Virtual Galaxy Infotech highlighted that its recent growth has been driven by expanding its product portfolio, strengthening recurring revenue, and increasing investments in R&D. The company also outlined its focus on cybersecurity, AI-led digitalisation, e-governance, and expanding its presence across government projects and international markets.
Karunya Rao: Hello and welcome to SmallCap Spotlight. Today on the sideline of our flagship event, I have with me the management of Virtual Galaxy Infotech, Mr. Mangesh More. He’s the chief advisor of the company and he’s here to talk to us about the growth the company has delivered and the way forward as well.
Mr. Mangesh, thank you so much and welcome to Small Cap Spotlight. So, first things first, since our last interview, a lot has changed. FY26 numbers came in, very strong growth on the top line and bottom line.
What has changed for the company? What has been the growth drivers, so to speak?
Mangesh More: So, there are 5-6 aspects of this growth particularly. So, we have grown from 250 people to 500 people. We have a product like we have introduced cyber security, we have introduced e-autopsy and the other ERP and the e-governance projects.
So, these are the major growth drivers in the business and over and above the whole momentum what we got in the last year. The AI is enabling us and making us more visible and after also the listing is one of the area where we get a proper, you can say, the orientation of the market. So, people know us, client recognises us.
So, these are the cumulative aspects of the team, management and the growth and the strategy what we have devised for the future. Interesting. In fact, 42% of the revenue is recurring revenue.
Karunya Rao: Yes. Let’s talk about that and how is that happening? What’s really caused that shift?
Mangesh More: Yes. So, I’ll tell you before answer this question, I’ll just take you into the little history that so far there is not a single client has gone from us.
So, there is no attrition in terms of the client. Secondly, the moment we started this business, we are into the very, you can say, the highly compliance required business. It is all monetised by the apex body that is the RBI, the mother institution of all the banks.
And so, the product is so, you can say, the important one that the client and us are have to be a very sticky things. The moment we step into the put our foot into the door of a client, we cannot go easily out, you know, because we handle their compliances, we handle their books, we handle their daily balances, their automation, their data centres. And that gives us the enormous, that gives both the client trust, as well as the company the confidence of this 42%.
I mean, what exactly is the result is outcome of that. But there is a strong and a team, which we have created since 1997, is now really giving us the real fruits. Talking about confidence, what is giving you the confidence to be able to achieve a 500 crore top line that the management is aiming for by FY 29? Now, that will mean a 40, 50% CAGR.
Karunya Rao: So, what is giving you the confidence? What are the aspects or drivers of this growth?
Mangesh More: Yeah, so, let me formulate in this fashion. So, earlier, we were focussing on the BFSI only. So, we call ourselves as a hybrid SaaS company, where we get a, as you mentioned, the 40% to 50% from the existing revenue as a recurrence revenue.
And there is another which the new avenues we have, you know, launched like the cyber security. So, I’ll tell you, ma’am, the cyber security is itself is a 1 trillion kind of a market right now. And, you know, and the one of, so our product is for Bharat, Bharat ka company.
And so, we are now competing with the other, you know, the big competitors, which are globally giants. And we have also got some breakthroughs in defence area. And in recently, we have signed and a very magnificent and very heavy magnitude MOU with the Konkan railway in terms of the digitalisation in terms of the AI to make the ERPs and to revamp the technology of a railway, particularly.
Also, the one important aspect you ask us that how, right? So, and what gives us the confidence. So, AI is giving us the confidence and implementation, whole digitalisation of the departments, e-governance. So, I’ll just give you like, there are like e-palikas is coming up, e-market are coming up, e-governance is taking shape.
So, that gives us the boost that will definitely cross the 500 crore top line in coming 2-3 years with the growth of 40-50% precisely. Interesting. And we look forward to, you know, see how you achieve that.
Karunya Rao: You’re also building a lot of capabilities in-house, there’s SIM, UEBA, those kind of hardcore, you know, platforms. So, what is the kind of R&D or capacity that you have? What are the investments that have gone into it?
Mangesh More: Okay. So, right now, we have three offices running across India.
First is in Nagpur. Second is in Pune. This is also company owned.
And third, we have just started in the BKC, Mumbai, where our, the marketing team sits there and they manages the, but our whole R&D team comprises of 150 people from the software development, the creation, writing, implementation, and PUC testing. So, whole things are in the Nagpur, the amazing facility. We would like to invite you on a someday or the prospective investor to come and see the actual facility and get the direct conviction.
So, also, in last eight years particularly, if you see the, there is a pre-COVID and post-COVID, we have increased our appetite in R&D. So, whatever the profits we are earning in the past, we are utilising at least a 28% to 20, 25 to 28% on the R&D, particularly. And our, that is why you see that we grew from six to eight products.
Right now, we are catering to the 12 products. And we are a product company. We are a software product company from Bharat.
Karunya Rao: So, between railways, e-governance, your existing cooperative bank base, is government-slash-PSU work now going to be a third big pillar for you?
Mangesh More: Certainly, yes. Because, see, the implementation was happening. So, growth, evolution, updates, you know, the hardware requirement, the product requirement, it is definitely you have to do in an all-in way. It is not a one-way side. You know, every day there is a new update, there is a, the hardware has a certain life, the products have a certain life. So, there is an enormous scope in the PSUs as well as the other departments like the Army, the Defence.
And Army is one of the biggest areas where the, even the banking, you say, the security business is so much. So, every computer, every, the mobile, right now, the every, whichever is the digitally connected with the internet, is your target market. So, TAM, that is why I mentioned that it is a one trillion market in only cybersecurity, not for others.
Karunya Rao: You know, since you also said that now you are in a stage, in a position that you are competing with global giants.
Mangesh More: Yes. So, if I talk about your global business or your exports exposure, it is still about low single digit, 6%, if I correctly remember.
Karunya Rao: So, what are the bottlenecks that are kind of preventing you scale globally?
Mangesh More: Like if you are a European company, if you are American, US company, then the product salability becomes little bit easy. But the same time, you see that now, after, so we are trying as a, I, as of now, we are doing a 6% of our export revenue as of now. And our target is to make it 20%.
Karunya Rao: By when?
Mangesh More: By in next years. So, we have recently, we have opened a door in Botswana.
We have just started working with the Zimbabwe. And our today, in fact, our team is sitting in Hong Kong. So, before that, we have already working in Tanzania, Malawi.
So, Africa market is, we are looking to go into the Africa market. And we are focussing on more on that market. And the problem earlier, it was like, whether the really the Indians are the innovators.
So, that the story to sell that, okay, the Indian stamp company, Indian product company implemented by us. Now, it is a little bit of opening in the particular market. The start of the conversation, you said that the company now has a headcount of 500 plus people.
Karunya Rao: And as you scale towards that 500 crore benchmark of that you’ve set for yourself for revenue, how is the talent mix likely to shape up from a more product and engineering specific pool? Should we expect a shift to more execution implementation type of talent pool or will the ratio largely be same as it is right now?
Mangesh More: No, no, no, certainly. I mean, see, as of now, the development is under process. Development requires a lot of strength, a lot of number of people headcounts, as well as the relevant infra.
\And once it is done, so R&D is not going to stop anywhere in the next year, four years. And since we are a product company, we have to innovate daily, we have to keep the things on upper hand. I mean, we have to comply with the RBI’s day to day amendments and the policies and everything.
So that part is already going on. And our focus is on now the next, as you mentioned very clearly, that we may market ourselves more rather than build because we are already building and selling, but we have to now market more. So we are looking to more in business development, the marketing and the trade marketing and the institution marketing.
So that will be our now the next target area where we will require a lot of help from the market.
Karunya Rao: So since you’re talking about marketing, for an investor watching the company today, Virtual Galaxy Infotech and watching this particular show, what would you say has worked or changed the most for the company in the last three months since we spoke to the management earlier? What would you say really sticks out or has been a dramatic or a significant shift or change for the company or something to watch out for from an investor standpoint?
Mangesh More: Yes. So what happened before last talk, before last update, there were no signing of this MIO with the Konkan Railway.
That has been developed. The Zimbabwe contract has been gained. Botswana has been gained.
Now, as I mentioned, we have at least did 25 plus demonstrations in the army areas. Our pipeline and our funnel has now been again, we are going towards the final signing execution of the contracts. So we have a funnel of 2000 crore.
The order book has been now slightly get now again, it will go bigger. So there is so many things are under the box right now for the investors and for the company.
Karunya Rao: So anything that the market has not priced in yet, anything they’re missing out on in terms of seeing what the company is doing?
Mangesh More: Yes. As of now, we are really looking for the real identity of the company. I may say that the people are usually comparing with the typical IT company or a staffing company, but Virtual Galaxy as a Virtual Galaxy Nagpur based and yes, there is a it can be happened in the small city like Nagpur and the product company. So this narrative is not going out very, very clearly in the investor fraternity that the Virtual Galaxy belongs to a product software company, mainly indigenous a company where we created this product and we are implementing in the banks, at the e-governance places, PSUs and now the army.
Karunya Rao: Great. Thank you so much for, you know, telling us about it in such great detail and all the very best for your endeavours. Thank you for joining us.
Mangesh More: Thank you. The pleasure is mine. Thank you.