Emagia the IDC MarketScape players for worldwide SaaS Account Receivable Product valuation.

We will start with position of Emagia’s O2C SaaS products in worldwide market.

Emagia positioned as a leader in IDC MarketScape: Worldwide SaaS and Cloud-Enabled Accounts Receivable Automation Applications for Enterprise from last two years.

The following screenshot from 1 year old article of Robert Solomon. He has nicely explained all players of worldwide SaaS players in Account Receivable automation. Bob Solomon is founder, President, and Chief Bottle Washer of Software Platform Consulting, Inc

https://www.softwareplatform.net/2020/02/10/growth-equity-cash-flows-to-saas-accounts-receivable-applications/  

Our task to estimates the valuation of Emagia a SaaS player. In Agile framework, if can't estimate task then we can use relative estimation. It means if that task was that much complex and taken this much time then compare our task with the already estimated task. We can use the same for estimation of intrinsic value or market value of Emagia. We are right now interested in the whole company valuation instead of around 67% stake of TechnVision. We can adjust that during the intrinsic valuation of TechNVision.

We will find out competitors and their current valuation. We know the current revenue of Emagia is just few millions.

We are having the following clues.

HighRadius : I don't know the exact revenue of HighRadius(promoted by NRI Sashi Narahari) but as per my understanding it is around $230 to $250 million. It is valued at $3.1 billion in latest funding which is 12.4 to 13.5 times revenue. We can give that multiple but HighRadius is 25 times more than Emagia . We need to check few more companies.

Versapay : Great Hill paid C$126 million for VersaPay in an all-cash deal when Expected 2019 Revenue: C$9 million and EBITDA loss for 2019 will be about -C$8 million. Great Hill paid 14 times to revenue.  Link : https://platformsoftware.net/2019/12/16/great-hill-to-acquire-versapay/

Rimilia : It has £6.18 million ( $8.55 millions) revenue in 2019 . Loss-making (EBIT 5.7 milions). BlackLine acquired Rimilia in Oct. 2020 at $150 million. It paid around 17.5 times. https://www.accountingtoday.com/news/blackline-acquires-european-ar-software-provider-rimilia

As per IDC MarketScape HighRadius is the leader. However, Emagia is ahead of Versapay and Rimilia. Versapay and Rimilia both were loss making when got acquired .

Before coming to valuation, we should know Emagia's revenue. So , Emagia had revenue around 16 crores in 2019. It is growing very fast .It has revenue of just 2 crores in 2018 , then 6.7 in 2019 then around 16 crores in 2020.It may come around 20-30 crores in 2020. We are waiting financials of the company for 2020 ( USA Financial Year) .So , valuation is also tentative till get confirm figures but I am assuming 25 crores.

Versapay was acquired at 14 times revenue while Rimilia was acquired at 17.5 times revenue valuation recently and both are the same size as Emagia.

Now, you can apply revenue multiples of your understanding to revenue of 20-30 crores for the current valuation for VCs and another fund. Mind you this is not valuation I or you are going to pay this is valuations that other companies or VCs and other funds can pay or strategic fit for a bigger company. Majesco shareholders made money because they know how much VCs or Fund houses can pay or market value.

Will you be able to find the market value of complete Emagia with these hints?  15 to 20 times will be the answer based on peer evaluations. However, Emagia has a better product and there is the rush for digital transformations. If we assume 18 times valuation and 25 cr revenue then valuation will come to around 450 crores INR . You are not paying this but this is the market valuation of Emagia today which can grow more in the next 4-5 years. Please also not Emagia can strategery fit for many companies . If BlackLine can pay Rimilia $150 millions then someone can even pay at least that much to Emagia if it strategically fit for that company.Emagia's products are better .

However, this is not a TechNVision valuation in Emagia. One will have to calculate as per 66.24% holding (around 298 crores) and give some discount for tax/holding/doubts and add a premium for growth of tech business. Discount and premium needs to be given by shareholders of TechNVision.

This will be the TechNVision valuation for Emagia Stake. But to complete the valuation of TechNVision, we need to add Solix's valuation which has 80 crores revenue last year and around 100 crores this year. Can anyone calculate that?

Next article, I will explain why the valuation of 10-20 times the revenue for SaaS companies with ARR is not expensive. In fact, I will be buyers for 10-15 times in companies like Highradius which is planning an IPO next year in the USA, or even Emagia for direct investment.

Note : Bad news on TechNVision. It is put on GSM : Stage 3 from earlier 2. This is a problem with illiquid stocks.SEBI & Indian exchange don't understand the intrinsic value of new generation tech biz which shows losses. Most of the Indian unicorns are making losses if listed then will be on GSM. I will request retail investors should stay away from TechNVision unless they can afford this type of illiquidity risk.

Disclaimer :  Please treat this post as starting point of your research and not conclusion to invest in any discussed stock. As always , please take the advice of a SEBI qualified financial adviser which I am not .