Intellect Design Arena share price: Sharekhan maintains a Buy rating with price target of Rs 660

Sharekhan attended Intellect’s Technology Day 2021, wherein the management highlighted its deep understanding based on design thinking, power of contextual and composable banking solutions under its Global Transaction Banking (iGTB) and retail banking businesses. Intellect Design Arena also showed its ability to demystify cloud-ready products and platforms and highlighted the potential revenue opportunity arising from participating in a large, rapidly growing data extraction market. Sharekhan maintains a Buy rating on Intellect Design Arena with a price target of Rs 660. Intellect Design Arena share price today is Rs 611, up Rs 22 or 3.8%.

Intellect Design Arena Management highlighted its investments on composable, cloud-based technologies by creating three platforms:

(1)    CBX (digital acceleration platform)
(2)    iTurmeric (cloud acceleration platform)
(3)     iFinCloud (Intellect financial services cloud) to provide differentiated customer experiences, reduce costs and enable faster time to market for customers’ products.

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All these platforms are microservices and Cloud-native based and allow banks to leverage and modernise the legacy business with simplified API and integration, leverage best practices, reduce costs, enhance security and adopt the right kind of compliance and lead to a shorter implementation time. The Intellect Cloud-based platform provides the company subscription-based revenues, which are sustainable.

Intellect Design Arena management believes that there will be huge growth opportunities in each five products under iGTB as it expects the total number of customers would increase to 150 by 2026 from 94 in 2021. By selling at-least four products to each of the potential 150 customers, the market share of Intellect Design would grow from 5.8% to 21% by 2026. As Intellect’s addressable services market in the retail banking space is expected to clock a 10% CAGR to $15.81 billion by FY2025, the company’s differentiated positioning in this space would help to capture opportunities.

Further, growth in this space would be driven by latest technology architecture, product growth engines, Europe and marketplace. The management indicated that Europe would continue to grow at double digit going ahead. The company’s entry into a large, rapidly growing data extraction market and its end-to-end data extraction capability digitally would help overall growth. The management sees an addressable market of Rs 100 cr - Rs 250 cr for its Magic submission product (underwriting space).

Given strong traction for its iGTB, retail banking and potential opportunity in the data extraction market, Sharekhan believes that Intellect Design Arena would report 14.3% CAGR growth over FY2021-FY2023E. The management aspires to achieve 30% EBITDA margin over the next four quarters on the back of revenue growth, sharp focus on cost optimisation, favourable revenue mix, and lower R&D expenses (due to product maturity).