🟢 1. At a Glance
Sahana Systems Ltd (NSE SME) is a software, IT services, and hardware-trading hybrid that scaled from ₹24 Cr revenue in FY23 to ₹167 Cr in FY25. It boasts 42.6% ROCE, 30.5% ROE, and a ₹1,150 Cr market cap. But working capital is a mess (226 days), debtors are at 193 days, and promoter holding has dropped steadily. A high-growth anomaly… or an SME illusion?
🎬 2. Introduction with Hook
Imagine a company that does software development, digital marketing, and also trades franking machine hardware.
Now imagine it’s certified CMMI Level-5, ISO 9001, and ISO/IEC 27001.
Now imagine it has better ROCE than most IT biggies… and worse receivable days than your neighbourhood kirana store.
That’s Sahana Systems. A stock that went from ₹1500+ highs to 22% down YTD. And still, looks too expensive for an SME with rising public shareholding and declining promoter stake.
Let’s dissect the hype vs hard numbers.
🧑💻 3. Business Model – WTF Do They Even Do?
- 🔧 Core Business: Software dev, digital marketing, analytics
- 💻 Side Hustle: Trading of hardware instruments – franking machines, LED monitors, laptops
- 🏅 Certifications:
- CMMI Level-5 (aka “we follow SOPs more strictly than SBI clerks”)
- ISO 9001 + ISO/IEC 27001 – top-tier quality + info security
- 🌐 Clientele: Mix of B2B clients across India; no marquee global logos listed
- 🧳 Extra Sauce: Recently invited by Royal Thai Govt to discuss fintech ecosystem collab 🤷♂️
Basically: half Infosys, half Nehru Place trader.
📈 4. Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue (₹ Cr) | 24 | 69 | 167 |
| Net Profit (₹ Cr) | 6 | 18 | 39 |
| Net Profit Growth YoY | – | 200%+ | 117% |
| OPM % | 40% | 34% | 34% |
| ROCE | – | 55% | 42.6% |
| ROE | – | 30.5% | 30.5% |
💡 What stands out:
- Steady margins, even at this scale jump
- Profit growth is real, not financial engineering
- ROE/ROCE combo is top-tier for any tech firm, let alone SME
💸 5. Valuation – Is It Cheap, Meh, or Crack?
- 📌 Current Price: ₹1,304
- 📌 EPS (TTM): ₹40.14
- 📌 P/E: 32.5x
- 📌 Book Value: ₹199 → P/B: 6.54x
- 📌 Fair Value Range (EduCalc™):
- 20x P/E = ₹800
- 30x P/E = ₹1,200
- 35x P/E = ₹1,400
- 🎯 FV Range: ₹1,000 – ₹1,400
Verdict: Currently in the upper zone of its fair value. Not bubble, not bargain.
🍳 6. What’s Cooking – News, Triggers, Drama
- 🛳️ Thailand Invite: In June 2025, company invited by Royal Thai Govt for fintech ecosystem planning
- 💰 Dividend Declared: Re.1 interim dividend in June, but promoters waived their payout 👀
- 📉 Stock Down 22% in 1 Year: Despite high growth – valuation fatigue?
- 👇 Promoter Stake Falling: From 62.88% to 57.15% in a year
- 🔎 Retail Love Rising: Public shareholding jumped from 37% → 42%
🧾 7. Balance Sheet – How Much Debt, How Many Dreams?
| Item | FY25 (₹ Cr) |
|---|---|
| Equity Capital | 9 |
| Reserves | 167 |
| Borrowings | 12 |
| Total Liabilities | 248 |
| Fixed Assets | 37 |
| CWIP | 17 |
| Investments | 21 |
| Other Assets (Receivables etc.) | 173 |
- ✅ Debt is low (~₹12 Cr)
- ❗ Receivables-heavy asset base
- ⚠️ Total assets nearly 70% tied in working capital
💵 8. Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | FCF? | Commentary |
|---|---|---|---|
| FY23 | ₹1 Cr | No | Nascent stage, tight ops cash |
| FY24 | ₹34 Cr | Yes | Good bump with scale |
| FY25 | ₹-48 Cr | ❌ No | Possibly over-investing / WC gap |
- Cash burn despite high PAT = bad sign
- Most SME bubbles pop when cash runs dry, not when P&L looks weak
📐 9. Ratios – Sexy or Stressy?
| Ratio | FY24 | FY25 |
|---|---|---|
| Debtor Days | 106 | 193 (!) |
| ROCE | 55% | 42.6% |
| Working Capital | 39 days | 226 days |
| Dividend Yield | 0.08% | 0.08% |
🧨 193-day receivables = 🚨
This is worse than PSU procurement cycles. Either collection sucks or biz is being booked on paper.
📊 10. P&L Breakdown – Show Me the Money
- 🔹 FY25 Revenue = ₹167 Cr
- Of which: ₹56 Cr Operating Profit
- ₹39 Cr Net Profit
- 🔹 OPM steady at 34%
- 🔹 No huge other income → real business
Seems clean on the surface. But… until cash collections catch up, it’s just a promise.
🥊 11. Peer Comparison – Who Else in the Game?
| Company | P/E | ROCE | OPM % | Debtor Days | M.Cap (₹ Cr) |
|---|---|---|---|---|---|
| Netweb Tech | 89.8x | 32.5% | 13.9% | – | 10,278 |
| Inventurus | 55.7x | 27.2% | 28.9% | – | 27,080 |
| Tata Tech | 42.4x | 25.8% | 18.1% | – | 28,752 |
| Sahana Systems | 32.5x | 42.6% | 34.0% | 193 | 1,152 |
📌 Sahana has better margins and ROCE than some listed peers.
📌 But peer group is larger, stable, and audited with more disclosures.
🧬 12. Miscellaneous – Shareholding, Promoters
| Shareholder | Jun ’23 | Mar ’24 | Jun ’25 |
|---|---|---|---|
| Promoters | 62.88% | 62.88% | 57.15% |
| Public | 37.12% | 36.52% | 42.09% |
| FIIs/DIIs | 0% | 1.2% | 0.76% |
| No. of Shareholders | 586 → 3,200+ 📈 |
- 📉 Promoter selling trend
- 📈 Public entry + 3x increase in shareholder base
- ❗ No major fund names yet
🧑⚖️ 13. EduInvesting Verdict™
Sahana Systems walks like a techie, talks like a startup, and files financials like an SME stock on growth steroids.
✅ Certified, profitable, debt-light
✅ Margins and ROCE better than some unicorns
❌ Debtors and WC stress = serious operational red flag
❌ Falling promoter stake = 👀
Fair Value Range = ₹1,000 – ₹1,400
Above ₹1,400 = momentum zone
Below ₹1,000 = possibly underpricing the risk well
In short:
“Excel sheet looks sexy. Cash flow? Not so much.”
✍️ Written by Prashant | 📅 10 July 2025
Tags: sahana systems, sme ipo, tech stocks, software growth, sme bubble, high roce, fair value, screener analysis, IT services India, cmmilevel5
