My two cents on a company I am invested in:
Qualitek Labs Limited:
https://www.screener.in/company/544091/
I attended the AGM and met the management.
Company has acquired a group company (ITC Labs) dealing in similar business. ITC is older and bigger in size but Qualitek’s capex will help them overtake ITC Labs.
Qualitek is mainly into automative testing (80%) and single digit revenues from water, minerals and defense sector. While ITC Labs is majorly into pharma, cosmetics and food testing.
Revenue FY 24
Qualitek > 29 cr
ITC > 32 cr
At AGM, chairman gave targets of 90 cr for FY 25 and 120 cr for FY 26.
While no backing was given as to how will they achieve the same but assuming the revenue remains same as previous year, it arrives at 61 cr roughly and they are expecting to book a revenue of 17 cr in FY 25 from a coal order from Quality Council of India in March, 2024.
At that pace 61+17 may lead to 78 cr, so at the least 70 cr may be expected in FY 25.
The tricky things here are:
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PAT Margins:
ITC Labs margins may improve as per management but on Qualitek Labs the same PAT is expected. I am anticipating a contraction initially as in new and expanded labs of Qualitek will take time to achieve sufficient operational efficiency. -
Revenue:
Company has posted 29 cr revenue in FY 24 and H1 FY 25 will see a consolidated figure which probably would be in and around 30-35 cr. Company may not provide comparatives for consolidated revenue.
Other Points:
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Capital Expenditure is under process in 2 labs of Qualitek and they are planning expansion of 2 labs in ITC Labs. So there is a good chance of revenue being achieved at 20-25% pace on consolidated basis.
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ITC Labs is facing a litigation issue. ITC Ltd has filed a case for the name of ITC Labs and defamation of 50 cr. This might lead to long legal battle but the order is on stay in Calcutta HC at the moment and company is allowed to use the name ITC Labs.