It says here http://deadpresident.blogspot.com/2006/11/reliance-money-stock-of-week.html that SubexAzure is undervalued and you should invest in them. Now, the old maxim goes that you should invest in things you know about, so that would imply people who work in revenue assurance should be thinking about investing in SubexAzure, but are they?
Clearly Subash Menon is one heck of a businessman. I met him a few years back at a conference in China and he clearly had a global vision to make his business the dominant force in revenue assurance. With an army of developers working in India, the logic seemed irrefutable: eventually they would pour out so much code that their software would inevitably outperform everyone else’s.
But to buy this stock you also have to believe that they can make a profit from what they do. Reported 25% market share and “exponential” growth expected for the next 2 years would both seem to be good signs. But my bet is that the growth in revenue assurance stocks like this will result in a mini dotcom boom. Take a quick look at the financials for SubexAzure http://www.indiainfoline.com/company/compsnap.asp?co_code=14155&lmn=4 and you see not everything adds up. It has 25% market share, and its valuations are boosted by estimates of revenue loss that presumably place them at upwards of US$100bn. Presumably this would mean SubexAzure already has market penetration into telcos suffering upwards of US$25bn of revenue loss. But its revenues and market cap are a drop in the ocean compared to this number. If it is generating strong revenues for its customers, it should be in a position to earn more from them. But its average revenue per contract is less than US$1m per year, suggesting its customers do not believe the hype about the values that can be generated by using SubexAzure’s products. And if they do not believe, then the true value of this market is far less than the estimates of loss would have us believe.
