Analyst's Diary: Onwards and upwards, quite literally!

If we were to pick stocks that lived up to their names literally and figuratively, Onward Technologies would be at the top of the pile. The coveted small-cap IT bet has drawn up a differentiated path thanks to its complete shift towards becoming an engineering research and development (E&RD) player. How did it do this? Let's find out. Changing lanes What many IT companies fail to do, Onward Technologies was able to achieve. It successfully broke away from the highly crowded and generic software and cloud computing segments by pivoting deeper into the ER&D space. ER&D involves contract-based work to enhance operational efficiency in various stages of software and hardware product development. Back in FY17, the company operated in two major segments - product design and IT services, which contributed 77 and 23 per cent to its revenue, respectively. Under the product design segment, the company catered to multiple international clients in the US while the IT services business constituted only domestic clients. With intense price competition in the IT services segment, it was struggling to expand operations. So, it capitalised on its existing presence in the product design space by expanding its digital services across the entire product development value chain. I