-Iris is better for smaller businesses or those in specific regions (like India) who need affordable, focused tools for compliance and tax filings. Users like its cost-effectiveness and support but want better marketing and a more modern interface.
- Workiva is preferred by big companies needing a powerful, all-in-one platform for complex reporting. It’s user-friendly for enterprises but can be pricey and less specialized for regional needs.
- If you’re a small business or in a market like India, Iris might feel more tailored and budget-friendly. If you’re a large corporation with global operations, Workiva’s robust platform is likely the better choice.
PS: Loved your article. :) I am also in a similar dilemma of wanting buy shares but not very fond of valuations. I would look at it by P/S metrics which is still higher than median.
The downsides mentioned can easily be overcome with good investment in talent at all levels. Like how Ashish Rai happened to Aurion Pro, a good ambitious leader with great vision and execution capability can lead to a re-rating here. They need a fresh set of eyes and hands.
Yes. That's whole point. Whoever is coming now as CEO has to have a vision and ambitious mindset. There's always some gestation period when this kind of management change happens. So, personally, i am willing to wait until they start performing on all the fronts.
I have been invested in IRIS for the last year and closely following their conferences, investor day meetings, etc. Have a massive respect for the company and its promoters. I think it will take time for the management to return to their spirits. They are deeply affected by the sudden demise of their ex-CEO. You also cannot rule out the possibility of IRIS being acquired by a larger firm. So I am holding on to the stock and waiting
Good Write up. Can you please elaborate a bit on the TAM, this was also your initial concern, but now the only risk you see is valuations. So what addressed your initial TAM concerns. Thanks.
The Indian RegTech market alone is projected to reach USD 2.18 billion (~₹18,000 crore) by 2033, growing at a 17.4% CAGR from USD 516 million in 2024. [Source: https://www.imarcgroup.com/india-regtech-market]
Global RegTech Opportunity:
IRIS operates in 54 countries and addresses a much larger global market. Industry research and company disclosures suggest the global RegTech and SupTech market is estimated at USD 20–25 billion and expected to grow rapidly as regulatory mandates (XBRL, ESG, e-invoicing, etc.) expand worldwide. [Source: FY24 AR]
Disclosure Management/ESG Segment:
The company’s annual report and investor presentations cite a global addressable market for disclosure management and ESG reporting of USD 10–15 billion. [Source: FY24 AR]
1. Iris has 27% of market share, so there's other players obviously that have the remaining 73%. What edge does Iris have that it can thrive going ahead?
2. The technology is not very deep or complicated, so what sustains Iris going forward?
3. For a SAAS company, the OPMs are not commensurate. Comparing with other companies like say for example Newgen that has OPMs in 20+%, Iris is a more sedate 15ish. Why?
1. IRIS's Competitive Edge in a 27% Market Share Landscape
IRIS Business Services operates in a niche but growing global RegTech/SupTech market. While exact market share figures vary by region and segment, its key competitive advantages include:
Deep Regulatory Expertise & Trust:
XBRL Pioneers: IRIS has 20+ years of experience in XBRL (the global standard for digital reporting), giving it unmatched domain knowledge. Competitors often lack this depth.
Regulator Partnerships: IRIS works directly with 30+ regulators (e.g., RBI, South African Reserve Bank) to design compliance platforms. This creates high switching costs and sticky relationships.
Proven Implementation Track Record: Landmark projects like South Africa’s SARB platform and Bhutan’s digital supervision system act as global references.
End-to-End Platform:
IRIS offers a full-stack solution (Collect-Create-Consume), unlike competitors that focus on point solutions. For example:
SupTech: Custom platforms for regulators (IRIS iFILE).
RegTech: SaaS tools like IRIS CARBON for enterprises.
DataTech: APIs for lenders/investors (IRIS Credixo).
Global Scalability with Localization:
Operates in 54+ countries, with solutions adaptable to local regulations (e.g., GST in India, e-invoicing in Malaysia).
Competitors like Workiva (US) and Vizor (Ireland) lack this emerging-market focus.
High Retention & Cross-Sell Potential:
95%+ customer retention due to mission-critical compliance workflows.
Existing clients (6,000+) provide a base for upselling ESG, tax, and analytics modules.
2. Sustainability Beyond "Simple" Technology
While XBRL and compliance tools may seem straightforward, IRIS’s sustainability stems from complexity in execution, not just technology:
Regulatory Complexity:
Compliance requires navigating evolving standards (e.g., ESG, Basel III) across jurisdictions. IRIS’s ability to update taxonomies and workflows rapidly is a moat.
Example: IRIS CARBON supports 100+ reporting formats globally, a feat few competitors match.
AI/ML Integration:
IRIS embeds AI for auto-tagging XBRL data, predictive analytics (e.g., GST litigation risk), and fraud detection. These features enhance stickiness.
Competitors often rely on manual processes or generic tools.
Trust & Compliance Certifications:
ISO 27001 and SSAE 18 (SOC 1 Type 2) certifications assure data security, critical for regulators and enterprises.
New entrants struggle to build this credibility.
Regulator-as-a-Customer Model:
SupTech contracts (e.g., SARB) act as endorsements, driving enterprise adoption. Competitors like TCS or SAP lack this dual focus.
3. Why OPMs Lag Peers Like Newgen (15% vs. 20+%)
IRIS’s operating margins (~15% EBITDA in FY25) are lower than pure-play SaaS peers due to:
Factor IRIS Newgen
Business Mix Blend of SaaS (high margin) and custom SupTech projects (lower margin). Focused on document automation (higher scalability).
Client Profile ~35% revenue from government/regulators (long sales cycles, negotiated pricing). Enterprise-centric with standardized SaaS pricing.
Growth Investments Heavy spending on global sales expansion (30–40-person team) and R&D (AI, ESG). Mature sales pipeline with lower customer acquisition costs.
Implementation Costs SupTech projects require upfront customization (e.g., SARB took 3+ years). Products like Newgen’s low-code platforms are more “out-of-the-box.”
Geographic Exposure 35% revenue from Africa/emerging markets (higher operational costs). Larger share from stable markets (US/EU).
Path to Margin Improvement:
Shift to SaaS: FY25 recurring revenue reached ~₹75 Cr (58% of total). As SaaS grows, margins could expand to 20–25%.
Thanks, explanation was very lucid. Even after recent correction of more than 55% from highs, stock PE is 38...Do you still see it as a value buy. Sure as a TA i se accumulation zone from 207-240.
I have been tracking IRIS since 2020. The first time I saw it, it was at Rs 40. Tracked it for a year to get a sense what exactly the company does. Saw a moat, niche business, very honest promoters. Liked it, thought of buying it; but because of the low liq. of min. 5000 shares, couldn't. The company got listed on the mainboards (Porinju invested somewhere around that time); the stock shot up to 160-170 levels. A fundraise was proposed at that time. The promoters had no money to subscribe to the issue, the board said that will send out a bad message; they cancelled the plan. The stock plummeted and hovered around 70-80. I was like what exactly is this company doing because the plan to raise money and grow faster was there for quite some time but it was not happening. I exited. But kept tracking it. Eventually the growth came and towards the end of 2023, the stock started moving and eventually touched a high of Rs 574.
When the markets started crashing in Sep'24; I remember that year on Diwali the stock made an all time high of Rs 400(UC) {somewhere around that time Narayana Murthy's firm also invested}, the stock kept moving up and like you said I was sucking my thumb.
What did I learn? Smallcaps will test your patience. But if the company is good, just sit with them; like the way promoters did. If they deliver, the stock will go up. I think we forget we need to think like the owners of the business.
A lot is happening in the business at this point in time. They have raised money, there is more structure, they are hiring people in India and overseas to scale the business. The call which happened before the last earnings call; they said before Swami's demise Balu, Deepta and Swami were working on a plan how to go from here. So, the plan is there.
For a company which has a market cap of 500 Cr, down 50% from the top and PE of 38 (one thing BM taught me, you can ignore valuations up to a point in smallcaps); the potential is huge.
Some insights from AI comparing user preferences.
-Iris is better for smaller businesses or those in specific regions (like India) who need affordable, focused tools for compliance and tax filings. Users like its cost-effectiveness and support but want better marketing and a more modern interface.
- Workiva is preferred by big companies needing a powerful, all-in-one platform for complex reporting. It’s user-friendly for enterprises but can be pricey and less specialized for regional needs.
- If you’re a small business or in a market like India, Iris might feel more tailored and budget-friendly. If you’re a large corporation with global operations, Workiva’s robust platform is likely the better choice.
PS: Loved your article. :) I am also in a similar dilemma of wanting buy shares but not very fond of valuations. I would look at it by P/S metrics which is still higher than median.
Thanks for the kind words. Yes, agree with your points.
The downsides mentioned can easily be overcome with good investment in talent at all levels. Like how Ashish Rai happened to Aurion Pro, a good ambitious leader with great vision and execution capability can lead to a re-rating here. They need a fresh set of eyes and hands.
Yes. That's whole point. Whoever is coming now as CEO has to have a vision and ambitious mindset. There's always some gestation period when this kind of management change happens. So, personally, i am willing to wait until they start performing on all the fronts.
I have been invested in IRIS for the last year and closely following their conferences, investor day meetings, etc. Have a massive respect for the company and its promoters. I think it will take time for the management to return to their spirits. They are deeply affected by the sudden demise of their ex-CEO. You also cannot rule out the possibility of IRIS being acquired by a larger firm. So I am holding on to the stock and waiting
Good points. Agree.
Good Write up. Can you please elaborate a bit on the TAM, this was also your initial concern, but now the only risk you see is valuations. So what addressed your initial TAM concerns. Thanks.
TAM:
RegTech Market Size (India):
The Indian RegTech market alone is projected to reach USD 2.18 billion (~₹18,000 crore) by 2033, growing at a 17.4% CAGR from USD 516 million in 2024. [Source: https://www.imarcgroup.com/india-regtech-market]
Global RegTech Opportunity:
IRIS operates in 54 countries and addresses a much larger global market. Industry research and company disclosures suggest the global RegTech and SupTech market is estimated at USD 20–25 billion and expected to grow rapidly as regulatory mandates (XBRL, ESG, e-invoicing, etc.) expand worldwide. [Source: FY24 AR]
Disclosure Management/ESG Segment:
The company’s annual report and investor presentations cite a global addressable market for disclosure management and ESG reporting of USD 10–15 billion. [Source: FY24 AR]
IRIS is just a 500 Cr company at the moment.
Good methodical analysis of the company.
Some questions, not disconfirming evidence.
1. Iris has 27% of market share, so there's other players obviously that have the remaining 73%. What edge does Iris have that it can thrive going ahead?
2. The technology is not very deep or complicated, so what sustains Iris going forward?
3. For a SAAS company, the OPMs are not commensurate. Comparing with other companies like say for example Newgen that has OPMs in 20+%, Iris is a more sedate 15ish. Why?
1. IRIS's Competitive Edge in a 27% Market Share Landscape
IRIS Business Services operates in a niche but growing global RegTech/SupTech market. While exact market share figures vary by region and segment, its key competitive advantages include:
Deep Regulatory Expertise & Trust:
XBRL Pioneers: IRIS has 20+ years of experience in XBRL (the global standard for digital reporting), giving it unmatched domain knowledge. Competitors often lack this depth.
Regulator Partnerships: IRIS works directly with 30+ regulators (e.g., RBI, South African Reserve Bank) to design compliance platforms. This creates high switching costs and sticky relationships.
Proven Implementation Track Record: Landmark projects like South Africa’s SARB platform and Bhutan’s digital supervision system act as global references.
End-to-End Platform:
IRIS offers a full-stack solution (Collect-Create-Consume), unlike competitors that focus on point solutions. For example:
SupTech: Custom platforms for regulators (IRIS iFILE).
RegTech: SaaS tools like IRIS CARBON for enterprises.
DataTech: APIs for lenders/investors (IRIS Credixo).
Global Scalability with Localization:
Operates in 54+ countries, with solutions adaptable to local regulations (e.g., GST in India, e-invoicing in Malaysia).
Competitors like Workiva (US) and Vizor (Ireland) lack this emerging-market focus.
High Retention & Cross-Sell Potential:
95%+ customer retention due to mission-critical compliance workflows.
Existing clients (6,000+) provide a base for upselling ESG, tax, and analytics modules.
2. Sustainability Beyond "Simple" Technology
While XBRL and compliance tools may seem straightforward, IRIS’s sustainability stems from complexity in execution, not just technology:
Regulatory Complexity:
Compliance requires navigating evolving standards (e.g., ESG, Basel III) across jurisdictions. IRIS’s ability to update taxonomies and workflows rapidly is a moat.
Example: IRIS CARBON supports 100+ reporting formats globally, a feat few competitors match.
AI/ML Integration:
IRIS embeds AI for auto-tagging XBRL data, predictive analytics (e.g., GST litigation risk), and fraud detection. These features enhance stickiness.
Competitors often rely on manual processes or generic tools.
Trust & Compliance Certifications:
ISO 27001 and SSAE 18 (SOC 1 Type 2) certifications assure data security, critical for regulators and enterprises.
New entrants struggle to build this credibility.
Regulator-as-a-Customer Model:
SupTech contracts (e.g., SARB) act as endorsements, driving enterprise adoption. Competitors like TCS or SAP lack this dual focus.
3. Why OPMs Lag Peers Like Newgen (15% vs. 20+%)
IRIS’s operating margins (~15% EBITDA in FY25) are lower than pure-play SaaS peers due to:
Factor IRIS Newgen
Business Mix Blend of SaaS (high margin) and custom SupTech projects (lower margin). Focused on document automation (higher scalability).
Client Profile ~35% revenue from government/regulators (long sales cycles, negotiated pricing). Enterprise-centric with standardized SaaS pricing.
Growth Investments Heavy spending on global sales expansion (30–40-person team) and R&D (AI, ESG). Mature sales pipeline with lower customer acquisition costs.
Implementation Costs SupTech projects require upfront customization (e.g., SARB took 3+ years). Products like Newgen’s low-code platforms are more “out-of-the-box.”
Geographic Exposure 35% revenue from Africa/emerging markets (higher operational costs). Larger share from stable markets (US/EU).
Path to Margin Improvement:
Shift to SaaS: FY25 recurring revenue reached ~₹75 Cr (58% of total). As SaaS grows, margins could expand to 20–25%.
Operating Leverage: FY25 EBITDA grew 36% YoY (vs. 23% revenue growth), signaling scalability.
Recent Equity Infusion: ₹20 Cr raised in 2024 will fund high-margin initiatives (AI, ESG) and reduce reliance on low-margin projects.
This particular response strengthens the conviction in Iris a lot...
❤️🫶🙏
Thanks for the detailed response.
🙏
Good work by the Zen Nivesh team . Congratulations and all the very best Ankit sir :)
Thank you
But is trading below it median PE for 3yrs and 5yrs as below.... Even with good numbers
Just one question Ankit bhai. After all that information, why are you not invested in Iris? Sorry if it out of bounds...
Good question. Valuation is the only thing that is stopping me at the moment. However, I may change my mind on that. :)
Regards
Ankit
Excellent, as always Ankit bhai !
Thanks, explanation was very lucid. Even after recent correction of more than 55% from highs, stock PE is 38...Do you still see it as a value buy. Sure as a TA i se accumulation zone from 207-240.
It is mentioned in the blog that it is not a value stock yet. Thanks for sharing your TA.
I have been tracking IRIS since 2020. The first time I saw it, it was at Rs 40. Tracked it for a year to get a sense what exactly the company does. Saw a moat, niche business, very honest promoters. Liked it, thought of buying it; but because of the low liq. of min. 5000 shares, couldn't. The company got listed on the mainboards (Porinju invested somewhere around that time); the stock shot up to 160-170 levels. A fundraise was proposed at that time. The promoters had no money to subscribe to the issue, the board said that will send out a bad message; they cancelled the plan. The stock plummeted and hovered around 70-80. I was like what exactly is this company doing because the plan to raise money and grow faster was there for quite some time but it was not happening. I exited. But kept tracking it. Eventually the growth came and towards the end of 2023, the stock started moving and eventually touched a high of Rs 574.
When the markets started crashing in Sep'24; I remember that year on Diwali the stock made an all time high of Rs 400(UC) {somewhere around that time Narayana Murthy's firm also invested}, the stock kept moving up and like you said I was sucking my thumb.
What did I learn? Smallcaps will test your patience. But if the company is good, just sit with them; like the way promoters did. If they deliver, the stock will go up. I think we forget we need to think like the owners of the business.
A lot is happening in the business at this point in time. They have raised money, there is more structure, they are hiring people in India and overseas to scale the business. The call which happened before the last earnings call; they said before Swami's demise Balu, Deepta and Swami were working on a plan how to go from here. So, the plan is there.
For a company which has a market cap of 500 Cr, down 50% from the top and PE of 38 (one thing BM taught me, you can ignore valuations up to a point in smallcaps); the potential is huge.
Who knows what will happen from here? Let's see!