SASKEN COMMUNICATION LTD - FIGHTING FOR A COMEBACK

  

 

 

Sasken Communication was a sizzling stock in Indian bourses for a long time.Once it termed as one of the most promising mid size IT company from India .In 2007 its share price touched a high of even Rs.624. which later plunged to Rs.40 level in 2009.Sure, it is not without any reason. Sasken is a  communication software company with considerable presence in the broadband and wireless software space. Its core expertise lies in developing embedded communication software for companies across the communication value chain-network equipment manufacturers, semiconductor vendors and mobile terminal vendors.Sasken is also present in application software development for communication service providers.Many once well known companies  like Nortel, Nokia, Motorola ..etc were the prime customers of Sasken.Sasken's strategy to depend on very few customers for its revenue growth  came as a big blow on the company when Nortel filed for  bankruptcy protection in 2009.Nortel was the largest customer and a minority share holder of Sasken. The change of equations in telecom sector also affected the growth of sasken in recent years.In the past five years company reported continuous fall in revenue and exit of some high profile executives from the company.After a long gap promoters are now taking some proactive steps to prevent further fall and bring back growth.Sasken is now planning to diversify into more new areas and more customers  to de-risk by avoiding the earler situation of depending only on handful customers.

                                                    The most important decision by the management  is to induct more professionals in  the company.Recently ,its founder CEO Rajiv Mody  resigned from the post and appointed Mr Anjan Lahiri as the CEO.Mody will continue as the CMD of the company.Mr.Anjan Lahiri is a well known figure as the CEO of MindTree Ltd’s information technology business.Only recently he quit Mind Tree  and in last week joined in Sasken as Whole time Director and Chief Executive Officer. Anjan is  one of the 10 professionals from  Wipro and  Cambridge Technology Partners who came together to start Mindtree in 1999, and also known as the main piller who stabilised the business of  Mindtree post departure of Ashok Soota in 2011.He is also known as one of the best Sales guy in IT Industry .Sasken is expected to gain from the experience and expertise of Anjan at a time when the company  desperately needs a lifeline.

                                                                                                  On the financial side ,Sasken reported  a turnover of Rs.475 Cr ,net profit of Rs.32 Cr, and an EPS of Rs.13 in FY 2012-2013.In the latest quarter, Company reported  some improvement in its top line and bottom line compared with March quarter. June qtr sales were Rs.115 Cr and net profit is Rs.17 Cr and qtr EPS is Rs.8 .Company is continuously paying hefty dividend .In last two years company distributed 70% each and in this FY, already declared an interim dividend of 45%. In the past few days promoters started purchasing shares from open market which is another positive sign.

I believe ,promoters are now taking some serious  efforts to bring back the company into the right track and the result of such efforts will start to reflect in coming years.Those with some risk appetite can take limited exposure in Sasken at CMP of Rs.118 with a long term view.

Link to company website HERE

Link to latest AR HERE