© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, good day, and welcome to the Saksoft Limited Q4 FY '22 Earnings Conference Call. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Ms. Asha Gupta, Investor Relations, Ernst & Young. Thank you, and over to you, ma'am.
Thank you, Melissa. Good afternoon to all the participants in the call. Welcome to the Q4 FY '22 Earnings Call of Saksoft Limited. The results and investor presentation have been already mailed to you, and it is also available on our website, www.saksoft.com. In case anyone does not have a copy of press release and presentation, please do write to us, and we will be happy to send the same to you. .
To take us through the results today and to answer your questions, we have with us the top management of the company represented by Mr. Aditya Krishna, Chairman and Managing Director; and Mr. Niraj Ganeriwala, the Chief Operating Officer and Chief Financial Officer. Mr. Aditya will start the call with brief overview of the year and quarter gone by, which will be followed by financials given by Mr. Niraj. We will then open the floor for Q&A session.
I would like to remind you that anything that is said on this call, which gives any outlook for the future or which can be construed as forward-looking statements must be viewed in conjunction with the risks and uncertainties that we face. These risks and uncertainties are included, but not limited to what we have mentioned in the prospectus filed with SEBI and subsequent annual reports, which you can find it on our website.
With that said, I now hand over the call to Mr. Aditya. Over to you, sir. Aditya, sir?
Thank you, Asha. Welcome, and thank you all for joining our Q4 and full year FY '22 earnings call today. I'm sure that most of you are regular participants to our earnings call, but let me begin with a brief introduction of Saksoft for some of our new investors, who may have logged on to this call for the first time.
Saksoft is a digital transformation partner that assists our customers to automate, modernize and manage IT systems through a combination of domain-specific technology solutions and solution accelerators from consulting to support. We have been in business for almost 2 decades now, with our offices across 14 locations, covering U.S.A., U.K., Asia Pacific and Europe, and we have an associate strength of 1,500-plus. FinTech, transportation, logistics, retail e-commerce, health care, telecom and public sector are the key verticals we operate in.
We believe that the target addressable market in the above-mentioned verticals will continue to grow in the future due to the interconnected nature of the verticals, which allows us to cross-sell and upsell service offerings to our clients. The verticals are supported by horizontal service offerings, spanning analytics, cloud solutions, legacy modernization, intelligence automation, application development and testing.
In terms of performance, I must acknowledge that FY '22 was an outstanding year for us. We delivered revenue growth of 24.5% and clocked revenue of INR 480 crores. EBITDA witnessed a growth of 22.7% to INR 79 crores, which is the best in the history of Saksoft, crossing INR 480 crores of revenue, a significant milestone for us, and we're now aiming to grow much faster to achieve our mission to become a $100 million company by 2025. In terms of quarter 4 FY '22 performance, while Niraj will deep dive into financials, I would just want to highlight that we reported highest quarterly revenue of INR 139 crores, reflecting a growth of 42.7% year-on-year and 11.7% on quarter-on-quarter basis. Despite challenging environment due to ongoing supply side challenges, we were able to sustain double-digit EBITDA margin at 15.9% for the quarter.
The business environment continues to remain strong for us. The demand for our digital transformation services is robust, driving our business forward. Our Inch Wide Mile Deep strategy is working effectively to create a niche for our company in a crowded marketplace. This is also evidenced by the addition of 3 customers in $0.5 million-plus revenue segment and the movement of 5 customers to $1 million-plus segment during the year. We are well positioned to capture the growth opportunities in the verticals we operate in. During the year, we made significant investments in terms of organic and inorganic initiatives to strengthen our capabilities and capacities, which is in line with our strategy of Inch Wide Mile Deep. We acquired MC Consulting Pte, a Singapore-based company specialized in providing technology-based business. Over the last 15 years, they've custom developed multiple solutions that improves the functioning of a seaport and public sector agencies. The acquisition reinforces our market position as a solution provider to logistics and transportation industry. This acquisition also evidences our intention to invest more in the Singapore market and commitment to provide employment to local talent. It will help to enhance our strength of vertically-focused approach and optimize cost for operations in Singapore.
Throughout the year, we continued to invest in talent pool. We added nearly 300 employees, taking our total headcount to 1,554. I'm glad to inform you that we are now Great Place to Work certified company, effective April 2022. We've always endeavored to provide a work environment, which offers flexibility, respect and meritocracy to all employees. Employees well-being has always been a nonnegotiable priority for us and will continue to be so.
The Board of Directors at the meeting held on 26th May 2022 has approved the split of the face value of equity shares from INR 10 to INR 1 per share. This is subject to the approval of the shareholders at the ensuing 23rd AGM, which is supposed to be held on 9th August 2022.
We have been consistent in sharing profits with our shareholders. For FY '22, we have recommended a final dividend of INR 3 per share. This makes total dividend for the year to INR 6 per equity share, which comes to 60% on equity value of INR 10 each as compared to INR 5 per share in the previous year. As mentioned in my earlier calls, we reiterate the same that our Vision 2025 is to become USD 100 million revenue company over the next 3 years. Some of the key factors that would drive our growth are: number one, we will continue to remain focused on our select industry verticals sectors, namely FinTech, transportation, logistics, retail e-commerce, which are verticals of the future.
Number two. Our Inch Wide Mile Deep strategy, where we focus on niche verticals and capabilities one of the reasons of our growth in revenue and will continue to be one of the major reasons why we will add more customers yielding more revenue. Number three, the network effect is working well for us. Our expectation is that 80%-plus revenue growth will come from existing accounts and references from these existing accounts and balance through new logos.
Number four, we will also -- we are also investing in digital assets and frameworks, such as UNITE, [ Stack, Sakama ], which will enable our customers a faster go-to-market on their products and also going digital. Five. Focus on acquisition will continue and our track record of successful integration of over 6 acquisitions gives us the confidence to go down this path with ease.
Our balance sheet continues to remain strong. We have a healthy cash and cash equivalent of INR 94 crores. We will continue to reward our stakeholders and dividend recorded over the last 5 years is a testament to our policy of rewarding the shareholders.
To summarize, I would like to say that FY '22 was the year of strong execution and growth. We are pleased with the current growth momentum and remain optimistic of future growth in the next fiscal year. We believe that the commitment and support of the entire fraternity at Saksoft and our esteemed shareholders, we will be able to achieve our growth target in the coming years.
With this, I will now hand over the floor to Niraj to take us through the financial highlights. Over to you, Niraj.
Thank you, Aditya. We will now go over the financial performance for the quarter 4 and the full year FY '22. In terms of revenue, quarter 4 FY '22 revenues were at INR 139.09 crores as compared to INR 97.45 crores in quarter 4 FY '21, and INR 124.47 crores in quarter 3 FY '22, reflecting a growth of 42.7% year-on-year and 11.7% on a quarter-on-quarter basis. For the full financial year '22, the revenue stood at INR 480.43 crores as compared to INR 385.81 crores in the financial year 2021, witnessing a growth of 24.5%, which is the highest growth in terms of absolute numbers in Saksoft's history.
Now looking at EBITDA. The quarter 4 FY '22 EBITDA was at INR 22.15 crores as compared to INR 15.55 crores in quarter 4 FY '21 and INR 22.07 crores in quarter 3 of the current year, registering a growth of 42.4% year-on-year and flat on a quarter-on-quarter basis. The EBITDA margin for the quarter stood at 15.9% as compared to 16% in quarter 4 of the previous year and 17.7% in quarter 3 of the current year. For the financial year 2022, the EBITDA stood at INR 79.02 crores as compared to INR 64.42 crores in FY '21, which is a growth of 22.7% year-on-year basis. Despite the challenging environment due to the supply side challenges and increased hiring costs, we were able to maintain double-digit EBITDA margin.
Now coming to the profit after tax. The quarter 4 FY '22 PAT stood at INR 17.55 crores as compared to INR 12.51 crores in the quarter 4 of the previous year and INR 14.93 crores in the quarter 3 of the current year. This is a growth of around 40% on a year-on-year basis and 17.5% on a quarter-on-quarter basis. The financial year '22 profit after tax stood at INR 63.26 crores as compared to INR 45.44 crores in the previous year, witnessing a growth of 39.2 percentage. The decrease in finance cost has also led to improvement in the profitability. This resulted in the earnings per share being at INR 63.37 for the current year as compared to INR 45.68 in the previous year, witnessing a growth of 38.7% year-on-year. The impact of the currency movement on revenue is only 2% for the current year. Based on the same, the pure volume-driven growth on revenues is about 22.5% as compared to the previous year. In terms of the revenue split by geography, the Americas contributed to about 45% of our revenue, Europe contributed 32% while the remaining 23% came from Asia Pacific and other regions. The on-site and offshore revenue mix remained stable, as on-site being 47% and offshore at 43% as compared to 48% on-site and 52% offshore in the previous year.
As mentioned before, we expect the mix to be inclined towards the offshore in the subsequent quarters. The revenue split across verticals is as follows: Fintech and telecom contributed to about 28% and 20% of the total revenues, respectively, while transportation and logistics, retail e-commerce and health care and the public sector contributed 10%, 8% and 6%, respectively.
Looking at some of the customer metrics. Saksoft has about 11 customers in the USD 1 million-plus revenue segment and 7 customers whose revenue is above USD 0.5 million-plus. We have moved 5 customers in the current year from the $0.5 million category to the $1 million category, and we have been able to add 3 new customers in the $0.5 million category. This gives us more confidence that we are being valued by our customers, and we are in the right path of our growth trajectory. The total employee count stands at 1,554, out of which 1,406 are technical and the remaining 148 are support staff. The utilization level of our employees, excluding trainees, stood at 85% for the current year. Moving to the balance sheet as of 31st March 2022, our debt position stood at INR 4 crores and cash position stood at INR 94.84 crores, which makes us a net cash company. We have repaid a debt of INR 20 crores during the year, and the cash outflow of the investment in MC Consulting for the first tranche was about INR 15 crores. For the financial year 2022, the return on equity stood at 20%, and the return on capital employed stood at 25.8%.
This now concludes the update on the financials, and we will now open the floor for Q&A.
[Operator Instructions]. We have the first question from the line of [ Srishti ] from Monarch Networth Capital Limited.
Firstly, I wanted to understand, we've seen good growth in the past 4, 5 quarters, so are we expecting similar growth trajectory of 5%-plus sequential growth in the next year as well? Just wanted your thoughts on how the demand environment is looking like?
At this point, we are confident that over the next 3 years, we can deliver 20%-plus CAGR top line growth, that's where we stand as of now. Last year, we did 25%. I think 20% seems very possible at this stage.
Sure, sir. And -- okay. On the new acquisition, would you say that it's margin accretive? And when do we see the acquisition of MC Consulting significantly contributing to our revenue?
Our acquisitions have never been for revenue. They've always been either for capability or for some strategic reasons. So having said that, we never acquired a company which is loss making or which is not going to add to our profitability. So in terms of margins, MC Consulting's margins are better than our present margin. So the average will go up. But in terms of top line growth, we don't expect them to contribute significantly. But the way they will help us is what I explained in -- what I said earlier is that they'll help us optimize local talent as well as be more efficient in terms of operational costs in Singapore. So those were our 2 main reasons for acquiring this business.
Okay. Understood. And sir -- and sorry, if I missed it, did you mention how much was the attrition rate? Just wanted to understand, your subcontracting costs have been sort of impacting margins, so would you take wage hike to sort of -- would you be taking wage hikes further in the next 2 years, in the next 2 calendar years to sort of bring down the subcontracting portion?
Go ahead, Niraj.
So just to clarify, I don't think at the company level, it would be right to state that the subcontracting costs are impacting the margin. For companies of our size, I would say that that's an indirect way of ensuring that the margins stay relevant and can slightly improve because when it comes to subcontractors and third parties, our utilization is anywhere between 95% to 100%. So we are able to operate efficiently by using the subcontractors. So yes, the subcontracting charges will continue to go up depending on how the talent is and how the availability is because this is a nice free pool, which is available in the market and can be used on a start-stop basis. But it definitely does not impact our margins negatively.
[Operator Instructions]. We have the next question from the line of [ Saurabh Malhotra ], a retail investor.
I have 1 minor question regarding the financials. If we study the past financials, all the DSO still stands at healthy 80 days. But this time, there is a significant increase under receivables around 65% or so. This has never happened in the last 4, 5, 6 years. Any specific reasons for this rise in the receivables?
I think what is relevant to note is also the growth, which has happened, we said 25% growth, there has definitely been an increase in the days. But if you look at an average [ debtor ] days, the number of average [ debtor ] days has gone up only by a couple of days. Yes, there has been some pile-ups in terms of collections towards the end of the year, but nothing significant, nothing worrying, and this should all get normalized in the coming quarters.
All right. Good to know. I have 1 more question. The revenue from the Americas region is around 45% or so, if we consider a geographical split. As things stand today, it is estimated that since the rate of interest are now increasing, the Fed is increasing the rate of interest, probably by the next year it is anticipated -- we don't know for sure, obviously, it is anticipated that U.S.A. may land in recession, and there might be some impact from a demand front, considering from that region. Do we anticipate that or do we expect that to happen or do we have a strategy to handle that? Just your thoughts on this.
This is a very relevant question. And honestly, I just have to say that -- I mean, it's a mixed bag as to whether the U.S. will go into a recession or not. I mean there are different views on it. And from our perspective, there is -- what are the tools that we have to manage a recession? We have to be very careful in building assets on our balance sheet, which we are very careful about. We're very careful about managing our cost. We're very careful about managing our margins. We don't want to take unnecessary overhead onto our balance sheet and our P&L. All that we are doing.
Demand side, if there's a recession, will get impacted. But keep in mind, our target market is not the Fortune 100 companies or the Fortune 200 companies, which get hit by the recession the maximum. Our target market is the middle segment, the companies which are typically $100 million to $2 billion in revenue size, okay? They are impacted by the recession, but less so. So we are quite hopeful. And time will tell that if there is a recession in the U.S., the impact on us should not be as significant from a demand side as it would be for the larger customers.
[Operator Instructions]. We have the next question from the line of [ Chaitanya ] Shah from [ Silverline ] Capital.
Sir, I broadly have a question on your acquisition strategy. Generally, we've seen that companies that do a lot of acquisitions, they always have their return ratios hit in 1 or the other acquisitions because most of the acquisitions are generally not very successful. But with your company, we've seen that you've been able to really handle the acquisitions very well. I just want to understand how you go about acquiring a company and what is it that you've done differently that has helped you in making most of your acquisitions successful?
We follow 2 or 3 basic principles when we look at an acquisition. Number one, if you see our capital, we are -- our paid up capital is only INR 10 crores. So we don't have deep pockets. So the first thing is it has to be affordable. Now when I say affordable, it has to be something that we can take on without diluting capital, diluting our equity. So the transaction size becomes smaller. So that's number one.
Number two, we look at what can this acquisition add to us from a capability perspective, never from a top line perspective. Most of the acquisitions that go bad are when the acquirer either acquires a target, which is the same size or bigger or a reasonably large-sized organization, which has a lot of complexities behind integration, et cetera. That is not the case with us. We're always looking at an organization or a company that can add some capability, irrespective of top line.
The third thing we do is we leave the company alone. We don't impose our values on that company because that company has a culture. If you disturb that culture, chances are there will be resistance to integration. So we never do that.
And if you can do these 3 things, number one, reasonable size; number two, don't impose your culture; and three, bring some new capabilities rather than just top line, you will be successful. And that's what's worked for us so far. And we will continue in that direction.
Okay. All right. My second question is regarding, traditionally, we've seen IT companies go for big-sized clients, like Infosys or Wipro, the TCSs of the world. But you -- specifically, you said that you focus on smaller clients. So operationally, how is it different to handle smaller clients or bigger clients? And what advantages do you have as a company against the -- some of the larger peers in the country?
It's a question of creating a niche for yourselves. It's -- take a large customer. Take -- for example, take Citibank. Now if Saksoft was to go to Citibank and say, look, we are an IT supplier, they will compare us with an Infosys or a TCS. Now the playing field will always favor the large players with a customer like that. We will always be on a back foot. So why compete there? We should compete where our chances of success are higher or chances of winning are higher. So we compete in the mid-tier. We compete in the mid-tier where ROI is very important. Value for IT spend is very important. Dealing with a supplier who's nimble, fleet-footed, understand their business is very important to that customer. These companies will always favor a Saksoft over a large IT player because nobody wants a supplier who is 5x, 10x their size, then the supplier will never be able to give value to that customer. So that's really where our secret source in our space is, and we want to stay there.
Okay. And post COVID, I mean has there been a fundamental change in terms of attitude of the smaller companies regarding digitization. And because generally, what we've seen historically and in your numbers as well that the spend are generally a little erratic for companies of a smaller size, they don't have a predefined IT budget, and you can correct me if I'm wrong. So has that changed after COVID?
It's a good question, a very good question. But you have to look at it in the context of not only the size of the company, but also the sector that it is in. The sector that we are operating in, for example, fintech and transportation, logistics. In that sector, IT spend is not being constrained so much by the absence of COVID, it's being -- it's really being propelled by the fact that, that sector is booming, transportation and logistics is booming, fintech is booming. There's sort of so much disruption in the financial services industry. There's so much investment in that sector. And these are all technology-led sectors, which have stayed behind the curve. For example, transportation, logistics has always been behind the curve in IT spend. Now with the boom in that sector, they're catching up, and that is not going to change at least for the next 5 to 6 years. So your question is very valid, but please look at it in the context of size of company and the sector because only then really it makes sense.
[Operator Instructions]. We have the next question from the line of [ Chaitanya ] Shah from [ Silverline ] Capital.
Just wanted to understand the rationale for going for stock split?
More interest in the stock, [ Chaitanya ]. We'll have more shareholders.
[Operator Instructions]. We have the next question from the line of Dhiraj from Roha Asset Management.
Just to understand the journey of over the next 3 years of $100 million and 20% CAGR. Is there any new verticals that we're looking at? See, acquisitions is somewhat unpredictable. But from an organic perspective, any new skill set, domain that we are adding up? And also if you can share some light on margins because you still way off from fairly decent margins for the peer group, which will be upwards of 20% or so. So anything that operating leverage will play out over time to move the margin needle from 16%, 17%-odd level?
In terms of new industry verticals at this point, we're not looking at anything because we find enough traction to get to where we are with our existing verticals. However, from a technology perspective and a horizontal play, we plan to invest in the cloud considerably. We find that the cloud journey or the migration to cloud is something which is still very much at the nascent stage, growth in cloud and the money that our customers want to spend on cloud is increasing. So we plan to build a bigger practice there, we plan to invest in some proprietary solutions, tools to hasten the access or the go-to-market for our customers in this -- in the cloud space. So that's really where if there is an investment, that's where it's going to be. Regarding margins, our margins are pretty much where they're going to be because our focus now is going to be deliver 20% CAGR or more for the next 3 years. And if it means compromising a little bit on the margins, we will do that. I think 20% is not going to happen for us, okay? But yes, when I say 20%, I'm saying not going to happen, 20% EBITDA margin is not going to happen for us. We're currently at 16%. I think 20% -- with a 20% CAGR is definitely off the table. Yes.
Okay. And how are you coping up with the heightened wage cost pressures and attrition? Are you able to pass on or replace technical people or pass on the cost hikes to your customers?
The rates are hardening in the sense that wherever we have opportunity to increase rates, we are doing that. Rupee-dollar is helping. But there is limitation on how much we can pass on because like I said, our focus is 20% CAGR-plus at decent margins. And to be honest, today, IT service is becoming more and more commoditized. It's very difficult to judge more than the market. The customer knows what is the prevalent rate, we know what is the prevalent rate, and we have to stick to that. Wage pressure is not going away in a hurry. We have to learn to live with it. Managing attrition is something that we are always doing. So I think that's 1 of the stumbling blocks and challenges, which this industry will face at least for the next 2, 3 years.
Sure. And lastly, assuming this 20% CAR has embedded inorganic acquisition. Assuming that doesn't play out, how much will we be able to grow organically speaking?
Sorry, can you repeat that question, please?
In the 20% CAGR assumption of your 3-year out revenue growth, how much will be organic led and how much will be inorganic assumption?
So this 20% is pure organic. You can -- as far as MC Consulting, et cetera, is concerned, it's -- the numbers are not very relevant. Like I said, we acquired this business for capability and more from a talent acquisition in the Singapore market than anything else.
[Operator Instructions]. We have the next question from the line of [ Chaitanya ] Shah from [ Silverline ] Capital.
Sir, my question is regarding what's happening in the start-up ecosystem right now in the country. We've seen a lot of people being laid off and valuations sort of collapsing. Now I just wanted to understand from an IT sector point of view, does this situation help us in terms of lowering the attrition rate or availability of talent? Do you see this thing helping the IT sector in the next -- in the coming years?
[ Chaitanya ], the numbers or the gaps are so big. The layoffs in the start-up sector will be what? 1,000, 2,000, 3,000, 4,000. The demand in the IT sector will be in lakhs. So it's a drop in the ocean. It's -- the numbers just don't stack up. So the need is far greater than what will get released from startups.
Okay. And sir, so when do you expect the situation to sort of normalize? Will it take years or months or what is your -- can this -- from a minority investor perspective, can this be considered a threat for [ years ], something that can really destabilize the business model?
Difficult to predict. But I would say, next -- well, next 24 months, it's here. Now if there's a recession in the U.S., people start getting laid off, demand starts taking a hit, automatically, things will correct because everybody follows the U.S. There will be ripples all the way to Europe and Asia. How that works out, time will tell. But it will definitely normalize. I mean it is a business cycle. We've seen it before also in the IT industry. Remember those days when every IT company used to put full paid ads for people in the media. Today, nobody does, okay? Maybe that will start again. So I think this is just part of the cycle. So we have to deal with it. The plus side is demand is booming. So now -- we rather have talent crunch and demand booming or the reverse. I would rather have it where it is today.
[Operator Instructions] We have the next question from the line of Amit Jain from Monarch Networth Capital.
Congratulations for a very healthy set of numbers. Aditya, one thing on the resource crunch, I think the industry is getting -- recent results what we are seeing, every IT company has highlighted this issue. And particularly for a company of our size, in this case, maybe when you are dealing with the client and you are handling some key projects and if you're key person exits from the company, definitely it effects and whenever you are negotiating a deal with the clients, so that obviously matters. So do you think it can pose a threat to your guidance of what you are projecting of 20%?
When we give you these numbers of 20%, it is keeping in mind the threats that we currently face. So we've factored the resource crunch into these numbers, okay, and come up with a 20% CAGR.
Having said that, resource crunch and the scenario that you painted is very, very realistic. It's happening, as we speak. People are quitting left, right, center. Managing attrition is a full-time job. Keeping people motivated is a full-time job. And it's not only money, it's not only wage or increasing wage which will keep money because you can never pay the maximum. There'll always be somebody who will pay more than you, okay? So it's a combination of quality of the work, the respect the individual gets, the flexibility. And we're trying to do all of that.
And this recent recognition of being certified as a Great Place to Work is a step in that direction. So we are taking a lot of steps to manage attrition and keep our key people committed and loyal to the company. And we had success. We have success. Now to get over the resource crunch, we are doing a couple of things. One, of course, like I said, managing culture, improving culture, keeping culture, making sure that culture transcends throughout the organization of respect, of recognition. So that's one thing that we are doing.
The second thing we're doing is we're looking at talent outside India: Latin America, Eastern Europe. Eastern Europe was very hard till what happened in Ukraine happened. So there are opportunities to look at talent outside India, which we are looking. So those are -- returning women in the workforce, third sector. Tier 3, Tier 4 cities, talent in those cities. So we are looking at many ways to overcome the resource crunch. And we're working parallelly on all these initiatives. It's not sequentially. So we will find a solution. After all, that's what we get paid for, right, to overcome these challenges and grow the business.
And one thing more about -- now again, there has been a concern. I think it can be, again, it's too early to comment on that about the recession and the slowdown in the discretionary IT spending. So I'm sure you must have taken cognizance of that as well in your projection. But still, do you think, yes, going forward, definitely as things evolve, as I said, but there are initial signs of worry that you -- while interacting with the clients that they are maybe in their IT projects, they are slightly skeptical about future IT spending?
You've used the word discretionary IT spend. 99% of our revenue for our business is not discretionary. It is mission-critical. We do IT work for our customers, which is mission critical. If we stop doing that, that business will stop. So yes, they can cut back on spending. And if there is a recession or signs of recession, we will see that. We will see cutbacks, people cutting back on team sizes, people cutting back on budgets. Everybody will be careful. But considering the size of our business, considering that 20% on INR 480 crores is not a very large absolute number versus the size of the market. We are confident that where we are today, we can deliver this number.
And just lastly on the margin side, I understand and completely appreciate that expecting a margin of 20% EBITDA, obviously. But are we just expecting that the similar margin profile, maybe plus/minus 100 bps here and there? And we can expect that kind of margin profile over the next 2 to 3 years?
Yes. I think if you give a leeway of 100 basis points, plus or minus, you -- that's something which is very, very realistic, keeping in mind the 20% CAGR.
Completely understood.
Thanks, Amit. Thank you for your support.
Again, heartiest congratulations for a very healthy set of numbers.
You're an early believer, Amit. Thank you for that.
[Operator Instructions] As there are no further questions, I would like to hand the floor back to the management for closing comments. Please go ahead, sir.
We thank everyone for taking out time to participate in this call and for their interest in Saksoft. We continue to believe that we're in the right place, and we will remain committed on our goal of Vision 2025. I hope we've been able to answer your queries. In case of any other queries, please reach out to us or our Investor Relations advisers, Ernst & Young. Thank you, everyone, for joining us.
Thank you, members of the management. Ladies and gentlemen, on behalf of Saksoft Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.