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Investment Rationale:
Steady growth and improvement in productivity by FY12 are likely to reduce the gap in valuations
Margins of TAKE Solutions have witnessed traction over the past 6 quarters; top-line of the company has grown by 13% CQGR over the past 6 quarters whereas EBITDA margin has increased by 20% CQGR and PAT by 35% CQGR over the past 6 quarters. We expect the company to grow by 35% CAGR for the next three years considering revenues from WCI acquisition and traction seen in both Life Sciences and SCM vertical.
Well placed in Supply Chain Management and Life Sciences
About 25% of the employee base are domain expertise in life sciences and Supply chain management with established relationship and proven record of managing large accounts. This will help the company to initiate multiple pilot projects and also their proven expertise in developing, growing and managing large accounts will help in expanding the company’s current clientele base
Strong Revenue Visibility
Order book of the company has been increased by 26% Y-o-Y basis, the order book has increased to $57.2 mn in Q2 FY11 from $45.3 mn in Q2 FY10. Recent deals from global giants both in LS and SCM are currently driving the order book. The order book of the company has grown by 6% CQGR for the last 6 quarters. This gives the strong revenue visibility going ahead.
Impressive Client Base
TAKE serves to 8 out of top 10 global pharmaceutical companies. It has an impressive client base like Novartis, Pfizer, Johnson & Johnson, Transocean, Canon, Kodak, ITC, Pepsi and many more. Currently company has approximately 416 clients of which 137 clients are in Life Sciences segment and 279 clients from Supply chain management.
Valuation
Considering robust order book, niche player operating in niche segment and domain expertise, we advise investors to buy the stock at CMP of Rs. 29.7 for the target price of Rs.52. At CMP the stock is trading at price to earning ratio of 3.4x at its FY 12E EPS of Rs.8.6. Price to earning ratio of other product focused IT companies is quoting around 8-12x. However, TAKE Solutions is quoting at a steep discount of 30-40 percent to its peers, in spite of growth in Net Profit. Recently TAKE has acquired UK headquartered WCI consultancy group through its subsidiary which will help the company to do the cross selling of their clinical data management product as most of the clients of WCI is in Life Sciences segment. We have considered WCI revenue in our FY 12E revenue. We expect company to grow at a CAGR of 35% for the next three years on the back of revival of US economy and customers shift from technology based application to technology enabled solutions. The investors intending for long term would definitely yield handsome return.
Company Overview
TAKE Solutions is a leading international business technology company with products backed by the strong domain expertise in Life sciences and Supply chain management to provide cost-effective comprehensive solutions for businesses. Since its inception in 2000, TAKE has been serving marquee clients in the Life Sciences and SCM with its global headquarters in located Chennai, India and US. There are 14 companies in the world with the approval of CDISC (Clinical data interchange standards consortium) and TAKE is the only Indian company registered as a CDISC solution provider. The CDISC mission is to develop and support global, platform-independent data standards that enable information system interoperability to improve medical research and related areas of healthcare. Today TAKE Solutions represented by over 900+ employees serving to more than 400 marquee clients globally.
Investment Thesis
Strong Revenue Visibility
Order book of the company has been increased by 26% Y-o-Y basis, the order book has increased to $57.2 mn in Q2 FY11 from $45.3 mn in Q2 FY10. Recent deals from global giants both in LS and SCM are currently driving the order book. The order book of the company has grown by 6% CQGR for the last 6 quarters. This gives the strong revenue visibility going ahead. We expect this growth momentum to continue on the back of recent acquisition of WCI and revival in US economy.
Order book of SCM has increased by 28% in last 6 quarters while the order book of Life Sciences has increased by 53.5%. This increased in Life Sciences order book is primarily due to win deals from global giants and we expect this growth momentum to continue going ahead.
Steady growth and improvement in productivity by FY12 are likely to reduce the gap in valuations
Margins of TAKE Solutions have witnessed traction over the past 6 quarters; top-line of the company has grown by 13% CQGR over the past 6 quarters whereas EBITDA margin has increased by 20% CQGR and PAT by 35% CQGR over the past 6 quarters. We expect the company to grow by 35% CAGR for the next three years considering revenues from WCI acquisition and traction seen in both Life Sciences and SCM vertical. Steady growth and improvement in productivity by FY12 will led to EPS of Rs. 8.6 in FY12E
Strategic Acquisition of WCI
Recently TAKE has acquired UK headquartered WCI consultancy group through its subsidiary. WCI has the robust professional relationships across Europe and US. This will help the company to enter into European market. WCI founded pvnet and pvconnect, which is the industry’s primary forum for patient safety. WCI work with a wide range of pharmaceutical, biotechnology, consumer health, medical device, and dietary supplement organizations, this clientele base of WCI and strong portfolio of TAKE solutions will help to gain traction with global pharmaceutical companies for improving productivity. This acquisition will also help the company to do the cross selling of their clinical data management product as most of the clients of WCI is in Life Sciences segment
Impressive Client Base
TAKE serves to 8 out of top 10 global pharmaceutical companies. It has an impressive client base like Novartis, Pfizer, Johnson & Johnson, Transocean, Canon, Kodak, ITC, Pepsi and many more. Currently company has approximately 416 clients of which 137 clients are in Life Sciences segment and 279 clients from Supply chain management. Over the last two years, the company has added more than 110 new clients. TAKE’s focus is not only increase the number of clients but also increasing the business from existing clients.
Well placed in Supply Chain Management and Life Sciences
About 25% of the employee base are domain expertise in life sciences and Supply chain management with established relationship and proven record of managing large accounts. This will help the company to initiate multiple pilot projects and also their proven expertise in developing, growing and managing large accounts will help in expanding the company’s current clientele base
As compared to domestic peers TAKE Solutions is looking attractive at CMP of Rs.29.7. Price to earning ratio of other product focused IT companies is quoting around 8-12x. However, TAKE Solutions is quoting at a steep discount of 30-40 percent to its peers, in spite of growth in net profit. As on 30th September 2010 TAKE Solutions has Cash and Cash equivalent of Rs. 788 mn. We expect company to grow at a CAGR of 35% for the next three years which is highest among its peer group.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Investment Rationale:
Steady growth and improvement in productivity by FY12 are likely to reduce the gap in valuations
Margins of TAKE Solutions have witnessed traction over the past 6 quarters; top-line of the company has grown by 13% CQGR over the past 6 quarters whereas EBITDA margin has increased by 20% CQGR and PAT by 35% CQGR over the past 6 quarters. We expect the company to grow by 35% CAGR for the next three years considering revenues from WCI acquisition and traction seen in both Life Sciences and SCM vertical.
Well placed in Supply Chain Management and Life Sciences
About 25% of the employee base are domain expertise in life sciences and Supply chain management with established relationship and proven record of managing large accounts. This will help the company to initiate multiple pilot projects and also their proven expertise in developing, growing and managing large accounts will help in expanding the company’s current clientele base
Strong Revenue Visibility
Order book of the company has been increased by 26% Y-o-Y basis, the order book has increased to $57.2 mn in Q2 FY11 from $45.3 mn in Q2 FY10. Recent deals from global giants both in LS and SCM are currently driving the order book. The order book of the company has grown by 6% CQGR for the last 6 quarters. This gives the strong revenue visibility going ahead.
Impressive Client Base
TAKE serves to 8 out of top 10 global pharmaceutical companies. It has an impressive client base like Novartis, Pfizer, Johnson & Johnson, Transocean, Canon, Kodak, ITC, Pepsi and many more. Currently company has approximately 416 clients of which 137 clients are in Life Sciences segment and 279 clients from Supply chain management.
Valuation
Considering robust order book, niche player operating in niche segment and domain expertise, we advise investors to buy the stock at CMP of Rs. 29.7 for the target price of Rs.52. At CMP the stock is trading at price to earning ratio of 3.4x at its FY 12E EPS of Rs.8.6. Price to earning ratio of other product focused IT companies is quoting around 8-12x. However, TAKE Solutions is quoting at a steep discount of 30-40 percent to its peers, in spite of growth in Net Profit. Recently TAKE has acquired UK headquartered WCI consultancy group through its subsidiary which will help the company to do the cross selling of their clinical data management product as most of the clients of WCI is in Life Sciences segment. We have considered WCI revenue in our FY 12E revenue. We expect company to grow at a CAGR of 35% for the next three years on the back of revival of US economy and customers shift from technology based application to technology enabled solutions. The investors intending for long term would definitely yield handsome return.
Company Overview
TAKE Solutions is a leading international business technology company with products backed by the strong domain expertise in Life sciences and Supply chain management to provide cost-effective comprehensive solutions for businesses. Since its inception in 2000, TAKE has been serving marquee clients in the Life Sciences and SCM with its global headquarters in located Chennai, India and US. There are 14 companies in the world with the approval of CDISC (Clinical data interchange standards consortium) and TAKE is the only Indian company registered as a CDISC solution provider. The CDISC mission is to develop and support global, platform-independent data standards that enable information system interoperability to improve medical research and related areas of healthcare. Today TAKE Solutions represented by over 900+ employees serving to more than 400 marquee clients globally.
Investment Thesis
Strong Revenue Visibility
Order book of the company has been increased by 26% Y-o-Y basis, the order book has increased to $57.2 mn in Q2 FY11 from $45.3 mn in Q2 FY10. Recent deals from global giants both in LS and SCM are currently driving the order book. The order book of the company has grown by 6% CQGR for the last 6 quarters. This gives the strong revenue visibility going ahead. We expect this growth momentum to continue on the back of recent acquisition of WCI and revival in US economy.
Order book of SCM has increased by 28% in last 6 quarters while the order book of Life Sciences has increased by 53.5%. This increased in Life Sciences order book is primarily due to win deals from global giants and we expect this growth momentum to continue going ahead.
Steady growth and improvement in productivity by FY12 are likely to reduce the gap in valuations
Margins of TAKE Solutions have witnessed traction over the past 6 quarters; top-line of the company has grown by 13% CQGR over the past 6 quarters whereas EBITDA margin has increased by 20% CQGR and PAT by 35% CQGR over the past 6 quarters. We expect the company to grow by 35% CAGR for the next three years considering revenues from WCI acquisition and traction seen in both Life Sciences and SCM vertical. Steady growth and improvement in productivity by FY12 will led to EPS of Rs. 8.6 in FY12E
Strategic Acquisition of WCI
Recently TAKE has acquired UK headquartered WCI consultancy group through its subsidiary. WCI has the robust professional relationships across Europe and US. This will help the company to enter into European market. WCI founded pvnet and pvconnect, which is the industry’s primary forum for patient safety. WCI work with a wide range of pharmaceutical, biotechnology, consumer health, medical device, and dietary supplement organizations, this clientele base of WCI and strong portfolio of TAKE solutions will help to gain traction with global pharmaceutical companies for improving productivity. This acquisition will also help the company to do the cross selling of their clinical data management product as most of the clients of WCI is in Life Sciences segment
Impressive Client Base
TAKE serves to 8 out of top 10 global pharmaceutical companies. It has an impressive client base like Novartis, Pfizer, Johnson & Johnson, Transocean, Canon, Kodak, ITC, Pepsi and many more. Currently company has approximately 416 clients of which 137 clients are in Life Sciences segment and 279 clients from Supply chain management. Over the last two years, the company has added more than 110 new clients. TAKE’s focus is not only increase the number of clients but also increasing the business from existing clients.
Well placed in Supply Chain Management and Life Sciences
About 25% of the employee base are domain expertise in life sciences and Supply chain management with established relationship and proven record of managing large accounts. This will help the company to initiate multiple pilot projects and also their proven expertise in developing, growing and managing large accounts will help in expanding the company’s current clientele base
As compared to domestic peers TAKE Solutions is looking attractive at CMP of Rs.29.7. Price to earning ratio of other product focused IT companies is quoting around 8-12x. However, TAKE Solutions is quoting at a steep discount of 30-40 percent to its peers, in spite of growth in net profit. As on 30th September 2010 TAKE Solutions has Cash and Cash equivalent of Rs. 788 mn. We expect company to grow at a CAGR of 35% for the next three years which is highest among its peer group.
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