TAKE SOLUTIONS LTD- will you take it?

Stock Opportunities
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Few additional pointers from the call.

Looking at customers as partners for growth. Non-linear triggers will be converting IPs into technology solutions

Use big data to improve Real World Evidence for clinical R & D to capture observations and inputs. They want create technology solutions that connect the dots for end to end clinical use cases
Will be rolling out new technology solutions based on their patents in FY 17

PharmaReady has around 100 customers, receiving good feedback and rolling out additional features based on it. In essence, competition for small and mid-sized is diffused

PharmaReady - Generates revenue in two ways

Licensing + Annual Maintenance Contract model
Service Delivery - Number of submissions, milestone based deliverables
They are investing in the right area and focussing on margin growth organically, but inorganic growth can happen in the form of non-linear triggers. Investments (cost) made for non-linear growth will be part of this year, will make money after 2 qtrs.

Middleeast growth will be flattish for SCM if not negative and there is no visibility into order book at this point of time

Reasons for Debt Expansion:
7% is because of forex fluctuation in the year
Loan from US & Singapore @ 5%
Promoter Load @ 7%
Ecron had debt on its books, carrying it on their books now

Loan to others: 8.5 Cr is long term loan and 172 Cr is short term (adv. tax, service tax, adv. to suppliers, pending accruals). This is not to earn interest

Not planning to write off goodwill, it will be on the books for now. No clear answer on number of years for amortization. Would like to hold it as an intangile asset for long term

Carrying 130 crores cash, will not use it to repay debt. Will use other lines of capital for re-paying debt

Grooming a membership community in life sciences and attending more global conferences

Disc: Invested recently

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One interesting thing was that they might update their medium term sales guidance post Q1 results. Seems they will decide which service line within pharma R&D sector to start/develop by then and will update revenue potential. They would remain with the current forecast of 20-25% organic growth while in the opening remarks they said they could be few times in the next few yrs despite divestment of SCM biz.

FCF generation was close to 50cr+ for the year and product development costs largely equal depreciation and should remain so going forward.

Disc: Invested and have been buying regularly

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Post results and management guidance has anyone managed to estimate Fair Value?

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Technicals…Demand supply chart…
On weekly EOW CLOSING BASIS…
SUPPORT…138.10
RESISTANCE 191…
ON DAILY CHARTS… SUPPORT AND RESISTANCES…
140/…153/…167/…195/…
AT PRESENT WE ARE AT 155/…

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Ex employees (of different cadres of TAKE SOLUTIONS LIMITED) REVIEWS…
THEIR PRO’S. AND. CON’S

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Please find the reviewed transcript of the the call i had with Take IR and one of the Executive Directors on May 13th.
https://drive.google.com/file/d/0BywmtQGBFr-jUFF4WjgtLWFzNXM/view?usp=sharing

Would like to acknowledge @rohitbalakrish_ and @ravimba31 for their additional inputs.
Also appreciate the time taken by @ankitgupta and @hitesh2710 for doing the review.

Disclosures:
Holding for more than 6 months and makes up 7% of portfolio.
No transactions in the last 30 days prior to the call and none since.
Please assume that i am positively biased and do your own due diligence.
I make no recommendation to either buy or sell.

PS:
This sort of thing was a first time for me.
It was a good learning experience. Hope to be better prepared next time.

Regards.

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@crazymama: Appreciate your thorough work. I have a few more open questions & some concerns around their disclosures. Hopefully we will get those answered in the subsequent interactions(through AGM, etc) from them.

Thanks,
Ravi S
Disc: Significant portion of PF. No recent trades in the past few months.

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Awesome work Vishnu :slight_smile:

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@crazymama Thanks for your hard work and sharing it.

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Update report from Karvy - https://www.karvyonline.com/viewdocument.aspx?DocumentID=12936

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Thanks for the positive feedback.

In fact @vivekbothra blog post on capital allocation and @rajpanda’s query on twitter were initial triggers for me to dig further into the company.

Happy to contribute and continue to learn from this excellent community.

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Veeva Systems posted good quarterly numbers today.

Revenue: +33% YOY

Net profit: +23% YOY (non-GAAP)

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Expect FY17 core organic revenues growing 20-22%:Take Solutions

Read more at: http://www.moneycontrol.com/news/results-boardroom/expect-fy17-core-organic-revenues-growing-2022take-solutions_6760421.html?utm_source=ref_article

Disc : Invested

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ET Now: What about Take Solutions ??

Jagannadham Thunuguntla: Take Solutions is a mid-cap IT name and the company is positioned well in the life sciences vertical. The company is focussing on the life sciences vertical with a strong growth of about 58 per cent year-on-year and the company also has recently acquired Ecron Acunova which is expected to help the company’s EBITDA margins grow further which is expected to frow from 10 per cent at present to to 12-13 per cent which should help the overall margin expansion of the group. And even with this new acquisition, overall consolidated margins at around 20-21 per cent which is quite healthy. So on Take Solutions, we have a positive view with a target price of above Rs 185.

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Take solutions aims to triple their revenues in the next 4-5 years.


The key points to me were:

  • Entered into 3 new domains - Stem cell therapy, Biosimilars, Diagnostic imaging and non-interventional studies. I remember in one of the interviews, Mr. Srinivasan mentioned there are about 26 verticals in life sciences and they are into a dozen of them.

  • Expect 20-23% organic growth.

Disclosure:Invested

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4-5 yrs not 3-4 yrs. that makes a good difference :slight_smile:

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That was a typo. thanks for pointing out :slight_smile:

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Link to the Interview video.

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latest research report on take solutions by hdfc securities

Take Solutions - HDFC Securities

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This report rightly points out some minor but known time bombs amid bullishness all around.

a) Goodwill of 255cr need to be impaired/amortised will hit reported PAT at some point of time. Need to watchout when they exit SCM biz. Not sure what % of goodwill is associated with SCM or LIfe sciences.

b) Rising debt in the short term. 300cr + as they acquire more life sciences businesses.

c) Product development costs to remain high leading to higher capitalisation. Q4 concall suggested that new costs and amortisation has equaled in FY16.

Disc: Invested

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