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Company Background

Take Solutions Ltd. (TSL) is a leading international business technology company, established in 2000. TSL, together with its subsidiaries is a globally recognised services provider, providing a range of domain knowledge, technology-based solutions and services with distinct expertise across Life Sciences and select niches in Supply Chain Management. TSL operates through three segments: Software Services & Products, E-Business Solutions and Others which include information technology (IT) infra and support services and clinical operations. In the fast-growing Life Sciences space, TSL offers clients a unique combination of full-service Clinical, Regulatory and Safety services backed by unique technology expertise. In Supply Chain Management, TSL focuses on high-margin niches in engineering services, and supply chain collaboration.

Investment Rationale

l TSL is headquartered in Chennai, India with a global footprint spanning across North America, Europe and Asia pacific regions. The company’s US headquarters are located in Princeton, New Jersey. It is represented by 1500+ professionals across 17 offices in 7 countries.

l TSL has consolidated its life sciences operations and brings together the capabilities of a full-service CRO (Contract Research Organisation), a technology-led Life Sciences services provider, and expertise in analytics and data sciences under a new brand name Navitas Life Sciences.

l It develops and implements consulting, technology, and functional services across the spectrum of clinical, regulatory, and safety for biopharmaceutical companies and generics manufacturers. The company also offers functional services and software solutions related to enterprise mobility, material tracking, value chain collaboration, business services sourcing, trade management, and engineering design for the technology, consumer packaged goods, oil and gas, and automotive sectors.

l For the period of FY13-18, its topline and bottom-line both grew at a CAGR of ~13%. In Q3FY19 & 9MFY19 TSL reported a growth of 28% & 33% in consolidated net sales, YoY. Though the Q3FY19 net profit declined but for 9MFY19, it increased by 31% to Rs. 149 crore, YoY.

l Recently, TSL acquired KAI Research, a clinical research organisation and health research company in the life sciences industry, for USD27 million which will help TSL acquire Phase II, III capabilities in North America adding to its current service offerings in Europe and Asia.

l It also acquired DataCeutics to augment its operations at about USD 45 million. It will provide Clinical Data Management services to the pharmaceutical industry. It will strengthen TSL’s domain strength in data sciences specific to life sciences.

Recommendation– The immense growth in pharmaceutical and biotech R&D, worldwide would benefit companies like TSL. The future prospects of the company looks bright due to the opportunities created by the consolidation in mid-size life sciences space, strategic inorganic growth through M&A, strong order book position, technology-driven approach, increase in its capacity as well as capabilities, portfolio of products backed by a strong domain expertise to provide cost-effective comprehensive solutions for businesses and positive margin outlook. At the CMP of Rs. 129.95, the stock trades at ~8 times FY20 EPS of Rs. 15.40. Hence, we recommend a BUY on the stock with a Target Price of Rs. 154, appreciation of ~19% from the current level with the medium to long term investment horizon.