At a Glance
Magellanic Cloud Ltd is what happens when an HR consultancy eats a SaaS startup, marries a drone firm, and signs a government contract for ATMs. With tech buzzwords flying around and margins rising, the ₹4,300 Cr smallcap IT player has caught investor eyeballs. But is this cloud tech or just cloudy hype?
1. 🎬 Hook — The Most Confusing Tech Company in India?
Imagine a company that does:
- 👨💼 Human capital management
- 🧠 AI consulting
- 🛠️ DevOps services
- 🛡️ E-surveillance for ATMs
- 🚁 And builds drones
Yes, all this under one NSE-listed entity. If you’re not sure whether it’s a software firm or a secret paramilitary supplier — welcome to Magellanic Cloud Ltd.
From ₹20 Cr in sales in FY17 to ₹597 Cr in FY25, this company has grown faster than your CA’s excuses during tax season.
2. 🛠️ WTF Do They Even Do?
Let’s decode the chaos:
Core Segments:
- 💼 Human Capital Services: Staffing, payroll, recruiting (old-school IT services)
- 🧪 Consulting + DevOps: Cloud migration, IT modernization, QA
- 🛰️ Drone Manufacturing: Yes, literal UAVs via subsidiary Scandron
- 👁️ E-Surveillance: Monitoring 1,300+ ATM sites across India
It operates across Asia, Europe, and the US, with new ventures in AI/ML analytics via Finoux Solutions (recent acquisition).
This is Infosys meets IdeaForge meets Quess Corp — with side quests.
3. 💰 Financials – Profits Take Off Like Their Drones
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 212 | 253 | 427 | 560 | 597 |
| Net Profit (₹ Cr) | 2 | 29 | 74 | 103 | 103 |
| EBITDA Margin | 1% | 3% | 25% | 33% | 34% |
| EPS (₹) | 0.04 | 0.59 | 1.26 | 1.76 | 1.76 |
🧨 5-Year PAT CAGR: 77%
📈 OPM: From 1% → 34%
🚀 ROE: 22.2% (FY25), 28% (3-year average)
👀 This company went from a staffing shop to a high-margin SaaS-type P&L.
4. 💸 Valuation — SaaSy or Saucy?
CMP = ₹74
P/E = 42x
Book Value = ₹8.85
P/B = 8.4x
Market Cap = ₹4,330 Cr
ROE = 22.2%
Fair Value Range
- FY25 EPS = ₹1.76
- Assigning reasonable tech P/E band of 28x–35x
- FV = ₹49–₹61
🧠 EduInvesting Verdict: Stock may have run ahead of fundamentals — high P/E + low BV + low FCF + inventory risks = 🚨 Caution advised.
5. 🍳 What’s Cooking – Drones, Deals, and Diversification
Recent announcements feel like a Web 3.0 meets DRDO crossover episode:
- 🤝 Acquired Finoux Solutions, a fintech AI player (₹43.8 Cr deal)
- 📦 Won ₹22.5 Cr 3-year E-surveillance order (June 2025)
- 🛫 Unveiled drone model Cargo Max 20KHC at Aero India 2025
- 📊 Orders for ₹18 Cr+ in AI/data analytics from large clients
- 🔄 Merger with IVIS International approved (March 2025)
Magellanic’s trying to be everything everywhere all at once — including the cloud, the ground, and the air.
6. 🧾 Balance Sheet – Now with Extra Gears
| Metric | FY25 |
|---|---|
| Equity Capital | ₹117 Cr |
| Reserves | ₹401 Cr |
| Borrowings | ₹257 Cr |
| Total Liabilities | ₹889 Cr |
| Fixed Assets | ₹482 Cr |
| CWIP | ₹4 Cr |
| Other Assets | ₹398 Cr |
🟡 Debt is rising, but still manageable
🟢 Assets nearly doubled in 3 years
🔴 No clear capital allocation policy (acquisitions keep changing narrative)
7. 💵 Cash Flow — Numbers vs Narrative
| Year | CFO (₹ Cr) | Capex | FCF |
|---|---|---|---|
| FY23 | ₹160 | -₹367 | -207 |
| FY24 | ₹32 | -₹76 | -44 |
| FY25 | ₹143 | -₹64 | +79 ✅ |
🟢 Finally, a positive FCF year
🚩 Capex-heavy due to drone biz, infra setup
⚠️ High working capital cycle (Debtors = 170 days)
8. 📊 Ratios — Sexy Margins, Stressy Receivables
| Ratio | FY25 |
|---|---|
| ROE | 22.2% |
| ROCE | 22.9% |
| OPM | 34% |
| Debtor Days | 170 🫣 |
| Interest Coverage | 5x+ |
| Working Capital Days | 142 |
🧾 Strong return ratios
💣 Long cash cycle (almost FMCG distributor-level bad)
🧃 Margins good, liquidity meh
9. 📉 P&L Breakdown – SaaS or Staffing?
Let’s compare:
- FY21 revenue = ₹212 Cr | PAT = ₹2 Cr
- FY25 revenue = ₹597 Cr | PAT = ₹103 Cr
- OPM moved from 1% to 34% 😳
So yes, this is no longer just an IT outsourcing firm — margin profile resembles platform companies (if sustained).
But: is this durable or just margin magic before drone scaling flattens curve?
10. 🆚 Peer Comparison – Tech Bros with Muscle
| Company | P/E | ROE | OPM | FY25 PAT (₹ Cr) |
|---|---|---|---|---|
| TCS | 25.5x | 52.3% | 26.4% | 48,519 |
| Infosys | 25.7x | 28.8% | 24.1% | 26,516 |
| LTIMindtree | 34.3x | 21.5% | 17.1% | 4,598 |
| Persistent | 67.9x | 24.1% | 17.2% | 1,358 |
| Magellanic | 42.2x | 22.2% | 34.4% | 103 |
📌 OPM is higher than most IT peers 🤯
📌 But scale and brand nowhere close
📌 PE not justified yet unless big biz continuity is proven
11. 🧩 Miscellaneous – Promoters, FII, and Crowd Movement
- Promoter holding: 58.30% (down from 60.6%)
- FIIs: 0.5% and fluctuating
- DIIs: 🫥 Basically absent
- Public holding: ~41%
- Shareholders: From 2,500 → 38,000 in 2 years 🤯
🚨 Promoter holding has dropped -8.8% in 3 years
⚠️ Heavy retail crowd = pump-and-dump risk if growth slows
12. 🚧 Risks – What Could Blow Up?
- ❗ No dividend payout = all reinvestment, zero yield
- 🧾 Receivables problem = 170 days = collection delays
- 📉 No profit growth in FY25 vs FY24 — stagnation red flag
- 🧠 No moat – lots of competitors in every segment
- 🔄 Identity Crisis – Is it a drone maker? IT firm? HR agency?
13. 🧑⚖️ EduInvesting Verdict™
Magellanic Cloud Ltd is a microcap chameleon:
- ✅ It has solid profit metrics, improved margins, and exciting verticals
- 🚁 It’s getting serious in drones + surveillance
- 🤯 And trying to be a SaaS-HR-AI-Defense-tech firm
But…
- ❌ It trades at a high valuation
- ❌ Promoter holding is sliding
- ❌ Zero dividend + cash flow volatility = 👎 for safety-seekers
Final Word: Magellanic is like that overachieving cousin who’s doing too many things at once. Cool? Yes. Trustworthy for your daughter’s wedding jewelry fund? Debatable.
✍️ Written by Prashant | 📅 July 6, 2025
Tags: Magellanic Cloud, Drone Stocks, Indian SaaS, Smallcap IT, Surveillance, Scandron, EduInvesting, Finoux Solutions, NSE Smallcap Tech, Cloud Services India
