Companies with the most consistent sequential growth

Consistent growth every quarter is not easy to achieve. Companies are swamped with both internal and external factors that impact their performance. Yet, some manage to grow consistently.

Among the non-BFSI (banking, financial services and insurance) companies with a market cap of at least Rs 500 crore, we identified four companies that have posted sequential revenue and PAT growth in at least 16 out of the last 20 quarters (last five years). Three out of these four companies were IT companies.

We explore factors that led to this growth.

Caplin Point Laboratories

• The core business area: Manufacturing APIs (Active Pharmaceutical Ingredients) and finished formulations.
• Primary growth driver: Its differentiated business model.

It aims to serve the "bottom of the pyramid".

What does that mean, you may ask? It caters to countries such as Guatemala, Ecuador, Honduras, Dominican Republic, etc., and provides low-cost pharmaceutical products in these markets.

Apparently, this strategy has proven successful for the company as it now generates a consistent revenue stream from these countries (90 per cent of Caplin's revenue is attributed to these markets).

Persistent Systems

• The core business area: Technology services. It provides various solutions to clients, such as digital transformation, data analytics and cloud computing.
• Primary growth driver: An increasing demand for cloud-based services in the healthcare and life sciences and banking and financial services sector in the past five years.

The company has recorded robust growth in order book value, increasing to $1.62 billion in FY23.

Saksoft

• The core business area: IT. It provides digital transformation solutions in Europe, the United States and Asia Pacific.
• Primary growth driver: An increasing demand for AI and machine learning-based solutions.

The revenue growth has been mainly driven by its broad customer base in this niche segment. Its strategy has been to focus on and cater to mid-sized companies.

Mastek

• The core business area: IT. It provides enterprise technology solutions such as digital and application engineering, automation and AI, cloud enhancement services, etc.
• Primary growth driver: Mainly inorganic factors.

To give you a context, it acquired Evosys, a cloud service provider, in 2021 to foray into the Middle East. This diversified its revenue streams and increased its presence in the cloud space segment. In fact, presently, nearly 50 per cent of its revenue comes from Evosys alone.

The fact that only four companies (out of our universe of 988) managed to post such consistent growth shows what a mighty challenge it is. Whether they can continue this streak is something we can't predict.

Also read: Why businesses must adapt to technological changes