Concall Recording:

Important points from the ConCall:

1. Q1 is seasonally weak quarter/ One client business portion (not fully) let go because of pricing pressure from competition-which is unsustainable, same client other area business (WhatsApp??) own/retained - This has around 3% margin impact, other one offs are - Infra upgrade -1% impact + currency fluctuation - 1% impact.
2. No guidance but confident that Margins to get back to 20% in the next two quarters Q2/Q3.
3. Most important point in the call - around 45 billion/month Cpaas transactions happening in India, including Government, Tanla only handling 2 billion/month, so Hugh market available for growth in India Itself. Imagine global opportunity.
4. VI - wisely integration mostly done, another couple of weeks to complete. TrueCaller started also going smoothly. Both VI & TrueCaller own based on better product not on pricing, wisely is costly, but everything on one platform.
5. Platform Wisely revenue will be step by step, slow and steadily it will grow in the next 4 to 6 quarters, very happy and confident how its progressing. Tanla is in no hurry.

Please consider some points I might have misunderstood or missed add if any.

Comments: Market reaction is obviously based on their past, surely over reacting, Industry itself growing by 25-30%, massive disruption, unless management goof up, massive opportunity lies a head, with nearly 1000 cr cash on Balance sheet, EV value @ Billion dollar now, let’s c how route mobile results will be, bullish on Cpaas industry.

HDFC sec q1 update:

Disclosure: Invested.

Faze Three transactions (exports) from Mumbai port (data upto 3 July 2022). Looks like Q2 will be flattish to slight degrowth.

All thanks to @Chandragupta for gently nudging into asking difficult questions!

Apart from their core business, their entire communciation is something I would want to see last in any company. On one hand there is slower but more holistic growth that they could have targeted with their MCC and CCS market. There are exciting opportunities in the food industry for which they have communicated in the past and that it will grow faster than other verticals. But looks like they’re getting trapped by the short term or they are looking at some competition headwinds that we fail to realise.

The 1% royalty bit is something which makes the company a no go if they don’t back track and rectify it. Because of a lack of focus, the capital allocation can go for a toss. I wouldn’t want to buy an ethanol business via Sigachi. Nor would I want to buy a generic marketing one (can suck working capital, increase opex and takes a different kind of accumen to succeed). Topline isn’t that hard to increase per se. But will be difficult to do along with better or stable RoCE’s. That’s what their responsibility is but the soft signs are not very good.

Recent results

Hope it helps

dr.vikas

Thanks for sharing the order. Nearly 2 years since this small, straightforward merger started. It’s worth reading the order to understand how death by compliance happens via Indian regulators / courts. When an inefficient system meets an inefficient management, shareholders are bound to get screwed.