Fidel Softech LtdQ3 FY22IT - Software

Fidel Softech Ltd

Q3 FY22 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Revenue guidance

Category 3

→The company aims for sustainable, long-term growth over the next 5 to 10 years rather than focusing solely on quarterly numbers.
→They have a current order book of around ₹12 crore spread over the next six months, which is likely to increase with new orders.
→Efforts are underway to build a stronger sales engine, invest in advisory and resources, and participate in industry events to boost growth.
→The company is cautiously optimistic about robust growth opportunities, expecting to continue mining new clients aggressively.
→They are targeting growth through expanding multilingual data enrichment and SaaS enterprise applications markets.
→Expansion into the US market with channel partners and local hires is planned alongside existing focus on Japan and other regions.
→With IPO proceeds, they plan investments in infrastructure, hiring, digital marketing, and tool development to support scale-up.
→The goal is to chase growth sustainably while building trust and maintaining performance consistency.

Category 3

→Fidel Softech is focused on sustainable long-term growth over the next 5 to 10 years rather than just chasing quarterly numbers (Sunil Kulkarni, Page 14).
→The company targets maintaining +25% EBITDA margin sustainably, backed by abundant business opportunities and current order book (Mandar Inamdar, Page 11).
→Revenue growth is expected, supported by a current order book of around ₹12 crores for the next 6 months and ongoing sales team efforts to secure new orders (Page 8, 12, 13).
→Positive outlook despite external recession concerns, with ongoing investments in digital marketing, infrastructure, hiring, and participation in strategic events to boost growth (Sunil Kulkarni, Pages 5-6).
→The company reported strong quarter-on-quarter and year-on-year growth with revenue rising ~34.6%, EBITDA and PAT more than doubling year-on-year (Mandar Inamdar, Page 3).
→Emphasis on building trust and improved communication with investors as they continue to grow (Sunil Kulkarni, Page 14).

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Yes

→The company has recently gone public via an IPO and has started utilizing the IPO proceeds for working capital, infrastructure upgrades, hiring key staff, digital marketing, and participation in events.
→There is no explicit mention in the transcript of any current or planned new fundraising through debt or equity.
→The management emphasizes strategic use of IPO funds for growth and building a sales engine but indicates it is early in their journey post-IPO.
→They are cautiously optimistic about growth and building sustainable long-term performance but have not disclosed any immediate plans for additional fundraising.
→Future funding needs, if any, have not been specified during this conference call.

Yes

→Current order book stands at approximately ₹12 crores, with visibility and assurance to execute within the next six months (H2 FY 2023).
→The ₹12 crore order book is spread over the next two quarters (H2) and reflects confirmed and conservative estimates.
→New orders beyond this ₹12 crore are expected to come in, as the sales team continues to pursue additional business.
→The company takes a conservative view on bookings due to market volatility despite no immediate signs of customer slowdown.
→The order book of ₹12 crores is lower than the revenue of the first half (₹15 crores), indicating room for order book expansion.
→Projects in the order book include recurring engagements and ongoing managed service contracts (MSS).
→The company is actively working to build and grow the order book as part of its strategic growth initiatives.

Yes

→Fidel Softech has started utilizing IPO proceeds for capital investments including infrastructure upgrades such as purchasing PCs and servers.
→The company has hired sales and marketing personnel as part of expanding capabilities and market reach.
→Investments are being made in digital marketing, participation in domestic and international events (e.g., LocWorld, tech events in Bangalore), and developing partnerships.
→Strategic investments include strengthening the advisory board with senior members for finance and branding.
→Focus is on building a sales engine and investing in key domains to scale supply capability.
→Efforts are underway to develop talent, reskill existing staff, and create tools for semi-automation in multilingual data enrichment.
→The company is positioning to compete for bigger global RFPs by achieving certifications like ISO 17001.
→Exploring strategic partnerships and channel partners in the US market to expand business footprint.

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