AI-generated · cited to primary sources · not investment advice · How we research
Capillary Tech.
Our verdict on Capillary Tech. isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
Management intends to continue investing in AI and product migration tools to improve win rates and customer onboarding efficiency. — target: Continuous investment
“So, as Aneesh spoke about, some of the product investments that we've been doing on AI stuff... So that's an investment that we would continue to make. The other is investment that we've been doing towards the product for migration of customers... So those investments would continue.”
Management targets a long-term organic annual growth rate of 20% or more. — target: 20%+
“ORGANIC BUSINESS - Customers on Capillary platform 20%+ Organic Annual Growth Rate”
See the full cited Management analysis of Capillary Tech.
How durable is the business?
The AI moat is evolving from a differentiator to a monetization engine. The aiRA product is currently in the 'Proof of Concept' (POC) stage with 10-15 customers, with plans to transition to paid annual licenses after 3-month free pilots. (1 expanding)
“We at least have out of our 115 customers today we at least have 10 or 15 who are in a POC or a post-POC type place with aiRA now.”
The organic business is expanding with a Net Retention Rate (NRR) of 115%, placing it in the top 10th percentile of global SaaS companies. This growth is driven by platform overages, upgrades to advanced stacks like Engage+ and aiRA, and expansion into new geographies by existing multinational clients. (1 expanding)
“If we break this down into organic and inorganic business, the organic business NRR is at 115%. And at this number, Capillary would be in the top 10 percentile of the global SaaS companies.”
See the full cited Business Model analysis of Capillary Tech.
Where does growth come from?
Customer count is accelerating through M&A, jumping from 110+ to 150+ following the Session M deal, including a 25% increase in Fortune 500 clients. (1 accelerating across 1 signal)
“150+ Customers... 25 Fortune 500 Companies (Combined)”
The new order book is showing accelerating growth, increasing from INR 53 crores to INR 66 crores for the nine-month period compared to the previous year. (2 accelerating, 1 new trend across 3 signals)
“Projected FY30 Adjusted EBIDTA ~₹398 Cr”
See the full cited Future Growth analysis of Capillary Tech.
What could break the thesis?
The risk remains stable as management continues the sunsetting process; they successfully sunset one of the Brierley platforms this quarter, demonstrating progress in the multi-year migration cycle. (2 stable, 1 high-severity)
“In the initial post-acquisition period, we will integrate approximately 60 customers from the two acquisitions onto our platform... The integrations will be done over the next 24-36 months”
The risk is intensifying as D&A rose from INR 13 crores to INR 19 crores per quarter, primarily due to the Kognitiv acquisition, which is limiting the expansion of EBIT margins despite EBITDA growth. (1 intensifying)
“Post integration with our platform customers move from a ~30% gross margin to a ~65% margin”
See the full cited Risk analysis of Capillary Tech.
Read the full thesis on Capillary Tech.
AI-generated informational research only. ThesisLoop is not investment advice, a stock recommendation, or a guarantee of returns.