Absolutely.
And Siddharth, now we will have the Q&A. We will take...
[Operator Instructions] We have a question from the line of Sandeep Investments.
Yes. I just wanted to know, year-on-year, you have -- there's been growth. And last financial year, there was good profit. All of a sudden, your profit has fallen due to employees benefits and high operating costs.
Now you tell me, madam, as an investor, your share has been trailing at INR 60, whereas we have bought at much higher rates. What is the future of the investor in the company?
Sir, we don't have any control over these share fluctuations. But we definitely have control -- we have exactly told the reasons why the profit has dropped. We have invested for growth. And we were also...
Another thing I'd like to point out, I've been sending e-mails -- because there been some market fluctuations and manipulation by foreign investors who invested, 1 company, FII invested and then they sold out all of a sudden and we -- all the investors were never left in the lurch. However, it was promoted on the blogs this company is [ ascendable to Western ] interest. Now anyone has lost money in your company. So how can I -- how -- what do we expect for the future on the stock?
Ladies and gentlemen, we've lost the connection of management line. Please stay connected while we rejoin them. We have the management line back on call.
I'm surprised. Is it [ Mr. Sandeep ] who's speaking?
Yes, I was asking about the stock market operation. You said you have no control.
We are not at all -- how do -- we don't -- those are all market speculations and -- we have nothing to do with those. And to be very -- the thing we don't come from that kind of a background. We don't -- we have neither -- we have...
Okay. Okay. Now what do you expect in the -- you're saying 30% growth a year. What EPS are you looking in 3 years from now?
Beg your pardon?
You just said you expect 30% growth per year. Now what kind of earnings per share are you looking in 3 years?
See, when we say 30%, we are talking about around INR 125 crores which is 35% EBITDA, which would come to -- I just don't have it, the numbers, [ Sandeep ]. One on one, you can write to me, and I'll respond to you.
Okay. Your good name, sir?
My name is Shastri.
Sure. Okay. I'll send the e-mail. And I'll be appreciative if you can send email address on my mail for what I registered for the conference.
It is available on the Internet.
[Operator Instructions] We have a next question from the line of Rajendra Shah from Fidelity Management and Services.
By which period do you think the fruits of your investments will become visible?
We will start seeing from FY '24.
And what are the hurdles or risks that you worry about in that process? I mean is it -- I guess the business potential is very much there. So does it come down to a question of just execution in terms of marketing and delivering on the product.
Sir, extreme market conditions or any 1 of those things, apart from that we believe we are on the right track to achieve and get the execution. Any of the major renditions hitting us or anything which humanly we don't have control of. Those are the factors which may impact. But otherwise, the plans which we have put in, we will be -- we are confident of achieving 30%. We have internally put a 30% target. We are hopeful about that.
[Operator Instructions] We have a next question from the line of Milan Shah from Urmil Research. I'm sorry, you're sounding muffled. Please use your handset.
Can you hear me, sir?
Very feeble, Mr. Shah.
Mr. Shah, we are not able to hear you. Can you use your handset mode, please?
I am on handset mode only.
Okay. But I think your network is not strong. We are not able to hear you.
Sir, please go ahead, sir.
[indiscernible] invested for the last 10 years. I'm very happy in between, as perspective of investors, we got very newer opportunities. But I want to understand that company's employee cost is -- since 5 years is 50%, near about. Then...
Beg your pardon, sir. Can you repeat the last part?
Since last 5 years, your company's employee cost is always 50%, near about. And this year it is also 50%. Then why it is [indiscernible] come down? And my second question is how many sales executives or marketing guys are recruited in this year, so we can get more business in next year which you -- of 30% or more?
Sir, we have wrapped up about -- business development about 16. How much...
In business development, we've added about 12 resources. In sales, we have added about 5 new sales...
These are all enterprise level sales people.
Sir, my request to you that we have to make investor presentation, so the investor understand.
Sure, sure, sure.
Second thing, my request to when we are going to get that much great award from governments. Exchanges never -- companies never inform to exchanges. And why investors know that company get this much of awards.
I am following Instagram and [indiscernible] is conducted in [ 1, 2, 3 March ], but there is no information on BSE site or NSE site. So our statutory, what is they're are doing for our company?
Sure. We'll also -- we have made it a practice to update our social media. We will definitely also start announcing -- publishing this on the regulatory websites.
All investors are going to social media. Company has the responsibility to inform exchange or -- that we get this kind of seminar or this kind of extraordinary award, which is internationally acclaimed. But we are -- investors are not going to know anything about company.
Mr. Shah, going forward, we will certainly [indiscernible] practice. We'll follow this practice as soon as update our social media with any significant messaging, that will go through the exchange also.
We are doing it sir, but there must have been some -- if there has been any slip-up, we'll correct it.
[Operator Instructions] We have a question from the line of Sandeep Investments.
Yes, sir. I just wanted to inquire I wonder where the company is doing well, how come from foreign institutional interest has not been shown in the company. Do you plan to do a placement or dilution of equity in a couple of years?
We are open to any good things, which will create shareholder value, sir.
[Operator Instructions]
We have a question from the line of Milan Shah from Urmil Research.
Sir, what is the attrition rate of our company? And can you explain some blueprint or something for Butterfly, which is mentioned by madam?
Yes. What was the first question, sir?
Attrition rate of company.
Attrition. Okay.
Mr. Shah, last year was a little extreme. Last year, the IT industry as a whole went through a phenomena called the Great Resignation after COVID, where it was quite a frenzy. So our last year's attrition rate may be an anomaly when compared to our standard attrition rate across the years.
But last year, we also had to make significant investments in retaining talent and attracting talent. That is also reflected in our employee costs. And with respect to Project Butterfly, I'm happy to share more information offline as well, sir.
But in general, what we have done essentially is we have taken 3 fundamental pillars for growth of the organization. We have set a 3-year horizon of what we want -- what revenues we want to be targeting and how -- from what revenue streams we want to be targeting that from. And we have basically broken it down across our existing products, the new products that we have added on and new services that we have added on to our portfolio. And -- so that has been the fundamental tenet of creating the entire structure.
We have our next question from the line of [ Arjun Balakrishnan ], an individual investor.
[indiscernible]
Your voice is slightly low, Mr. [ Balakrishnan ].
Sir, is it better now?
Yes, better.
Yes. Okay. Your operating expenses are quite high. What is the guidance for the next year on operating expenses?
We are currently at expense [ INR 70 crores, INR 73 crores, INR 74 crores ] and we are looking at it growing to [ INR 80 crores, INR 85 crores ] on the thing. And basis, our -- we are looking at EBITDA of 30%, 35%.
In addition, Mr. [ Balakrishnan ], we have started taking on managed services opportunities. So managed services opportunities come with an initial CapEx investment on our part, which we recover subsequently, like what the operating expenses that reflect in our books as of 31st also, quite a lot of that has already been recovered in the first quarter.
So that also tends to inflate our operating expense. But it is short term in nature until the client pays us back.
So we are -- the question is because compared to Q4 last year, which shot up quite significantly and that dented the profitability. So going forward, if you have the same operating expenses...
It will not be so, sir.
So the reason for that is we had started the implementation of 2 new projects, and that required an upfront investment in server infrastructure, et cetera, which we have also recovered for the most part. So whenever we take on new managed services opportunities, which involve us managing entire infrastructure, software and service, all together, sometimes there may be these upticks.
Okay. And the other thing is you conduct conference calls very arbitrarily.
No, we...
[indiscernible] let me just complete, let me just complete. So we've invested in other companies as well. Some companies don't conduct conference calls at all. That's fine. And some companies do regular conference call. So in a way you got to decide, right? It's very arbitrary for me as an investor to suddenly see like you had a conference call. Please can you decide when you will have a conference call and when not.
Sure, sure. You're right. And we want to get to -- we had a hiatus for maybe the last 2 years, but we want to resume having more regular engagement, more regular conversation. So we will definitely publish the schedule.
You will be seeing a more -- we will be visible very clearly, and we will have what to do, roadshow, the other things. So that...
See, because the reason why I'm asking is, if you go to your last conference call, 2 years back, you promised a conference end of every year, okay. And I do understand for that period of time. So I expect the management to keep the promise of 1 call end of the year. I'm not sure why that was not kept.
Sure, sure, sure. Noted, sir.
Okay. The last question is in the previous call, you mentioned that Q4 will not continue to be lumpy, but lumpiness [indiscernible]. How is that [indiscernible] revenue over 4 quarters instead of 1 at the end?
Typically, sir, the last quarter is definitely will be a higher, better quarter for us. But it will be much more evenly spread going forward.
We are endeavoring to see that we get to a more quarter-on-quarter predictability, Mr. [ Balakrishnan ]. Some of our existing engagements, we're not able to modify, but whatever new engagements we're signing up, we're trying our level best to see that it's not -- it doesn't ultimately get padded on to fourth quarter. We're trying to do that as well.
Okay. And finally, any plans of increasing stake [ for the promotors ]?
Yes. We have increased our stake. I had taken about 8 lakh thing and it's made up there are yet to be -- my shares are yet to be listed.
Okay. But that is [indiscernible]
Yes, that's already been fully paid -- converted and fully paid. Yes. I just did that. I also come from a -- I don't come from a very wealthy family. Whatever I am capable, everything, all my earnings in my life, I have put in Intense.
We have our next question from the line of [ AL ], a private investor.
Just wanted to understand what your future dividend plans are?
We've been paying dividends for the last 4 years. We are contemplating to also give the fifth year. We have called for a Board meeting for that on the 5th. And we'll deliberate and we will definitely would wish to continue the tradition of being a dividend-paying company for this year also.
[Operator Instructions]
We have a question from the line of Rajendra Shah from Fidelity Management.
Shastri Ji, I have 1 suggestion. Why not make an investor presentation with broadly your strategy and potential. That...
Definitely, we would want it to -- we will be doing that, probably either we do it after the first quarter results or before that. We wish to do that, sir. [indiscernible] suggestion also came to us.
So people don't know about where the Intense stands and what type of growth strategies you were putting in place. I mean there's -- knowledge is not there, sir.
So definitely, sir. Thank you for the suggestion. We will do it.
[Operator Instructions] As there are no further questions, I now hand the conference over to management for closing comments. Over to you.
Thank you. I would like to thank every investor who's a -- prospective existing investors who have joined the call, and thank you very much for all your feedback, questions. Your inputs are very valuable to us. We will take them very seriously and put it in action.
And as I have mentioned, we are determined to see that this company grows and goes to the new heights. And as we have set ourselves this first milestone, we would want to see that we achieve is a 30% growth this year with keeping at least 35% EBITDA and this thing -- that is that itself is a huge task for my team and the entire organization. And we look forward to seeing that we earn your respect, thereby your value. And thank you very much. Appreciate your time. Jayant, you want to say something.
We internally are extremely excited about Project Butterfly and plans that we have put in place with a 3-year horizon. Many of you have also expressed the fact that, yes, we should be communicating more, in fact, we will be very, very keen to communicate our own plans and socialize them with you.
Because in the past, too, we've always believed that by socializing our internal plans, broad plans with you, we also tend to get good advice from our own stakeholders and people who are interested in our growth. We certainly will take your advice and make it a point to socialize our plan with you and see that -- and periodically also inform you of the milestones that we have reached. Thank you very much for the interest and the support that you have been for over the past many years to us.
Thank you. On behalf of Intense Technologies Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.