Hi! After a long gap, we’re excited to share our research on a microcap company publicly. This idea was originally suggested by a close friend, an excellent investor in his own right. We began our study when the company had a market cap of ₹176 Cr (currently ₹232 Cr), and what stood out to us was its presence in a highly niche segment. We believe it’s worth putting this story out there.
About the company
Founded in 2004, Fidel Softech Ltd, a Pune-based organisation, offers technology solutions and services with a focus on local language delivery and support. The company specialises in LangTech, Language Engineering, Enterprise Product Services, and Cloud Infrastructure solutions.
LangTech (Language + Tech) is More Than Just Translation – While tools like ChatGPT and LLMs can perform translation, LangTech, as defined and practised by Fidel Softech, is a broader concept. It involves leveraging technology and linguistics to provide technology services with local language UI/UX.
About the Management
Sunil Sudhakar Kulkarni, aged 50, is the Promoter, Chairman, and Executive Director of Fidel Softech Ltd. An alumnus of Pune University (B.E. Mechanical, 1993) and MIT’s Technical Japanese program (1996), he has over 20 years of experience in IT consultancy. On the Board since 2005, he currently oversees the company’s overall management and marketing functions.
He currently holds a 55.47% stake in the company.
Board of Directors
Note: Shyamak Sunil Kulkarni, one of the board members, is the son of Sunil and Prachi Kulkarni.
Business Model
Fidel is a LangTech consulting firm that offers technology services with local language UI/UX – This forms their core business.
Business divisions:
A. Language Localization and Engineering
Language Localization and Engineering formed the core of Fidel Softech Ltd.’s business. This vertical encompassed services such as translation, interpretation, software localization, and multilingual data creation. The company specialized in supporting organizations requiring localized UI/UX, cultural adaptation, or last-mile delivery, especially during global or regional expansion. Additionally, Fidel developed multilingual datasets to train AI models and chatbots in local languages.
Fidel had executed projects in over 100 languages, with frequent requirements spanning 10–12 major Indian languages—such as Hindi, Tamil, Telugu, Marathi, and Gujarati—as well as Japanese. The company also possessed in-house expertise in developing e-learning content in local languages.
B. IT & Consulting Services:
This vertical included software development, cloud and infrastructure support, and consulting and staffing solutions such as training. Fidel offered services such as application hosting on managed platforms and was actively expanding enterprise capabilities around ServiceNow. The company also evaluated adding SAP and Microsoft Dynamics offerings, especially for the Japanese market.
How do they provide these solutions?
1. API Integration and Technology Platforms
Fidel Softech collaborates with clients to build cloud-based systems—typically hosted on platforms like AWS (They recently partnered with E2E Networks Ltd for cloud services )—and enables seamless data exchange through API integrations. Clients transmit data via these APIs for localization, which Fidel processes and returns with language-specific modifications. This combination of cloud infrastructure, API integration, and language expertise is often perceived by customers as a comprehensive, value-added solution.
To enhance operational efficiency and quality, Fidel leverages Translation Management Systems (TMS) and automation tools. Technologies like Memsource and Trados are used to ensure translation consistency, faster turnaround times, and cost optimization.
2. Machine Translation (MT) Engines
Fidel also supports machine translation workflows, either by using third-party APIs—such as Google Translate, Bhashini, or Fujitsu—as specified by clients, or by deploying its own proprietary engines for select languages like Hindi and Japanese. Notably, Fidel does not position its MT engine as a competitor to larger players; instead, it offers it as a functional tool within its broader service ecosystem.
In many cases, machine-generated translations are supplemented by human linguists who perform vetting or post-editing to enhance accuracy—especially when the raw MT output falls short of acceptable quality standards.
3. Multilingual Dataset Creation
A core part of Fidel’s offerings involves the creation, transcription, and annotation of multilingual datasets—critical for training AI engines and chatbots. The company has contributed to large-scale projects, including the development of training data for voice assistants like Amazon Alexa. These initiatives often require thousands of hours of speech data, meticulously transcribed and annotated for data science applications.
Fidel also collects data across regional language variations, such as dialectical differences in Marathi or Hindi. In addition, it plays a key role in validating multilingual AI outputs, ensuring linguistic and contextual correctness before deployment.
4. Human Expertise and Domain Knowledge
Fidel maintains in-house linguistic and technical expertise for eight major Indian languages as well as Japanese. For other languages, it works with a network of pre-vetted localization experts and linguists worldwide—many of whom bring domain-specific knowledge in fields like telecom, fintech, or healthcare.
The company also trains its engineers in both language and technology, enabling them to serve clients in Asia who demand bilingual proficiency. For example, Fidel emphasises the value of professionals who can combine language fluency (e.g., Telugu) with technical skills (e.g., Java), creating a distinct advantage in markets requiring culturally adapted tech solutions.
Market & Industry Opportunity
1. Global Market Outlook
- The global language services market is projected to reach $81.79 billion by 2028, growing at a CAGR of 8.3%.
- Key growth drivers include:
- Globalization of e-commerce
- Rising demand in healthcare, customer support, and accessibility services
- Multilingual virtual assistants and AI training datasets
- Localization in gaming and audio-visual content
- Globalization of e-commerce
2. Indian Market Gap & Opportunity
- Globally, large players in language engineering generate $500 million to $1 Billion+ in revenue.
- India lacks mid-to-large scale LangTech firms—most are either:
- Basic translation agencies, or
- IT services companies without deep localization focus.
- Basic translation agencies, or
- Fidel positions itself uniquely as a tech-driven language services firm from India.
3. Growth Potential from India
- There is a clear runway to build a $50–$100 million LangTech company out of India.
- Indian enterprises are increasingly going global, requiring:
- Multilingual UI/UX
- Product localization
- Cross-border language engineering
- Multilingual UI/UX
4. Real-World Demand Signals
- Fidel has worked with Indian e-commerce firms like Flipkart and BigBasket on localization.
- Supported a listed Bombay-based product firm in 11 languages for global rollout.
- These point to a rising domestic demand for enterprise-grade language services.
Revenue Mix
FY25: 90% Exports and 10% Domestic
Financials
Revenue growth has been pretty good with a 3 year CAGR of 27%. Margins are fluctuating between 18-23% – which may be due to a change of service and client mix.
Receivables and loans to related parties comprise around 24 % of total assets as of 31 March 2024.
Cash and cash equivalents of 7.69 Cr with investments of 22.30 Cr in Mutual Funds.
Pretty strong balance sheet for a company of this size.
The CFO has been positive for the last 3 years.
IPO Funds: ₹12 Cr from IPO. ₹3 Cr remaining. Mostly used for Working Capital.
Risks
1. MD Prachi Kulkarni is the Wife of Sunil Kulkarni. Who is the founder of arthshikshan.com, an ed-tech content based portal. This is a FinTech initiative for customer education and training and to make them financially literate and aware. This naturally diverts some focus from the main business.
2. Client concentration: Top 3 contributes around 50% of the business, and top 10 around 85%. Loss of any of the top 3 clients can do some serious damage in the topline.
3. Maintaining a competitive edge requires constant innovation and high service quality.
4. Low Float stock – this usually acts as a double-edged sword. ⚠️
Why PrudentParrot finds this company interesting?
1. We believe that there are currently no listed Companies in India that are focused exclusively on the segment in which Fidel operates.
2. They remain confident despite IT Industry headwinds for two reasons:
A. Unlike others focused heavily on the U.S., they’ve built goodwill in Japan, a market with demographic challenges and talent shortages, presenting long-term opportunities.
B. While many firms are still shaping their AI strategies, they are already executing AI-related work—such as multilingual dataset creation and AI output validation—driven by customer demand
3. Management is very frank and honest – this is our opinion by going through past concalls. See this snippet for example:
4. Well positioned for inorganic growth: They are looking out for inorganic acquisition opportunities in the range of $1.5 million to $ 2.5 million, with $ 3 million in revenues. They will use internal accruals and maybe some borrowings.
5. Commitment to increase shareholders’ value: continuously paying dividends after going public
Paying dividends is a strategic choice driven by their status as a publicly listed company, their commitment to shareholder value, their stated goal of being a dividend-paying company, and their ability to generate profits while still planning for future investments and expansion.
In the H2 FY25 concall, the management explicitly stated that they “want to be on the list of dividend paying companies“
6. Lucky Investments Managers, the investment firm of the Ace Investor Ashish Kacholia is interested in the company, it seems 😁
7. In our opinion, the stock can re-rate in the very short term (in the next 2-3 months). May get quoted at 35 – 40x FY25 PAT.
A word of caution: Avoid jumping into a FOMO buy at the top ‼️
See you next time.
Until then… Stay Prudent!
Disclaimer: This article is provided for informational purposes only and should not be considered as an investment advice
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