TAAL Enterprise – cheap valueations

Notes from TAAL AGM 2024

• Growth has come from existing customers as well as new customer addition. Will continue to strike a balance. Intent has been to prioritise the growth of our capabilties and share with existing customers.
• Slowdown in growth rates attributable to sluggishness in the plant engineering business. See this turning around now.
• Business split currently at 50% Product Development & Engineering, 35% Plant Engineering, Rest from Construction Engineering. Split more or less same as last year.
• Customer count ~60+.
• Margin fluctuations: due to hiring in advance of employees being placed in projects, variations in onsite/offsite employees ratio. Confident of maintaining EBITDA margins in a band of 25-30%. More likely to be closer to 30%.
• Current employee count ~600. Manage this very carefully basis the demand that we see from our customers.
• No revenue guidance, setting internal targets and track them.
• This year, the softness in the growth has been because we’ve lost a couple of customers as they have been acquired. Identify this as a problem as TAAL primarily works with the middle tier of companies which are usually promoter driven and when the companies change hands, not in their control on continuity of the business.
• Not keen on defence space – prefer predictable revenue streams and businesses without payable concerns.
• Cash on books – deliberating utilizing of cash, yet to decide on it. Understand importance of improving return metrics and will take a call on this.
• Capabilities – new areas added – auto embedded.
• Capacities – looking to add more customers in existing domains or more capacities with existing customers.

While there has been no revenue guidance, do continue to see the employee count as a proxy to establish revenue growth and margins.

The slowdown/degrowth in employee addition trends are in line with the revenue trends and margin profile trends as the lower employee costs are getting absorbed over the same revenue base recently.

Disc: Tracking. Not invested.