Ticker: Bse: 543615
Market Cap: ₹ 185 Cr.
Company Profile
Silicon Rental Solutions Ltd (SRSL) is a leading Indian company in the IT equipment rental business. They rent out computers and peripherals like laptops, printers, servers, projectors, etc. The only company of IT rentals that is listed on the Indian stock market, in the list of best small cap. The company claims to have 30 years of experience.
Business Model & Target Market
The business model of Silicon Rental Solutions (BSE small cap) is simple, the company uses Capex to purchase computer peripherals and lends them to clients.
Source: Investor presentation
The company operates throughout India with major locations in Mumbai, Pune, Kolkata, Delhi, Hyderabad, and Bengaluru. However, they are among India’s first ISO 9001:2015 certified IT rental companies, ensuring quality service.
The company mainly targets the corporate market and has some major clients in their portfolio. these include; Tata Motors, Reliance, Mahindra, Grab a Grub, Bewakoof, Epicenter, etc.
Management Analysis
Even at first glance, it is very clear that the company is a family-owned business. The chairman and Managing Director (MD) is having an experience of 29 years. Additionally, he oversees overall business operations, including procurement, sales, and business development policy formulation.
However, the other family members are relatively less experienced and qualified. On the board of directors, there are two independent directors named Manish Sehgal and Rajesh Krishna Vyas. As the company is new and there is limited information available, no political affiliations were identified.
Source: Investor presentation
Financial Analysis
Silicon Rentals (BSE small cap) operates an asset-heavy business model, which means that in order to increase its revenue growth, the company needs to make significant capital expenditures (Capex).
Therefore, the company’s expansion can be easily recognized by analyzing the Capex they undertake. Recently, the company has made substantial Capex investments.
Additionally, on November 3rd, 2023, the company secured an order from an International Broadcasting Channel for 250 laptops on a rent-to-purchase basis, inclusive of essential services.
Silicon Rental Solutions is operating on a good operating margin of around 83% at present, moreover due to the scalability they have, they have significantly increased their profit margin. However, due to increased working capital, the Cash flow from operations has decreased when compared to the sales.
Industry Analysis
India’s equipment rental market has seen a significant increase from 47% in 2010 to 67% in 2020-2021. Moreover, the computer rental market in India is projected to grow at a CAGR of 6.8% from 2019 to 2024, and the Indian computer peripherals market is expected to reach USD 6.03 billion by 2026 with a CAGR of 5.5%.
Factors Driving the Industry Growth
Renting or leasing computer equipment can save businesses up to 20-30% compared to outright purchase, according to TechNavio. It also helps mitigate technological obsolescence, which occurs every three to five years, according to Gartner. Leasing equipment is a popular option for businesses as it allows them to access the latest technology without the risk of owning outdated equipment, as found by the Equipment Leasing and Finance Association (ELFA).
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Disclaimer
The information presented here is for educational purposes only and should not be considered financial advice. Please do your own research before making any investment decisions.