ValuePickr Forum

TAAL Enterprise - cheap valueations

This is my first post on valuepickr so am pretty excited and pretty sure that i will be making mistakes so pardon me for that and i will try to make amends as soon as possible.
The company we will be talking about is TAAL ENTERPRISE (BSE CODE:539956)
Background-
• It was a merged entity with taneja aerospace which went for a demerger during the mid of 2015.
• They were the first in INDIA to manufacture light transport aircraft in 1992 and then set up an academy for flying in 1994. (taneja aerospace)
• TAAL TECH is a niche engineering & technology solutions provider.
Mcap – 73 crs. (approx) Price – 235

The company is mainly into engineering design service. It is also engaged into Air charter services which due to licence issues is being operated by taneja aerospace and avaiation(TAAL).

(As per Clause 9.2 of the Scheme of Arrangement as approved I sanctioned by the Hon’ble Madras High Court on October I, 2014, Taneja Aerospace and Aviation Limited (TAAL) will carry on the business and activities relating to the demerged charter business for and on account of and in trust for T AAL Enterprises Limited (TEL) until the time TEL obtains the requisite statutory licences required for carrying on the demerged charter business. The said licences are yet to be obtained and accordingly the demerged charter business has continued to be operated by T AAL in trust for and on behalf of TEL including banking transactions, statutory compliances and all other commercial activities. Accordingly, the accounting entries pertaining to the demerged charter business are accounted in the books of account of the Company)

The air charter service has seen a revenue growth of around 23% from 7.14 crs to 9.28 crs and from a loss of around 3.37 crs it has posted a profit of around 1 crs. (which is mainly because of an other income of 3 crs.).leaving the other income if we calculate this segment would have reported a net loss of around 2 odd crs. Overall this segment is an hang on the company’s financials and the company would be better off striping this segment off.

There are multiple triggers for this business like there are far off locations with poor connectivity and projects in backward regions but the company has not been able to capitalise on it because there are very low entry barriers in the industry. As a result there are a few international players who own mixed fleet of aircrafts which are economical for short routes. In short they have not been able to make a mark in the industry as such.

The main business which caught my eye was the engineering design service which has been growing steadily for the past few years and this time reported a 18% increase in total revenue and a profit jump of 32%(The reason i say it is 32% is bcoz there ws a total other income of 8 crs of which 3 crs was for air charter division so the remaining 5 crs must have come from the EDS business so the profit from this segment comes to around 15 crs.)

TTIPL is a niche Engineering and Technology solutions provider serving global corporations in their pursuit for faster innovation and technological excellence. TTIPL provides Product Engineering Services, R&D Services and IT Services customized to the specific needs of every individual customer.
Over a period of three years i.e the company has clocked a CAGR on sales at 27.25% and PBT of 159%. The company is growing steadily and should continue to do so. Do not have too much info about this company but in hindsight the company seems to be performing well.
From a profit of 30.78 lakh in 2014-15 the company has clocked a PBT of 15.87 crs.(excluding other income).

Key risks
• Dividend payout is good but too much of dividend payout is a problem first they approved a rs 25 dividend and now they are recommending another 50 rs.
• The air charter business is a big overhang on their financials. Maybe it can change when it comes under their supervision but that remains a question to be seen.
• Their is not much info about their engineering division available and there is not much info about it in their previous annual reports as well. Waiting for this years annual report to get some insights.
Disclosure – am invested from 220 levels with around 3% of my folio and this post is just for informative purpose. Please consult your financial advisor before investing.

1 Like

https://www.taaltech.com/
check website

03F962E0_400A_42B8_92AA_43A8EC4BCB9A_122037.pdf (52.5 KB)

AGM on 28th. May declare interim dividend of Rs.25

Yes the website is there but i am not really a tech guy so for me understanding the things they are into is a bit difficult but it does mention a wide variety of industries it caters to.

declared rs.10 dividend

Any one attended AGM ?

taal tech subsidi .declares dividend to parents and taal ent declared 10 rs dividend …

Did the subsidiary declare the same amount of dividend as declared by taal ent.?

no but let me check it

Any idea about the business of TAAL Tech? I found there are other subsidiaries like TAAL TECH USA, Germany. What is their growth prospect?

https://www.taaltech.com/
Please go thru this link. U will get fair idea

Could anybody please explain the the growth of TAAL Tech

It is very difficult to say what exactly taal tech is into as there is very little or no info about it in the net as well as the annual report but i have seen that they are hiring a lot of people who are ready to travel outside india so i am guessing that they might show decent growth in the near future as well.

Disc: am invested from lower levels and i might be wrong and biased towards the company pls do ur own research before investing

1 Like

They are in eng and infra consultancy and I was planning to attend their AGM but couldn’t attend.
May try to meet them. Their other offices are in Pune. If some one intetrestec in Mumbai then we can go and meet them. As company looks very interesting with very good earning and low equity base.

Disc. Invested and interested.

1 Like

. Yes true. But plannng to meet them. At least if we can find their views and vision. Biggest problem is presently all the profit is in subsidiary. And consolidated result comes at the year end so we are fighting blind folded till then

If we analyse annual report 18,17 and 16, it will be seen that employee benefit expenses (Crore) then ||2018|2017|2016|
| — | — | — | — |
|Consolidate(A)|60.7|52.6|39.2|
|Standalone (B)|0.53|1.3|.93|
|Taal Tech=A-B|60.17|51.3|38.27|
The increase in Employee benefit says the business is growing. If They are still recruiting a lot then we may conclude that the business may grow in future.

Yes you have pointed out the biggest scare in the company. We will never know what is going on throughout the year.

This situation continues for only one more quarter. The company has to declare consolidated results for full year. From 2019-20 all the companies should declare consolidated quarterly results. The suspense regarding working of the subsidiaries won’t be there. From the indications available, the subsidiary Taaltech should be doing very well as they paid interim dividend of Rs.50 Per share for 2018-19.
Disclosure: Forms 38% of my PF.

It’s with all the company who has substantial business in subsidiary. Take eg of harita…

if anyone has met the management would be very good if he/she can share it over here…would help us understand better

1 Like