CE Info Systems to Affle India: AI Revolution Puts these Deep Tech Stocks in Limelight

John McCarthy coined the term 'Artificial Intelligence (AI)' in 1956, but India's AI journey began in the 1960s when Professor H.N. Mahabala became an AI pioneer.

Since then, the progress has been phenomenal.

Thanks to the government's visionary tech policies, India is shaking off its follower status and transforming into a global AI leader.

India made a massive leap forward, hosting the Global Partnership on AI (GPAI) summit in 2024.

The government is laser-focused on nurturing AI, with initiatives like 'AI for All' in 2018, the creation of INDIAai, and the establishment of the Ministry of Electronics and Information Technology (MeitY) in 2020.

The AI industry is poised to inject US$ 967 billion (bn) into the Indian economy by 2035, with a GDP boost of US$ 400-500 bn as soon as 2025.

MeitY has established 7 dedicated working groups to accelerate this growth with AI advancements.

There's more!

The government's "Make AI in India" and "Make AI Work for India" programs are setting up AI centres of excellence in universities, creating a breeding ground for innovation.

This isn't just about economics - AI is a key player in the Viksit Bharat Mission, the ambitious plan to make India a developed nation by 2047.

With projected CAGR of 30% growth of Indian deep tech B2B SaaS companies, the country is planning to become the AI garage of the world.

Whether you're an AI enthusiast or simply looking for groundbreaking opportunities, these deep tech stocks deserve to be on your watchlist.

#1 Intellect Design

Intellect Design is pioneering a financial revolution with a cloud-based platform redefining how banks and insurance companies operate.

The products from the company command premium pricing as they contribute significant value to banks and financial institutions.

A significant profitability driver for the company is its iTurmeric no-code platform, the first-of-its-kind technology to deliver products much faster compared to its competitors.

The company's stock price has skyrocketed 180% in just the last year.

In the past 3 months, the price has shot up by 45%.

Intellect Design Share Price - 1 Year Performance

The company became completely debt-free in FY23.

Intellect Design is leading the charge in financial technology with its revolutionary technologies. Its one-of-a-kind eMACH.ai platform, built on 329 cutting-edge microservices and 1757 open APIs, allows banks to create custom solutions.

The global banking giant Societe Generale has deployed Intellect Design's Corporate Treasury Exchange (CTX) platform to automate cash balance movement.

Exploring its financials, the company's income is growing steadily, with a quarter-over-quarter increase of 3.6% in December 2023. Even better, the profits are soaring at an impressive 19.7% QoQ.

The company registered income growth on a quarterly and yearly basis.

The company's net income growth over the past 5 years is a phenomenal 29%, compared to the industry average of 22%.

The stellar financials reported are a result of high earnings retention and efficient management.

About 89% of their earnings are reinvested into the business, fuelling future growth and development.

Financial Snapshot

Particulars (Rs m)	FY21	FY22	FY23
Total Revenue	15,101	19,187	22,826
Operating Profit Margin	24.50%	25.40%	19.70%
Net Profit	2,646	3,504	2,686
Net Profit Margin	17.70%	18.70%	12%

Data Source: Equitymaster

The company has an early mover advantage with strong technology architecture, ready to be deployed on the cloud.

In the next 3-5 years, the company expects accelerated growth for its products, resulting in improved profitability.

The company is also working on launching new technology platforms through a strong partner ecosystem.

#2 Netweb Technologies

Netweb Technologies was established in 1999 as a high-end computing solutions provider. It's one of the largest supercomputing systems manufacturers, having installed 300 of those.

In November 2023, the company partnered with NVIDIA to develop a brand-new line of AI servers under the "Tyrone" range.

More than 10 server variations are currently under design.

These powerful machines are built for high-performance computing and supercomputing, making them perfect for cutting-edge AI applications.

The Tyrone systems offer unmatched flexibility for businesses to tackle next-generation AI tasks.

In the past 30 days, the share price of the company is trending upwards, gaining 4.8%.

Netweb Technologies Share Price - Since IPO Debut in July 2023

Netweb Technologies is a key player in the Make-in-India initiative, pushing the boundaries of domestic high-tech manufacturing.

Looking at its financials, in the December 2023 quarter, Netweb Technologies reported a 74.3% increase in its income and a phenomenal 71.8% jump in its net profit compared to the previous quarter.

Compared on a YoY basis, net profit more than doubled.

Financial Snapshot

Particulars (Rs m)	FY21	FY22	FY23
Total Revenue	1,443	2,479	4,457
Operating Profit Margin	10.10%	14%	15.70%
Net Profit	82	225	469
Net Profit Margin	5.80%	9.10%	10.50%

Data Source: Equitymaster

For the current financial year (FY24), the company is aiming for a 40% revenue growth target and a projected gross margin of 25-26%.

The company recently secured a massive Rs 1.5 bn supercomputer order from ISRO, India's space agency.

This, combined with their existing order book, has pushed the total order book to Rs 3.3 bn.

#3 CE Info Systems

CE Info Systems ("MapmyIndia") was incorporated in 1995.

The company is a data and technology products and platforms company, offering proprietary digital maps as a service ("MaaS"), software as a service ("SaaS"), and platform as a service ("PaaS").

CE Info Systems has a strategic edge with its MoU with the Department of Space to develop cutting-edge location-based software services and AI solutions.

This collaboration positions them at the forefront of India's space and technology advancements.

The company has expanded its offerings from 2D maps to 3D and even 4D maps with real-time data and hyper-local geo demographics.

Currently, it offers global maps for 200+ countries.

It develops the entire technology stack in-house, showcasing impressive technical prowess.

And it is not stopping at maps. Its "Mappls Gadgets" brand is taking the retail world by storm with innovative IoT-powered solutions.

The 2022 integration of Gtropy solutions further bolstered its IoT division, dramatically increasing device sales and rentals in 2023.

Even though the stock was trending down in the last 30 days, over the last year, CE Info Systems stock has gained 58.6%.

CE Info Systems Share Price - 1 Year Performance

Here's a table showing the company's financials.

Financial Snapshot

Particulars (Rs m)	FY21	FY22	FY23
Total Revenue	1,929	2,500	3,187
Operating Profit Margin	33.30%	39%	40.80%
Net Profit	598	871	1,075
Net Profit Margin	39.20%	43.40%	38.20%

Data Source: Equitymaster

The company recently secured a massive Rs 4 bn contract from Hyundai AutoEver Corp in Seoul, South Korea.

The production will commence in 2024. This 5-year project showcases its global capabilities.

Their investments in Indrones (Rs 70 million) and Kogo (Rs 100 million) open doors to new markets and use cases, giving them a competitive edge.

The recent CCI ruling against Google's monopoly further paves the way for the company to expand its market share.

With a target revenue of Rs 10 bn in the next 4-5 years, CEInfo Systems has high growth plans for sure.

#4 Avalon Technologies

Avalon Technologies, founded in 1999, is a fully integrated electronics manufacturing services (EMS) company that offers a full-stack product and solution suite to certain global original equipment manufacturers (OEMs).

The company has 12 manufacturing units in India and the US.

Avalon Technologies is a leading provider of comprehensive box-build solutions for high-value, precision-engineered products.

This specialisation allows them to cater to niche markets with specific needs, like clean energy and aerospace.

Avalon Technologies has been a strategic manufacturing partner for Centre for Development of Advanced Computing (CDAC) since 2001.

Now, the company will boost its manufacturing capability of High-Performance Computing (HPC) systems for RUDRA program to design and manufacture supercomputers in India.

Following this announcement, the share price gained 4% within a day.

In the last 30 days, the stock price has moved marginally%.

Avalon Technologies Share Price - Since IPO Debut in April 2023

About 60% of its revenue comes from the US.

While 75% of its production takes place in India, allowing the company to optimise costs and tap into the growing Indian market.

The recent dip in its quarterly net profit has raised concerns, but Avalon is taking action.

Some of its IPO funds will be used to reduce interest expenses in FY24, further streamlining the company's financial health.

Financial Snapshot

Particulars (Rs m)	FY21	FY22	FY23
Total Revenue	6,967	8,517	9,591
Operating Profit Margin	9.50%	14%	11.90%
Net Profit	231	675	525
Net Profit Margin	3.30%	8%	5.60%

Data Source: Equitymaster

The global market can be unpredictable, but Avalon is prepared. The company expects to maintain its 2023 margins.

It is working on improving efficiency in its US operations and plans to shift production to India to reduce costs.

Its focus on industries with long product life cycles, like power, railways, and medical, provides stability.

Furthermore, its recent foray into clean energy opens doors to a booming sector. In fact, clean energy already contributed a significant 25% of its total income in 2023.

#5 Affle (India)

Affle (India), established in 2006, is a global technology company that helps marketers identify, engage, and acquire potential and existing users through its consumer intelligence platform.

The platform uses artificial intelligence, machine learning, and deep learning algorithms to generate customer insights for better-targeted marketing.

The company aims to reach 10 bn connected devices, including smartphones, personal wearables, connected TVs and smart household appliances.

Some of the well-known brands from this company are RevX, MediaSmart, Shoffr, and mKr8.

The company's recent acquisition of YouAppi is a strategic response to market challenges in 2023.

In the last year, the share has gained 7%. Just in the last 30 days, the stock price climbed by 14.1%.

Affle(India) Share Price - 1 Year Performance

The company aims to surpass Rs 18 bn in revenue by April 2024.

The company also has a proven track record, as shown by its successful acquisition of AppNext in 2020.

The December 2023 quarterly results show a 29% increase in income compared to FY2022, reaching a staggering Rs 5 bn.

Even better, their profits climbed to a healthy Rs 768 m, reflecting a solid 15% growth QoQ.

Financial Snapshot

Particulars (Rs m)	FY21	FY22	FY23
Total Revenue	5,584	11,548	14,920
Operating Profit Margin	25.10%	19.50%	19.80%
Net Profit	1,350	2,147	2,455
Net Profit Margin	26.10%	19.80%	17.10%

Data Source: Equitymaster

The company's margins have been improving steadily over the past nine months, and its aiming for a consistent 20% growth in both revenue and profit going forward.

Affle's focus on premium consumer platform conversions ensures better pricing and higher margins.

In November 2023, the company filed 15 patents in various AI domains. 6 US patents have been granted, and about 30 patents are pending approval.

These patents are expected to fuel future advancements and propel them to the forefront of Generative AI-powered advertising solutions.

In Conclusion

India's journey with AI is at a crossroads.

Experts believe India missed out on fully capitalising on past tech revolutions like chip research and robotics.

There's a renewed focus on catching up, emphasising domestic research & development (R&D) to create cutting-edge AI tools.

Despite industry concerns about regulation, the combined value of 100 key Indian gen AI companies has grown 7x since 2019.

The focus is nurturing a robust "generative AI" ecosystem that keeps pace with global advancements.

This is an exciting time for the Indian AI landscape, and the coming years will be crucial in shaping its future.

India's AI landscape is brimming with potential. Do your research, identify promising companies aligned with your investment goals, and invest confidently.

Stay tuned to this space as we cover more editorials around the 'evolving deep tech theme' in the coming days.

Happy investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...