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INTELLECT DESIGN Analysis !!
#Intellect

A detailed #Thread below 🪡🧵
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About -

Intellect Design Arena is engaged in the business of software development & delivers financial technology products for the BFSI (banking, financial services and insurance) domain. Intellect Design Arena has a comprehensive portfolio of products across Global consumer

banking (product name: iGCB), central banking, Risk & treasury management (product name: iRTB), Global transaction banking (product name: iGTB) and Insurance (product name: SEEC). The co is headquartered in Chennai & has a global presence across the world & serves 240+ clients .

Financial Summary -
Q3 FY22 (YoY)

Revenue were at ₹519 Cr ⬆️34%
PAT at ₹101 Cr ⬆️25%

▪️ Established player in software product development within BFSI domain -

The co has established itself in the BFSI products business globally by beginning the Intellect suite of software products in 2004, while being a part of Polaris Consulting Services Ltd.

Intellect Global Transaction Banking (iGTB), the transaction banking specialist is ranked #1 in the world for Transaction Banking by IBS Intelligence. The co has more than 14 products across various sub-segments of BFSI such as corporate banking, retail banking, treasury &

capital markets & insurance. The company’s products have been well recognised & rated by various leading institutions & has been conducive in winning top notch digital transformation deals against global competition. The company has robust relationship with large international

banks by providing critical information technology (IT) products to their business centres across the globe.

▪️ Diversified product profile aids in de-risking the portfolio -

The co has diversified product offerings across the sub-segments of the BFSI vertical. Its suite in

transactional banking for corporate banking product constitutes major chunk of revenue mix & is noticing incremental traction in other products majorly due to digital centric service oriented architecture & focused solution that service specific customer needs. The co is emerging

as the leader in this category and now boasts of over 90 clients. Further the company has multiple revenue streams & models which enables its earning potential to be well diversified, de-risked & sharpened to take advantage of every form of market opportunity & trend. This in

turn, will ensure both an assured & repeated revenue stream, as well as growth, driven by logo acquisitions, entry to new markets and replication of their success with the top customers. The co’s repeat revenue from existing customers stood at 85%. The co has seen steady growth

in license linked revenue which constitutes cloud/SaaS, AMC & license revenue.

▪️ Healthy demand prospects for product companies in BFSI segment -

BFSI is the largest vertical, contributing to more than 50% of revenue within IT services and solutions. On an average, banks &

financial institutions spend about 7-8% of revenue on IT, which is the highest among all verticals. We believe BFSI segment shall continue to remain the biggest technology spender, taking into consideration its dynamic nature and high regulatory requirements in the industry.

Hence, revenue prospects for software firms in BFSI is expected to remain healthy, driven by continuing high spending, increasing adoption of digital technologies, & expected increase in penetration. The co has created multiple IPs across banking functions.

▪️ Continuous deal wins to provide impetus to growth -

The co has won a mega destiny deal (iGCB) from OTTO GmbH (largest e-commerce operator in Germany) enabling entry into Germany market. Further iGCB also entered North America (Canada) & won its first cloud subscription deal

with a mid-tier bank, the deal was won against strong international & local competitors. Further the company closed a multi- million-dollar upgrade deal for the most innovative and fastest growing bank in Africa for their Core Banking, Lending & Cards transformation & Insurance

(SEEC) also added its tenth customer (from Australia). Recently one of the largest banks in Vietnam (Vietcom Bank) has done strategic partnership with iGTB by deploying digital transaction banking enterprise suite (DTB). This Enterprise Suite delivers superior channel experience

to grow the bank’s corporate customer base, create customer stickiness with the ability to quickly respond to customer changes, in-built configurable product setup for faster responsiveness as the market evolves.

▪️ Unique client acquisition strategy has aided in increasing order book -

The co understands the BFSI domain thoroughly and has done significant investments in terms of participating in industry events such as SIBOS & also developing leadership program in transaction banking.

The co’s new products have been successful as it understands client’s requirements and it does positioning considering competitive landscape, strength/ weakness of peer product & Bank tiers.

▪️ Key Risks -

~ Slower adoption of its products.

~ Introduction of superior products by peers or technology disruptions.

~ Deceleration in deal pipeline.

▪️ Conclusion -

We believe the co is well placed to capitalize on incremental growth opportunities given its upgraded & matured product suites in BFSI domain, strong order book execution capabilities & continuous deal wins.

Further we expect the company to deliver robust growth supported by domain specialization and long standing client relationship.

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@caniravkaria @DrdhimanBhatta1 @WealthEnrich @SumitResearch