In recent times, Silverlake Axis’s share price has fallen from its 50-60 cents range to that of 41.5 cents as of today. The question on people’s mind is probably, if the current share price reflects the value of the company. As a start, let’s recap on the business of Silverlake.

Brief description of Silverlake Axis

Silverlake Axis’s main competency lies in the core banking system industry and insurance. It produces software which is used to run the operations of financial institution. As the core banking system is a critical system for the bank, there is a high risk and high cost nature involved if banks switch from one core banking system product to another. Hence, this is where Silverlake’s business moat lies- It is difficult for its customers to switch out.

Silverlake adopts a business model where it sells the software to financial institutions and then charges a recurring annual …