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Hinduja Global Solutions Ltd

Cmp- 660 Rs

Hinduja Global Solutions Ltd is one of the largest transnational business conglomerates in the world. The company provides information technology enabled services in India and internationally. They offer professional IT staffing, claims processing, call center, software development, and consulting services. They also provide customer relationship management programs integrating inbound contact centre, Internet, database marketing, market research, closed loop lead management, and fulfillment services.

The company offers services in verticals like automotive, banking and financial services, consumer electronics, energy and utilities, government/public sector, healthcare and insurance, household and consumer products, logistics and transportation, media and entertainment, pharmaceuticals and life sciences, technology and telecommunications. 

The company has 20 delivery centres across US, Canada, Mauritius, Philippines and India, all working towards creating leaders out of their clients. The key intangible, TeamHGS – made up of 42,000+ employees globally which plays a big role in intelligently integrating human knowledge and expertise with technology innovation, led by AI, social care, analytics and automation, to drive a high-performance experience, and in turn organizational success for HGS.

HGS at a Glance

52% of its revenues comes from Healthcare verticals

237 Crore BPM Clients

656 HRO and F&A clients

17500+ healthcare professionals supporting critical interactions from quotation to care management.

13680+ employees went through HGS’s ready now training program across India,Philippines , North America and Jamaica in FY 2019.

More than 42190 employees globally.

3900+ HRO/Payroll processing advisors

1100+ Nurses employed

900+ digital Experts.

Operating since 1973 with 73 delivery centres across 7 countries and revenues of more than $680 million.

Company Information

HTMT Global Solutions Ltd was incorporated in 1995 as Tele Video Communications India Pvt. Ltd with the objective of carrying out the activities relating to media business. The company was converted into a public company in 2006. 

During the year 2006-07, the company’s name was changed form Tele Video Communication India Ltd to HTMT Technologies Ltd and then to HTMT Global Solutions Ltd. 

In November 2006, the company acquired Affina in Illinois State which has multiple centres in Peoria, Waterloo, St Louis, El Paso and Montreal, has significantly added to the Company’s delivery capabilities and global footprint. 

The Information Technology and Information Technology Enabled Services, undertaking of Hinduja TMT Ltd was demerged and transferred to the company on a going concern basis with the appointed date, October 1, 2006 and thus Source1 HTMT Inc, USA, Affina LLC, USA, HTMT Europe Ltd, UK, Hinduja TMT France, Customer Contact Center Inc, Philippines, CCubed (Antilles) NV, C-Cubed BV, Pacific Horizon Ltd became the subsidiary company. 

The equity shares of the company were listed on the BSE and NSE in 2007. HTMT Global solutions Ltd was ranked among top 15 ITES-BPO exporters for the financial year 2006-07 by NASSCOM. The company is ranked No 2 in the Best performing Call Center Firms worldwide in the Global Services 100 survey conducted by Neo IT & Global Services Magazine in January 2008. Also, the company has been the winner of ICT Innovation Award 2008. 

In June 2008, the company expanded its footprint to Chennai by inaugurating its second delivery centre at Nandambakkam. With this, the company has 11 delivery centres across India in Bangalore, Chennai, Durgapur, Hyderabad, Mumbai and Mysore.

In FY 2019, HGS identified two areas as fast-growing and critical to participate in — population health management (PHM) and digital services. The company acquired two companies: CMH Services Subsidiary LLC, USA — operating under the trade name of AxisPoint Health (100%) and Element Solutions LLC, USA (57% stake). 

  • The services offered by HGS have traditionally been in administrative segment of healthcare sector. The acquisition of AxisPoint Health has enabled HGS to offer services in the medical cost management segment. This is about four times larger than the administrative segment. The acquisition has given HGS access to AxisPoint’s powerful analytics capabilities. This includes predictive intelligence and advanced care management models that help organizations accurately identify the health needs of members to improve outcomes while reducing medical costs. While there have been some initial challenges to profitability at AxisPoint, the strategic rationale for this remains strong and we are confident of turning things around soon.
  • The acquisition of Element Solutions has helped HGS foray into the area of digital marketing and cloud services. While HGS has traditionally been in customer care, Element helps us to support clients in the area of customer acquisition too… hence covering the full spectrum of customer journey.
Source-: CompanY Annual Report

With the client base of several fortune 1000 clients HGS looks very confident of the future growth paths.

Financials

HGS posted 93.7 percent jump in consolidated net profit at Rs 71.1 crore for December quarter 2019

The company saw its revenue from operations grow 5 percent to Rs 1,335.7 crore in the quarter under review as against Rs 1,272.6 crore in the third quarter of 2018-19.

HGS posted a strong revenue growth in Q3 FY2020

The company is about to release it financials for the year ending 2019-2020 in the coming week.

  • The debt of the company has been stable over a period of 5 years.
  • Although higher debt levels do remain a concern over the longer period.
  • HGS has a book value of 792 rs .
  • The company also had cash and equivalents of more than Rs 300 cr at the end of last year 
  • HGS has stable operating margins of about 10% over past several Years.
  • The compounded profit growth rate of the company over the period of 3 year stands at 21% .
  • The compounded sales growth rate of the company over the period of 3 and 5 year stands at 14%.
  • Company has reserves and surplus of about 1200 crore Rs.

Key Aspects-:

In the statement released by the HGS management said that , the Company has been successful in enabling and facilitating most of its employees to work from home to continue servicing clients. Hence, COVID-19 pandemic has had a muted impact on the operations of HGS so far. 

The Company has managed to secure the consent of majority of its clients to service them through work from home model by Company’s employees

Further it added that The Company does not have any plan to raise capital by way of debt or equity during the period. Currently, the Company has a comfortable liquidity position to service all its obligations. During lock-down, the Company seamlessly procured requisite capital assets/ IT infrastructure to service its clients and other stakeholders. There is no material impact on internal financial reports and control. 

Thus the Company is well positioned to fulfil its obligations on the existing contracts/ agreements, hence does not foresee any significant impact on the business. 

Conclusion-: Hgs is currently trading at the PE of about 5 while that of industry is 9. The company has a book value of about 800rs which is significantly higher than the current market price of the stock. Although the debt is more than 600cr but overall debt to equity ratio of the company is very low , about 0.28. Thus given its size and significant strength in the BPO sector HGS is worth exploring for long term.

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