Techknowgreen Solutions (TSL) is an environmental consulting company with 20+ years of experience headquartered in Pune, India. Key offerings are:
- Consulting (Regulatory/Sustainability) – 65% of FY23 revenues
- Environment Impact assessment: 5 sectors NABET approval. Life cycle assessment, carbon neutrality, ECBC (Energy conservation Building Code), traffic study, Hydrology study, Post Environmental Clearance, Central Control room
- ESG and climate change: Includes sustainability reporting, climatology
- Environmental compliance: Consent, Petroleum and Explosives Safety Organization, Fire factory, Central Ground Water Authority, EPR, Hazardous and Biomedical Waste
- Environmental Due Diligence: Includes different phases Site assessment, Chemical Analysis and Remediation
- DPR and designing includes STP, ETP, WTP, SWM, remediation, Air pollution control (Urban), HWM, EPR, renewables
- Training and sensitization
- Environmental crime investigation
- Technology (execution/Infotech): 35% of FY23 revenues
- Wastewater: STP, ETP, Zero liquid discharge (ZLD)
- Air: Deveoped products such as YUKa yantra for Indoor air and virtual chimney for ambient air purification
- Solid waste: Biogas, organic composter
- Remediation: Soil, contamination, hazardous waste
- Software: Developed Know your compliance app, Intellignet decision support system
- Applications: Developed ROCO footprint app, e-catalyst and mass plantation apps for Maharashtra Pollution control board
- IoT: Data communication interface for applications and software
- Research (Policy/Engineering):
- Climate change: Carbon capture, storage and utilization (CCVS), modelling Blue carbon, carbon sink, carbon and methane – neutrality and climate resilience
- Circular economy: Wastewater trading, circular economic wetland technology
- Pollution control technologies: Advanced oxidation process, Nature based solutions
- AI and robotics: Enbvironmental survelliance, compliance monitoring, Big data
- Policy research analysis: Cost and health benefit analysis, analysis of alternatives, policy screening
Positives and possibilities:
- TSL is in business which has lot of sectorial tailwinds due to emerging environmental challenges – climate change, pollution, etc. In India alone environmental consulting addressable market is 1.2 Bn $ and environmental technology market is 6.7 Bn $. Additionally, environmental technology market for GCC countries if 5.9 bn $.
- TSL has strong parentage of 20+ years in environmental consulting. Due to this, they have great existing customer relationships and execution capabilities. They have gained ‘first mover’ advantage in lot of environmental areas due to their promoters educational backgrounds (PhD) and subsequent work ex.
- Being a consulting business, human resources are critical. TSL has 70+ employees as on date and significant amount of those are working for TSL for more than 10 years. Also, there are lot of past employees who are keen to come back which indicates employee friendly operations (reviews on various online platforms also paint the same).
- TSL has growth strategy focused on:
- big ticket projects through cross selling, bidding for large projects, newer opportunities like data centers
- Upgrade to state of the art R&D through resource addition and infra addition, tie-ups with major IITs and internationally acclaimed universities, empanelments of environmental professors and experts on board
- Focus on annuity business through new annuity offerings, strengthen ESG division, Shared resource model, launch of environmental apps.
- Geographical expansion in GCC and US
- TSL’s KMP’s salaries are significantly lower; a rarity in microcap space. Also, there are insignificant related party transactions. Board as well as various committees have right representations.
- Business is asset light which is visible in terms of various metrics – OM, ROE, ROCE, etc.
- TSL has paid all its outstanding debts through IPO proceeds
- Inspite of being microcap there are hardly any negatives through online searches – frauds, missed project completions, etc.
- MD, Dr. Ajay Ojha, is very visible speaker at various conferences, conducting awareness sessions, awards. Seems a respected technocrat.
- TSL is focusing on customers who are cost conscious as that reduces competition. Also, govt. business is 50% as that reduces receivables risks.
Risks/Future steps to track:
- Competition in various areas are Big 4 consulting firms (specifically in ESG) who have muscle to win business. However, TSL’s offerings are more extensive. IITs also operate as a competition.
- Lot of business is with govt. (50%) and semi govt entities. Receivables need to be tracked closely.
- Plan to invest in R&D, people, infra, etc. Should not be through equity dilution.
- Need lot of certifications to operate. These prerequisites need to be managed well.
- Significant opportunity for scale up in India and abroad; partnerships they strike needs to be monitored for the same
- IPs in these businesses can be a gamechanger. For now it has 2 approved patents. Keep tab on new patent additions.
- Annuity business can be great for this business. Keep tab on annuity as well as consulting business share which are high margin businesses.
- Since TSL is recent IPO, there is not much in terms of financial analysis as well as forensics possible.
- For now CFO is more of a technocrat and auditor is not a very well known name. Need to keep tab on any changes of the same which would be good.
Disclosure: Invested. Please do your own due diligence