Aurionpro Solutions Ltd

NSE:AURIONPRO

Earnings Call Transcript 2023-Q3

[Operator]

Ladies and gentlemen, good day, and welcome to the investor call of Aurionpro Solutions Limited to discuss the Q3 and 9 months FY '23 results. Today, we have with us from the management, Mr. Ashish Rai, Vice Chairman and Director; Mr. Vipul Parmar, Chief Financial Officer; and Mr. Ninad Kelkar, Company Secretary.

[Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Aashvi Shah. Thank you, and over to you, Ms. Shah.

[Aashvi Shah]

Thank you, Niraj. Before the call, we would like to point out that certain statements made in today's call may be forward-looking in nature, and the disclaimer to this effect has been included in the earnings presentation shared with you earlier. The investor call may contain forward-looking statements based on the currently held beliefs and assumptions of the management of the company, which are expressed in good faith and in their opinion, reasonable.

Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, financial condition, performance or achievements of the company or industry result to differ materially from the results, financial condition, performance or achievements expressed or implied by such forward-looking statements.

The risks and uncertainties relating to these statements include but are not limited to risks and risks of expansion plans, benefits from fluctuations in our earnings, our ability to manage growth and implement strategies, competition in our business, including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain a highly skilled professionals and our ability to win new contracts, changes in technology, availability of financing, our ability to successfully compete or integrate our expansion plans, liabilities and political instability and general economic conditions affecting our industry. Unless otherwise indicated, the information contained herein is preliminary indicators and is based on the management information, current plans and estimates.

I now hand over the conference to Mr. Ashish Rai for the opening remarks. Thank you, and over to you, sir.

[Ashish Rai, executive]

Thanks, Aashvi. Good afternoon, everyone, and welcome to this earnings call for Q3 FY '23. The results for Q3 continue our strong growth momentum over the last 3 years, reflecting an exceptionally disciplined execution from our teams at a time when we are seeing significant growth in demand across all our key offerings, most of our key offerings. During the quarter, we saw a very healthy growth in our key business lines, which ensures that we remain firmly on track to meet the 30% growth target for top line and earnings.

I'm sure by now you received the investor deck that details our performance in the quarter. Allow me to briefly summarize the key performance highlights.

The revenue for the quarter stood at INR 169 crores, a strong 30% growth year-on-year and 9% on a sequential quarter-on-quarter basis. EBITDA grew 23% year-on-year to INR 37 crores and PAT stood at INR 26 crores, which is a growth of 30% year-on-year. Our EBITDA and PAT margins for the quarter remain at 22% and 16%, respectively, in line with the same quarter last year.

On a 9-month basis, the company has posted a revenue of INR 469 crores, which is a growth of 27%. EBITDA for the 9-month period was higher by 30% and the profit after tax was higher by 39%. EPS for the quarter was at INR 10.97. And for the 9-month period, it stood at INR 31.69, which is an increase of 40% on a year-on-year basis. This growth is the result of strong performance across all our core business segments with exceptional growth in the TIG segment on the back of accelerating execution against the order book. We are very proud of this execution from our teams, especially in the backdrop of a tough global environment. And I think it's a great validation of the competitiveness of our offerings and the resilience of our chosen strategy to build a world-class IP-led software products and platforms provider.

Q3 was a significant quarter for us in terms of achievements across several business lines. Transit business had a phenomenal successes in the quarter and an especially proud moment, when Her Excellency President Draupadi Murmu launched the cutting-edge open loop ticketing system in Haryana powered by Aurionpro. Launch in Maldives together with Mastercard and MTCC was another significant achievement for the transit business, a great quarter overall for the transit business.

Banking and Fintech business saw the launch of AuroDigi, a significant investment from Aurionpro to create the next generation of corporate digital banking. Aurionpro Fintech in U.S. also signed the largest order win till date for us in the U.S., with an $18 million win, with one of the largest payment facilitators in the U.S. Aurobees signing with the BSE agricultural marketplace that we announced and Auropay launching B2B payments and partnership with global leaders such as FIS Worldpay and Stripe provide great proof points on the impact and success of our bets on next-generation fintech platforms.

We've also seen a healthy expansion of pipeline in the last quarter as well as a strong expansion in the order book. The signed order book now stands at INR 760 crores, a very large part of which will be executed over the next 4 to 6 quarters. We've been expanding our capacity to execute against this order book, including a net addition of over 400 staff over the last 2 quarters. We are confident that this sets us up to have a sustained growth over the next few quarters and beyond.

This quarter also saw a significant expansion in our sales force with some exceptionally well regarded sales leaders joining us across India, Southeast Asia and the U.S. These leaders are building out the next phase of expansion of our sales channels, and I'm confident that these additions will really deepen our leadership pool and over time, contribute to accelerating our growth momentum in these markets.

If the last 12 months have taught us anything, it's that we can't accurately predict what the macro environment will be in the short term. While any significant deterioration in the economic environment can throw challenges for the industry overall, we believe that our strategy of creating a well-diversified portfolio of highly differentiated IP-led products and platforms will allow us to continue to outperform our peer group and grow at rates significantly faster than industry growth; as we've been doing the last 3 years. The competitiveness and depth of our IP portfolio is thanks to the dedicated efforts and focus of our teams over the last several years. And this gives us a very strong defensive moat and will allow us to continue to clock above average win rate when we compete and a pricing power, way above the average undifferentiated offering providers.

We feel confident that our IP portfolio will allow us to grow the earnings power of our business much faster related to the industry and will help us to significantly expand the intrinsic value of our business over time.

All our key segments continue to witness strong demand momentum, and we will remain sharply focused on execution to keep expanding our market share and create significant value for all our stakeholders.

That's all from me for now. I hope this has given you a useful overview of the overall business context and our strategy and performance. I look forward to addressing any questions that you may have.

[Operator]

[Operator Instructions] The first question is from the line of Swechha Jain from ANS Wealth.

[Swechha Jain, analyst]

I have a few questions. So I'll probably ask a…

[Operator]

[Operator Instructions] Swechha, sorry to interrupt you. May I request you to speak through the handset, please?

[Swechha Jain, analyst]

So I have a couple of questions. Just ask couple -- a few of them now, and then I'll rejoin the queue. So first, if you could just give me the cash position and receivables as on 31st December? And along with that, if you could just help me understand what kind of orders have you bid for in Q3? And how does the bid pipeline look like? If you could give a number to it? That's my first question.

[Ashish Rai, executive]

Okay. Hi, Swechha. Yes, thanks. Good questions. So overall, so we will -- we published a half yearly balance sheet that gives you the kind of cash position. We had a bit of issues with DSOs in Q2, as we mentioned in the last call, we've resolved most of those now. And overall, I think the DSO has remained stable. And more it's not materially changed from where we end of Q2. We will publish the balance sheet again, end of March, and there you will see the accurate positions, right? But I think some of the, sort of, execution issues that we had pointed to the last quarter have now been resolved, and the DSOs are stable at where they were.

The pipeline and the order book, so as you would have seen, the order book has grown quite materially from 3 months back, we're talking about. So that points to how strong the execution has been. The pipeline has grown for us quite significantly. There's a reason why we do not publish pipeline numbers in our business, there tend to be some very large deal sizes that will, we believe, we will put a misleading sort of representation of where it is. So that's why we like publishing signed orders instead of pipelines. But I would say the pipeline has climbed up significantly over Q3, and we see very strong momentum on a few places. I think the transit side of the business is doing very well. The fintech business, in the U.S., is doing very well.

And some of the latest initiatives that we've had around banking products, both on the lending and transaction banking side, we've seen increased momentum on the pipeline. It's also partly because our sales channel has expanded. So last time around, we were talking about increasing the sales force on the ground. Now as I mentioned, we've added more feet on the street and have experienced leaders in India, in Middle East, in Southeast Asia and the U.S. over the last 3 or 4 months. And part of the pipeline increase is coming from that. I would say it's materially -- it's become quite a bit bigger over Q3, but we will not publish a number.

[Swechha Jain, analyst]

Sir, my second question is actually, if you could help me understand the order book split between banking and TIG. And also, if you could give -- if you could help me understand the order book split between software services and patent and license. The reason I'm asking is because, we report our revenues in [ right ] in the presentation, we've given software business and equipment and then we've given the revenue split into banking and tech innovation. So -- and I'm sure, there might be some overlap. So if you could first give me the order book split and also understand what kind of revenue is built in what because we report in these 2 ways, and I was just trying to understand as to what [indiscernible].

[Ashish Rai, executive]

Sorry, Swechha, I got the first part of your question, where you're asking for the order book split. Can you repeat the second part? I didn't get it.

[Swechha Jain, analyst]

Okay. So second part was in our presentation, we gave the revenue split in 2 ways, right. One, we report as software business and equipment license, how we report in our [indiscernible] system. And again with the same revenue between banking and tech innovation, right? So I just want to understand, when we look at the revenue in these ways, what exactly goes in software business and equipment? And what exactly goes in banking and innovation? Because I understand there might be some overlap right that banking also would have software and equipment and tech would also have software and equipment.

[Ashish Rai, executive]

True. Yes. So true, look, I think your line is a little bit off, but I think I got it. So just coming to the software, service and equipment and product licenses, that is more a revenue type split. So there are 3 types of splits that we publish. One is a split between the businesses. So that is banking and fintech and TIG. Second is a split by revenue type. That is the other disclosure we do, which is, the way to look at it is more of what is a one-off versus what is more of a continuing service more or less, right? So that is the second disclosure. And the third way we started disclosing now based on the last feedback was on geographies, right? So the way to look at it is these are 3 -- all of these 3 overlap with each other in the sense that they are 3 independent mutually exclusive distribution of revenue, right?

Coming to the question on order book, roughly right now, it is split 40% for banking, banking and fintech and 60% for TIG. And the reason for that is banking has a deeper basis, more frequent -- with the existing base, we sign orders more frequently, especially a lot of the A&C contracts and recurring service contracts that get signed every year. So the size of the order book doesn't need to be a lot bigger to deliver because the execution cycle is very tight. On the TIG side, the size of the order book is bigger. And also, as you would have seen from the investor tech, the growth in the business is a lot more. So that sort of explains the disproportionate share in the order book.

[Swechha Jain, analyst]

So just a small clarification, sir. Between banking and TIG, could you give a revenue split like into banking, how much is on the software side and how much is on the equipment side? And in TIG, what would be the software component and what would be the equipment component? For this quarter...

[Ashish Rai, executive]

That, we will have to come back to you on that. I think honestly, I think broadly, the license component is a bit heavy on banking. We will come to look at it, but I don't believe that really will give you a materially different information in terms of quality. Because ultimately, I think the split would more or less be the same across the businesses. So when we sell, it's amount to understand a part of our sales ends up being one-off, which is especially when we are acquiring a new customer, which is where there is a license sale or an initial setup. And then the rest of it is implementation. Typically, you would split 1/3 on the one-off, 1/3 on the service and 1/3 on the ongoing AMC and more or less, that split sort of adheres. But we'll see if we can get a split on those lines for the sub-segments.

[Operator]

[Operator Instructions] The next question is from [ Ganesh Jain from AC Capital ].

[Unknown Analyst]

Congratulations on a good set of numbers. So sir, I have 2 [indiscernible] question. The first one is on the revenue guidance for a range of around [indiscernible] basis on the basis of other company extending new employee [indiscernible] the strong order book plus company having a very robust pipeline. So I want to know, sir how long it takes to convert into numbers. So overall, if you cover the long-term guidance for [indiscernible] that's my first question.

And my -- the second question is on, sir, segment revenue side. So you see the sale of the equipment at [indiscernible] prices down in December quarter. So if like the company is focusing more on the [indiscernible] to maintain the growth stages here or just one-off, and it will improve in the coming quarters. So these are my 2 basic questions.

[Ashish Rai, executive]

I got the first question, which was about the revenue guidance, but I did not fully get the second question.

[Unknown Analyst]

Yes, sir, my second question is on the both segment revenue side. So this is the sale of the product license down in December quarter, sir. So it is like the company focusing more on sort of software services to maintain growth [indiscernible] or is fully just one-off, it will improve in the coming quarters, sir?

[Ashish Rai, executive]

Let me attempt to answer that. So first, about the revenue guidance. So we do give out an outlook, especially in terms of our targets more in terms of our plans 12 months out, right? So that we've given, which is grow at about 30% or thereabouts this year. We do not really give out a long-term 3- to 5-year guidance, but I think -- and I'm happy to explain the philosophy that we have overall, right? So if you see when we started the strategic pivot for the enterprise 3 years back, we had an ambition to create a global IP-led product and platform vendor. That is a leader in a few chosen spaces, not a leader in India or Southeast Asia, but essentially a global leader in those spaces, right?

And we set about saying, one, is my chosen space the right space with the right size of the market and the -- and a long enough demand runway, right? Second, if I find that segment, can I build an absolute Tier 1 product in that space that can go and compete globally. Example, lending, we mentioned that last time around, Chartis RiskTech squarely in the leader's quadrant on corporate loan organization, collateral management, limit management, right? So not leader's quadrant in Asia, or leader's quarter in India, leader's quadrant globally competing with the biggest vendors in the world.

Similarly, on the transit side, like we mentioned, win in places like California, which are some of the most competitive [ RFPs ] in the world tells us, I can go and compete anywhere. So the idea was Tier 1 IP in segments which are big enough and then I want to get to a leadership position in those spaces, right? So these are very large spaces and the leadership position in those spaces can be very large numbers. Hence, the hesitation to really try and chalk out of the [ C2C ].

So our ambition right now as an enterprise is to grow in the range of 25% to 30%. We have now been doing it for 11 quarters. And we expect to continue to do that. I do expect we will have an inflection point at which point our platforms are really ready to compete globally and are acquiring scale and the growth rates can go up. As and when we get to that inflection point, we would come in and advise the shareholders and investors on that. At the moment, I would say a good ballpark, in terms of our planning, is to continue to try to grow at between 25% and 30%, both on the top line as well as earnings, right?

So that's the first part. The second part in terms of how much -- and I will apologize if I did not get that question right, how much of this growth comes in from, for example, one-off kind of services sales in licenses or in equipment and is some of the growth dependent on that. So typically, a lot of our growth comes in from the existing base, which is where once we are in with the client, especially with, let's say, a very large-sized bank like the largest banks in Southeast Asia, for example, that we work with. And we are providing a mission-critical system to them. They will need us to provide an ongoing service and a lot of growth for us comes in from the existing relationships, just adding in terms of a new functionality needed or a service needed to maintain and things like that, right? So I think there is less dependence on one-off.

A part of the growth comes in from new sales. And new sales, one-off is a portion of that, right? So I would say it's hard to assign a number to it, but I would say roughly, let's say, 35% to 40% of the revenues come in from new sales and a portion of that -- of new sales and net new sales and a portion of that comes in from the one-offs. It's not such a significant -- it's something that will always be there, but it's not a significant portion of the overall growth that one should think we will not be able to continue or will change in either direction by a huge number, right, either positive or negative. I hope that makes sense.

[Operator]

[Operator Instructions] Next question is from the line of [ Neha Jain ], an individual investor.

[Unknown Attendee]

Congratulations on a good set of numbers. I just had a couple of questions. So the first one is regarding the TIG business, can you throw some light on which are the new state governments, you are planning to tie up with for that business segment?

[Ashish Rai, executive]

So look, I think typically, we will not talk about deals which are in place for various reasons, including both confidentiality as well as competitive reasons. As you have seen -- so this is what I would say. We've had our share of success in the Indian transit space. The goal that we had for the transit business is to create the most integrated end-to-end offering in the transit space. And I think we've succeeded there. We operate today with probably the most integrated solution stack at probably the most -- has been the most cost-efficient provider as well, including the hardware stack, right. So I think that is very, very important, which makes us very competitive.

And you've seen the success in terms of -- on the metro side, Nagpur Metro, Noida Metro, Kanpur Metro, Haryana Transport, U.P. Transport. So we are very competitive in India. We are seeing a lot of success globally now with -- including U.S., including LatAm, including Africa, a lot of places. So we are -- the success in Maldives that we talked about. So I think the trick with the business right now is to balance the growth out, and we will continue to win a share of the Indian deals, but we are also trying to balance that out going out and competing a lot more on the global deals, especially expanding our channel out in the U.S. and a few other places, right? So yes, I think I can't talk of specific deals, but we've been proven to be one of the most competitive players in India. We'll continue to win some more business in India, but we are trying not -- trying to go out and win a lot more globally now.

[Unknown Attendee]

So sir, just adding on to this [indiscernible] question. So since you are with the government, is there any lag that we see in our payment cycle? I mean, in terms of receivable days and is it like impacting the working capital as well?

[Ashish Rai, executive]

So not so much on the mobility side. I think mobility side, the payments are pretty transparent, whether it's metro operators or the transit operators in the state. I don't -- there is absolutely no issue at all in payments. On the smart city side, which is a smaller portion of the business, it is dependent on the payment cycles in the government. So yes, as an overall part of the business, it's not large enough to really move the needle, but from time to time, that may -- the payment cycles may stretch in that business. But it's not on the transit side, more on the smart city side, which is smaller.

[Operator]

Next question is from the line of Umesh Matkar from Sushil Finance.

[Umesh Matkar, analyst]

A couple of questions. How are you seeing the global slowdown impacting the business right now? And so once the growth picks up globally, do we see -- is it growing at a much faster pace. And for that, have you done the investments -- are you done with the investments in people and technology or -- [indiscernible] the investments are still at the initial stage? That is first. And you also spoke about doing projects globally and also in India. So how are the margins on both the sides?

[Ashish Rai, executive]

Okay. So first on the global slowdown. Look, I think -- so for us, we do not see a hugely material impact. Now any global recession, if things are really tough. Of course, it's a painful thing for the economy and we -- I feel for people who get affected. But for us, from a demand standpoint, I do not think it materially changes anything. So there are 2 ways of looking at it. One is -- if there is a widespread global slowdown, I think it affects everyone across, I believe it affects -- given the nature of our model, which is where we are not a run rate generic IT services company or a single product software product company, we are essentially a -- one, we are an IP-led product and platform company. Second, we are not just dependent on one product.

We've got a diversified portfolio of products, right? So I believe this model, regardless of what is happening to the industry, we will be able to outperform bulk of the players in the industry, purely because of the nature of the IP-led business, which is higher margin, more stable and our biggest challenge right now is fulfilling demand, not so much demand itself. Right? The second part is we are today a very small player in very, very large segments. So we happen to be one of the most competitive players in the segment we chose, but we happen to be also very, very small.

So for us to keep growing, again, is more a function of how much of demand can we fulfill, not so much the overall segment slows down. Because the overall segment slows down, I think, the weaker competitors will lose share, and we will get the opportunity to continue to keep on growing. And hopefully, the capacity also shapes up in terms of growth so that we can continue to capitalize on it. Right? So I believe an overall slowdown, we will -- it sort of allows the strength of the model to stand out a lot more compared to a normal situation where everything looks the same, right? So I believe we've sort of filled the model to sort of outperform in situations like this.

The second is, growth picking up globally. As I said, as and when that happens, very good. Right now, we don't see a slowdown in demand in the first place. So it's not really a material question overall. Our bigger problem right now is capacity not demand, right? And which -- to address the other part to it, are the investments done. Look, we are growing at 30% now for 3 years, which puts a lot of sort of need in terms of expanding the scale. I don't think we are done. I think our expense line will keep on climbing as we keep on adding people, but the revenue line will keep on climbing as well, proportionately.

And we will continue to invest. It's almost a continuous process. If you keep on growing at 30%, roughly, I would say, 50% to 60% of the growth, we still need to add capacity. The other 40%, we don't. So we will -- it will not probably increase in line with the revenue growth, but it will increase. So that's one. On the technology side, I think bulk of our investments are done. So most of the products are fully built out. We launched new versions of the bulk of our products, including on the renting side, the cloud version. So that investment is done, the corporate digital banking products. That investment is done on the transit side, remain bulk of the investment. So I would say on the tech side, your position is correct. I think bulk of the investments are done. And what we need to do now is more incremental R&D investments. By and large, it doesn't mean we will not find a new sort of area to come. But I think our sort of R&D spend will remain stable for the next couple of years. I hope that I have addressed all the points?

[Umesh Matkar, analyst]

Just I had one question on the margins. How are those compared if you compare global projects versus India?

[Ashish Rai, executive]

Okay. So look, at an overall level, as you would have seen over the last 3 years, we probably -- one of the better margins in the industry probably one of the best margins overall. We intend to keep that stable at around 22% on -- 22% to 23% on EBITDA and 15% to 16% on net. The reason for that is we've been able to balance out the product lines and the geo splits of the business. So we do see the margins that we are seeing in U.S. and Southeast Asia and Middle East, they tend to be better than what we get in India, right? So I think that is one geo split. And second, there is a sort of marginal split across, depending on the product and the service you're talking about.

So on the one-off license-based products, you'll see a slightly better margin in that quarter. On a recurring business, you'll see a more steady state margin overall, right? But balancing this portfolio out, I think today, we are one of the highest margin shops in the Indian IT and we intend to continue to where we are, right? So which is at about 16% net. As I said on the last call as well, we expense most of the investments. So typically, there is always an R&D spend as a percentage of top line, which is pretty significant, which goes on top of that, right? So as we get more room to scale up the R&D spend, we will do that, and we'll try and keep the margins stable.

[Operator]

[Operator Instructions] The next question is from the line of [ Ganesh Shetty ], individual investor.

[Unknown Attendee]

Congratulations for a great Q3 also for taking the company on [indiscernible]. Sir, my first question is regarding our acquisition in the year that is Hello Patients, is it contributing in the [indiscernible] of our revenues this quarter? Or we may have to wait for some more time?

[Ashish Rai, executive]

Good question. So Hello Patients is more of a strategic long-term bet for us. And that's why we represent that as a part of the fintech platforms. It's not material to our revenue at the moment. In terms of strategy update, what we are doing with Hello Patients is, we believe Hello Patients has an opportunity to fundamentally change the patient management, practice management space in the U.S. We were a very experienced management team in that business, and we are working together to create the next-generation experience in that space. We are -- so we've got some sort of clients live on the platform, but we are looking at creating a next generation of it and launch it very soon as and when we are ready to launch the next generation of the product out there, we will announce that. I think we are a few months away from it.

[Unknown Attendee]

My next question is regarding the data center business, as we are experiencing a real demand for data center across the country. So can you explain where you exactly stand in this business and how the margins [indiscernible].

[Ashish Rai, executive]

Ganesh, I did not get the question. Can you be a bit closer to the mic?

[Unknown Attendee]

Yes. Can you hear me, sir?

[Ashish Rai, executive]

Yes. Just go a bit slow. I think the line is not great.

[Unknown Attendee]

Yes, sir. I just want to know about our data center business that are seeing a great demand across to the country. So how the business is shaping up and what is the margin picture over there.

[Ashish Rai, executive]

So fantastic. I got that. I got that. Thanks, Ganesh. So look, data centers, we believe we now have one of the strongest teams in the business in this industry. We have invested heavily in that space. And I think it is showing up in terms of some fantastic wins that we've announced from time to time, including some highly competitive, very, very prestigious wins, where we've probably not been able to announce the client name because of confidentiality reasons, but like the most prestigious wins in the industry. So I think we are very well placed in that business. I believe for quite some time. So that business will win more market share than what's in the peer group. And the other thing is, you're totally right. I think there is an explosive demand in the country in that space in terms of new investments coming in, multiple players coming in and a specialized player, with very high-end consulting skills like us, has a lot of share to win. So I believe for the short- to medium-term, that business will grow way above the enterprise growth rate that we have.

[Unknown Attendee]

One more question if the time for it.

[Ashish Rai, executive]

Sorry.

[Unknown Attendee]

Can I ask one more question, if there is a time permitting.

[Ashish Rai, executive]

To the moderators.

[Unknown Attendee]

Okay. I will go on with a question. Sir, as you weigh all experience that Aurionpro is moving from one stage of growth, to second, to next to third stage. So now where we can see a very explosive growth in all our products as we have array of software products and platforms. So how we position our self to make ourselves equipped to handle those challenges where a company is shaping from a small company to big company to a large, very large company. So all these come -- all these planning are -- whether we have certain plans for these initiatives with us or we are yet to make all those decisions, sir. These are just qualitative questions regarding our business.

[Ashish Rai, executive]

So look, I think that's a great question. So we are being very deliberate in where we want to be. As I said, we started this strategic pivot 3 years back, we were very, very careful on where we want to be, the kind of business we want to build. We are looking at the very long term. What is the goal of the Board, overall, right? So we want to build a business that really materially enhances the long-term intrinsic value of the firm over an extended period of time, right? So we went in and carefully selected the segments we want to be in and then we carefully selected the model that will allow us to perform over the long term, which means there were issues with the pure-play single product software game. We said, okay, we will diversify the portfolio out.

There were issues with the pure-play services game, obviously, in terms of increasing costs. And also, we said, okay, we will be very, very IP-focused so that we can always have a pricing power way above the commoditized IT services player, right? So we very deliberately chose the current model, which is where I am in the focus segment, whether it's banking, whether it's transit, I am creating multiple levels of leverage. Leverage #1 we create absolute Tier 1 IP in the product space that we are in that itself will allow us to win a lot of business. Then leverage #2, we wrap that IP up in a whole set of services, whether it's cloud or platform services to create platforms.

For example, if you look at transit, it's an end-to-end platform, not just a single product like an AFC or something and across both hardware and software, right? So that's a second leverage, which allows us to get even bigger pricing power and margin power overall. And then a third level of leverage, where we say, we will bet on the convergence of these platforms. We will go and work with industry leaders worldwide to create the ecosystem leverage, which explains the fintech platforms you have like Aurobees, like Auropay like Hello Patients, which is where the IP is ours.

We've wrapped it with services and then we are collaborating with industry leaders to make it even wider, right. So those 3 levels of leverage in the chosen segments will allow us to command both growth as well as pricing power, disproportionate to pretty much anything else we see in the market, right? So that is the theme. Now are we ready for it? I think we've got 3 years track record to -- in terms of what we've delivered.

Second, we've shown some of this. We have a top-class management team that we announced. We've had a significant expansion in capacity. And we believe now we see increasingly, we've become a magnet for the right kind of product talent to come in because there are not so many alternate options who are doing anything similar, whether it's banking or transit right. So I think we are going about this in a very deliberate way. We are not trying to overstep by trying to grow at 50%, 60% because it's not a services game.

We need to protect our delivery reputation. We need to protect the scale. So we are going about growing in a very, very balanced fashion, grow at 25% to 30%, grow our capacity. The management team is in place. I believe we now have the structure to support a bigger, a much bigger business than what we have. So I feel, as a management team, we feel very good about our preparation for scale, our preparedness for it. And I think we -- our goal is to continue to log the growth rates and continue to show that we are ready for that leadership position that we aspire to.

[Operator]

Next question is from the line of Keshav Garg from Counter Cyclical PMS.

[Keshav Garg, analyst]

I wanted to understand that what is our CapEx plan for the next 1, 2 years? And what is the net cash that the company has as of 31st December 2022?

[Ashish Rai, executive]

Okay. So Hi, Keshav. Thanks. So look, CapEx plan -- first, we're not really capitalizing any of the software investment side. So we basically expense them out. We are, at the moment, expensing at the rate of roughly about 7% of our top line. That may go up or down a little bit as we go. But as we said, we want to sustain the margin levels we are at. So it will typically be 6.5% to 7% and climb up slowly as the economic profile of the products keep on improving, right, as we get scale. So no capitalization on the software side, barring some very specific situations, which are non-material in nature.

The -- on the actual other CapEx, I think it's more or less scaling with the expansion in capacity. So it's not something abnormal. We will publish. So we publish half yearly, we publish the balance sheet half-early and we'll publish at the end of the full year. So I will -- we will not get to end of Q3 sort of announcement on where it is. But I would say we have -- if you go back 2 years, 3 years, we had a large amount of debt sitting on the balance sheet. Now that debt is very, very low compared to the size of the business. We've been publishing the debt-to-equity number, it's 0.12 or 0.1 something. It's not material in any case. And the cash position has steadily been building up, right? So I would not answer a specific question, but we will do a disclosure, as we normally do with the full year balance sheet when we publish. And I think overall, the debt position, the business has reduced over time and the cash position has gone up.

[Keshav Garg, analyst]

Sir, I also wanted to understand the tax rate. In 9 months our effective tax rate has been 15%. So going forward, what is the tax rate that one should expect?

[Ashish Rai, executive]

Yes. Can you repeat that...

[Keshav Garg, analyst]

To understand that in this third quarter, our tax rate was 14%. And for the 9 months of this year, it was 15%. So going forward, what will be the effective tax rate applicable to our company on consolidated basis?

[Ashish Rai, executive]

Yes. So look, I think typically, the tax rate will be between 17% to 20%. We will show a little bit of -- you'll see a little bit of variance quarter-to-quarter. I mean especially global. So depending on the skew of the global business, right? I would expect let's say, getting to 17%, 18%, but it depends on the mix of business over the quarter. And what is happening to the business overall is, I think -- so last few quarters, we've been overall steady. But as we increase the size of the global business, you'd probably see us climb down a little bit. But historically, I think we've typically posited for being at around 17%, 18% and going up to 20%.

[Keshav Garg, analyst]

And lastly, I just wanted to touch upon one thing that, like you mentioned that our operating margin and other parameters are amongst the best in the industry. But if you see at our valuation, that despite being almost debt-free and with constant improvement on all parameters, we are still trading at single-digit price to earnings, which is the cheapest among the industry. So -- and plus, we are expecting a glorious future and we are showing steady growth rate of 25%, 30%. So that needs the stock even more cheap. So if the company can buy back its shares and extinguish the same. So our EPS going forward will increase faster than the profit, and it will be a permanent thing for all times to come. So if you could finally consider that position, it will be very beneficial for the shareholders.

[Ashish Rai, executive]

Yes. So look, I think we would consider it that -- thanks for that. It'll be around, look -- valuation, ultimately, market is the determinant of valuation. So the management has no contribution to that fact. Our goal is to play for the long term. Our goal is to enhance the long-term intrinsic value per share for the shareholder of Aurionpro, and we will continue to work on that. You are right. I think if we could get to a stage where we saw the best use of cash to go and buy back the share. But I think we are -- as a management team around the Board of Directors' table, I think there is absolute clarity that we are managing this business for the long term.

There is really -- either probably the short-term benefit to buying back shares, but the rate at which we are growing and the size of opportunities that exist in front of us, at least in the near term, we believe the best use of our investment is to invest in growth. I think that is what's of the interest of the shareholder is the best. If you see over the last 12 months, even on the inorganic side, right, whether it's our investments in Toshi, our investments on SC Soft, our investment on Hello Patients, like the inorganic side, they have been to finish up the product stack. They have been to finish off the offering so that we generate that incremental intrinsic value for our shareholders. I don't think buyback would have. I mean, did we have cash to do that?

Of course, we had. But we would much rather go and use that to invest in finishing of the product stack, completing that end-to-end offering. So essentially, in any part of the value proposition, we go for what is the adjacency can I backward integrate, right? And whenever we do that, we extract more margins. That is the reason why we are one of the best margin shops today. We extract more margin and we become more competitive on the chain, right? So I believe for at least the short- to medium-term, the management believes that is the best use for investments. I think if you got to a stage where we really had growth slowing down or we had no other revenue to invest. I do agree that, that may make sense, right? But ultimately, I believe the market would, over the long-term value all prices. Really over the short term, I don't think that valuation really matters a lot to the management team.

[Operator]

[Operator Instructions] The next question is from the line of [ Ankit ] individual investor.

[Unknown Attendee]

Congratulations on the good set of numbers, sir. So sir, I have 2 questions basically. So what is the current debt on the books? And are we planning to raise the funds?

[Ashish Rai, executive]

Sorry, what is the current debt on our books? And are we planning to raise any external funds?

[Unknown Attendee]

Yes, yes.

[Ashish Rai, executive]

So look, our debt number, as I said, we've progressively draw that number down. We will still continue to have, I suppose, some -- a little bit of long-term debt that we have a problem retiring as well as we'll continue to have some short-term debt to manage the growth, just the growth in working capital, but it's not material to the size of the business now. The -- look, I think -- so the thing is, at the moment, we find no real need for excess capital to maintain our current growth rates on each of the lines of the business. So as I said, product investments largely done, denominate investments largely done.

So unless there was a specific opportunity to significantly expand value somewhere. We don't really see any use for excess capital. The business is kicking up enough capital to reinvest back and continue to compound the growth in the business overall, right? And as I said, bulk of our investment cycles are done. So now it's more execution more for us to capture as much growth as we can, right? So there is no immediate plan. I mean, never say never, but I -- unless it has to be some significant opportunity for value creation. So at the moment, we don't see any need for it.

[Unknown Attendee]

Sir, my second question is, as you mentioned about the global environment being recessionary. So as far as our business is concerned, what kind of slowdown are we seeing? And is it impacting our run rate for achieving our target for next 2 years?

[Ashish Rai, executive]

Yes. Look, honestly, we don't see any material slowdown anywhere. We hear talk like everyone on this call does about a recession possibility globally, if it happens, very good. I think like [indiscernible] right, I mean, the goal of the management team is not really to judge whether it's high tide or low tide. The goal is to swim as early as we can, right? I think we are executing well. We don't see a slowdown in demand. As and when there is a slowdown in demand, I believe we will outperform our peer group. So we will continue to convert when the weaker players have stopped converting. That is what we believe, right?

The other thing is, if you see what is causing this global sort of noise around recession, a large part of it is around increased interest rates in the Western world. Right now, as the cost of money increases as interest rates increase, a large part of our offering, if you see, for example, the corporate lending side, right? We believe banks will normally do well in a high interest rate environment. Corporate loan is the heart of a wholesale bank. So we believe banks will continue to spend on transformation there.

Banks will continue to spend on the, for example, the corporate banking products that we have. So we don't believe a high interest rate environment is necessarily bad for the parts of the banking industry that we address. I can understand it's bad for, for example, investment banking, the transaction volumes have dropped, there's no M&A and I get that, but it's not necessarily bad for the corporate banks that we serve, right? So I would expect that demand to continue to hold. We would expect the transit demand to continue to hold. So we honestly, right now, don't see a reason for slow down. If we see one, we will come and talk to the shareholders about it.

[Operator]

[Operator Instructions] The next question is from the line of Swechha Jain from ANS Wealth.

[Swechha Jain, analyst]

Sir, I have a follow-up. So one was, I wanted to understand what does our investments in SC Soft and Toshi Auto that we have done. So I want to understand how do you think these 2 investments are going to help us strategically? And another question that a follow-up I had is from your commentary that you said that we've been maintaining a growth of over 30% over the last 11 quarters. So I wanted to understand how long -- like for how many more quarters do you see us growing at a 30% kind of a number?

[Ashish Rai, executive]

Look, we don't see a slowdown at all. So we expect to continue to grow at 25% to 30% in the next several quarters and beyond. Right? So the goal of the management team. So what we don't give is a forward guidance going several years out. So we don't want to do that. What we share is an insight into our planning for the next several quarters. And our performance target for the next several quarters is to continue to grow at the same rate as we've been going the last 3 years, right? So we don't see a need to slow down the growth rate at the moment, either from a demand standpoint or a capacity standpoint, we believe we can keep scaling capacity at the current growth rate. Of course, if you were to accelerate, if it can become a challenge. And hence, our choice of growing 25% to 30%, which is where we believe capacity can keep up with our conversions. So that's essentially the story there.

SC Soft and Toshi, that's a great question, Swechha. Look, I think it's important to understand what we are trying to create on the transit side, right? Under the leadership of Sanjay who's the President of the business, we promoted -- we have built out today, one of the most integrated end-to-end stack in the transit space, right? Why are we doing that? We believe it is a multibillion-dollar space globally. We see a huge momentum across the world in terms of transformation of transit payments from the legacy closed-loop systems to open loop systems, where we happen to have a cutting-edge tech stack, right? When we say we want to build out the most end-to-end offering, it means we need to capture parts of the value chain, where we are not there, right?

And that explains SC Soft, SC Soft is a Singapore-based provider, very strong -- most of our -- a lot of our transit technology has come from there and being developed out of our R&D centers in Singapore and Istanbul, as well as in India, right. This is where the hardware stack comes in, which is the validator, and we are increasingly backward integrating that piece going down to a lower level, building more and more of our stuff and replacing the component side. So we will continue to build out global class validators and exact from the Singapore setup, that's where SC Soft comes in. We, more or less finished the acquisition.

We acquired 90% of it with a 10% that we will put in the cash over the next couple of quarters, right? So that is SC Soft. Toshi fits in again in terms of completing out the offering stack in that business. So where Toshi comes in is, a lot of the contracts come out, not just for technology, but also for things like the turnstiles and the gates and the actual core hardware component, right? And Toshi will help us capture that portion of the contract. So when we go out, we can actually have an offering for pretty much everything that a bid is coming out.

So some will come out purely for a portion of the stack like just the validators, for example, or just the software, ASC or the larger transformation contracts come for everything end-to-end. So it gives us the ability to play in the large turnkey contracts as well as play in any part of that chain, right? So Toshi takes up the manufacturing side, hardware co-manufacturing side. SC Soft provides the electronic manufacturing, the hardware and the tech stack, right, and we bring it together with -- wrap it along with a set of services that we have, and that is what allows us to go in and win a disproportionate share of business in that space.

[Operator]

Thank you very much. I now hand the conference over to Mr. Ashish Rai for closing comments.

[Ashish Rai, executive]

Okay. So thank you, everyone, for joining the call. I hope it has been useful, and I look forward to seeing you back next quarter. Thank you.

[Operator]

Thank you very much. On behalf of Aurionpro Solutions Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.