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subu76
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Joined: 25/Feb/2008
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   Posted: 15/Apr/2010 at 1:28pm |
Originally posted by eulav
Subbu--looks like a good find, and seems undervalued at quick study. Will try to dig deeper and report back on what I hear from Industry feedback.
Positives:
Sound Management and Board -Shriram group has good corporate standards
Top management and founders have been around for along time so understand the domain
Tied up with Oracle/SAP for Supply Chain solutions -typically enabling mobile applications/RFID which could be growth areas
Decent Balance sheet and financials, 2009 AR doesnt seem to show any negatives /red flags
Growth seems to be coming back after a slump
Worries
CEO has no ESOP/Stock holding ?
Tried to merge with Four Soft--then called it off after 6 months--management may be tempted to make acquisitions (which maybe EPS dilutive)
No geographical diversification--mostly US centric--tried Europe by the FourSoft merger, but failing that have not penetrated the EU market
Background reading(yet to read)the promises made and kept (or reasons not kept) are usually instructiuve
Take Solutions DHRP
www.sebi.gov.in/dp/takedraft.pdf
Old Report by SBI Caps
http://www.takesolutions.com/Reports_Filings/2007/Annual/SBICAPSecurities-TAKE-Solutions-InitiatingCoverage.pdf |
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subu76
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Posted: 15/Apr/2010 at 1:30pm |
Hi Eulav,
I've followed this company for about 2-3 years now and it always seemed to be a highly regarded company (atleast valuation wise)
Now the market perception has changed. 
On the FourSoft merger...that plan got dissolved due to last minute valuation issues (that is what i heard from the company)
These folks have done acquisitions in the past and have mentioned that they're planning to do more. I'm pretty sure they'll dilute equity. It'll be a real bummer if they dilute now...when their stock seems undervalued. This company seems to have trouble growing
Check out their low ROE and let me know if you have some theories.
Edited by subu76 - 15/Apr/2010 at 1:43pm
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subu76
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Joined: 25/Feb/2008
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Posted: 15/Apr/2010 at 1:35pm |
Originally posted by hit2710
Originally posted by subu76
we are certainly pleased to end FY 09 with INR 1,102 million of cashand cash equivalents. |
Quite confusing.
Coming to the business of the company, both its niches in scm and life sciences have good growth potential especially life sciences. And if and when order inflow improves, the scalability is there in their business. Dec Qtr seems to show some upswing in the company's business and next few quarters could be a good guide to the company's future prospects. |
Valuation
Sure we can expect the SCM business to atleast do better as purchase manages buy more while the economy recovers. Life Sciences businesses are generally stable. So EV of 4 time 2009 profit seems on the lower side.
Growth Potential
Not sure we really understand the dynamics involved. Take is not really a product company...it's more of a solution company.. Let's not forget that SCM and LifeSciences is also something that the software biggies (not to forget IBM etc) are also going after. They have been in this business for a much longer time than Take.
BTW..is this why Take has such a low ROE?
MD misquoting cash ad cash equivalent
What does it tell about a company if the MD does not know about the cash situation in the company and such glaring inconsistencies creep in into the annual report.
Edited by subu76 - 15/Apr/2010 at 1:36pm
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eulav
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Posted: 15/Apr/2010 at 3:19pm |
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Some of their SCM products are typically extensions of SAP or Oracle SCM functionality--sooner or later the biggies will plug the holes in their product offerings, squeezing TAKE out of that market. From what I found out, in the SCM space they sometimes compete and sometimes partner with Oracle/SAP. The products are ok, but not with any huge and sustainable differentiation.
Pharma space- even there products like Oracle/Siebel Clinical and niche vendors like Arisglobal do exist.
So the Investment thesis on the basis of purely niche play is not sustainable , it may be they are smaller and agile enough to build extensions around the core product that are more close to a customers need --most Oracle and SAP deployment sdo need fair amount of custom extensions t make them fit. This approach of extensions usually means a lot more engineering cost, and that could be the reason for lower margins for TAKE. They dont seem to report the new License and recurring AMC spearately for products, so hard to make out if they are gaining product traction or not. Anyway to get some data/insight around that--maybe during the next Investor call, or writing to the Investor relations people--but they might not divulge anything now till their annual results are declared.
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subu76
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Joined: 25/Feb/2008
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Posted: 15/Apr/2010 at 4:06pm |
Thanks for the greater insight.
I agree with you...nothing about this company makes it looks like a world beater...folks who don't understand software often think a company is a world beater by just reading company literature (e.g. Geodesic)
It is a hum drum company which just looks somewhat cheap valuation wise...
Let's not forget the company actuallygenerates free cash
I'll read the IPO document sometime (hopefully tonight) and post more about the bubbles blown by this company during it's initial listing...
Edited by subu76 - 15/Apr/2010 at 4:12pm
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raj261178
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Location: India
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Posted: 18/Apr/2010 at 8:58pm |
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Market cap/sales = 5.8 (336/58)
PE = 32, P/BV =1.5
How do we say it as cheap valuation wise.
DO we feel EPS will grow more than 100% every qtr from now on??
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hit2710
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Location: India
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Posted: 18/Apr/2010 at 11:08pm |
Originally posted by raj261178
Market cap/sales = 5.8 (336/58)
PE = 32, P/BV =1.5
How do we say it as cheap valuation wise.
DO we feel EPS will grow more than 100% every qtr from now on?? |
You need to look at the consolidated figures as mentioned in the initial post. Then the figures will be different.
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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.
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subu76
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Joined: 25/Feb/2008
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Posted: 19/Apr/2010 at 12:31pm |
As Hitesh clarified above...
Using consolidated figures.
Mkt Cap/sales = 1 (roughly)
PE = 10 (roughly using current year's figures)
= 6 (using 2009 figures)
I guess the bet of stock holders is that the company has more growth left.
BTW...the nore on bse site says that an entity called Passport India is selling.
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