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hw_twRegistered Boarder
The promoter’s pledged shares portion seems to have reduced to 14.99% from around 18%…is this because of bonus shares
2+hw_twRegistered BoarderYou can listen to BCG’s Q1-FY22 earnings conference call over here
hw_twRegistered BoarderLooks like BCG has not issued a Press Release about the guidance
numbers…I couldn’t find any news coverage regarding thisIt would be good if they release it especially when they are talking about such a stellar growth which beats all analyst expectations
The exchange notification will be viewed only by the existing investors, but a PR would put BCG under the radar of all big investors
hw_twRegistered BoarderMy view on the guidance for next quarters and the impact of it
– It is a welcome move and this would totally change the way the existing and new investors look at the future of the company
– If the numbers are any close to the projections for this quarter, it would give a lot of credibility to this company and this should be attracting large investors / MFs
– The growth is higher than general adtech industry growth and also higher than other listed companies like Affle. This should command a higher PE
Coming on to the expectations of meeting these numbers, I feel he would achieve it and some reasons on why he would be achieving it
– He has shared both topline and bottomline numbers. This shows they have lot of clarity on these numbers
– The numbers are shared based on the run rate he has seen in last two months.
– This is the first time SKR has given guidance and I don’t think he would have given such a big growth projections unless and until they are solidly backed by some large long term contracts signed across the board.
– SKR and his team is well aware of the cash constraints they have and what amount of media they have to buy in advance to achieve these kind of numbers. Without this math they wouldn’t have come forward with these numbers
– Also we should note that when a company gives a guidance all their internal team will be working towards these targets and there will be target based incentives for the team
Overall, in my head there is no second thought about what percentage he would achieve it atleast for this quarter.
He might revise the estimations for next quarter or so but this quarter they should be achieving it 100% for sure.
hw_twRegistered BoarderThanks SKR for sharing the guidance for the rest of the year. It was a pleasant positive surprise…:-)
Just when everyone thought 30% itself is difficult to achieve 90% year on year organic growth is too much.
I guess it would take a lot of time for your critics to digest this ..:-)
hw_twRegistered BoarderFrom whatever I see, most of the digital marketing companies are smaller in size with around 50 to 200 employees count… don’t see much of the companies having employee count of 1000 and above
If this deal goes through, I guess Brightcom will be one of the top 5 DM companies based out of India and no. 1 in listed space
Please note that I am referring to this size only in the context of DM segment excluding the Digital Ads and Adtech business
hw_twRegistered BoarderMy views on the “Growth” aspect
We saw a glimpse of Growth in Q4-FY21. The commentary from SKR mentioning that there were some operational efficiencies combined with sales gave an assurance that it would sustain in coming quarters, but the same was not visible in Q1-FY22
We don’t know whether it is an one-off event or if SKR was projecting numbers considering acquisitions too.
Note that apart from Covid uncertainties there was a war situation in Israel and not sure if there was a impact because of this. Hopefully we will get some clear answer from the Tuesday’s call.
Leaving the organic growth aside, I am more bullish on the in-organic growth aspect.
We all know that adtech is one of the industry which is poised to grow big with increased no. of digital devices, their adoption, increased screen time, 5G etc;. This is a phenomena across the world.
While the external growth factors are all looking positive, what is important is the internal growth factors. I believe the following are some of the important factors which contribute largely to the growth of BCG or for that matter any company
1/ Right Products and Services
2/ Brand
3/ Sales team
4/ Implementation team
5/ CapitalOut of these factors, I guess SKR seems to be mainly looking at item 4 from the new company, but along with this he also is getting items 1, 2 and 3 too. A Digital Marketing Services company who has built their brand with a right mix of Sales and Implementation team. The Sales team is able to bring in marque clients like Netflix, Disney, Hulu etc; and an Implementation team who is able to service them. Note that the bar is pretty high while working with these kind of companies. You will be working with the best marketing brains at the same time these people will be looking to extract every penny out of their marketing budget, the service providers need to have the right mix of talent and the whole team will be required to be on their toes to match to the expectations of these kind of customers.
We need to note that, the new company might not bring in item 5 right away. SKR will be funding this initially from the capital he will be raising from different means including LoC if required.
Once merged, in the medium to long run SKR is confident that together they will be ticking all these growth factors and will be able to go in full speed firing on all cylinders and thus his assurance on the EPS multiples.
In coming quarters, I feel we will be able to see a strong long-lasting Fevicol bond between BCG and Growth.
hw_twRegistered BoarderThanks for the details @vgsatwork…not sure how many people are looking at this event and considering it as a positive event.
As you mentioned hoping some large investors take a note of event and take the price up
At present the MC board seems to be worried about individual bonus shares …but these seems to some small investors invested just for bonus shares and not looking at any other positive aspects of the company
hw_twRegistered Boarder@vgsatwork – There is no announcement regarding shares allotment to FPIs.
Since the 20th record date is over, I guess we can assume now that FPIs will not be getting bonus shares.
hw_twRegistered BoarderSKR talking about Jio in 2016. He was saying Jio will be making money with ads and it’s positive for DM companies like Brightcom.
He seems to have rightly timed the acquisition of an Indian DM company which would help them grow both in Indian and International markets
hw_twRegistered Boarder@admin – I guess you will be sharing a curated questions list to SKR
Sharing few questions from my side … request others to please add
Financials
– Any specific reasons for muted YoY revenue and PAT growth compared to last quarter…can we expect improvement in Q2…if so to what percentage– Breakup of digital ads revenue from products (Compass, Protector, BLocal Exchange) and product based services business
– Breakup of revenue from different regions
– Any significant achievements which you can highlight…like long term contracts, multi-million dollar contracts, publishers count, ads count etc;
– Any reduction in receivable days post covid
Outlook
– Revenue and PAT growth projections for next quarter and for this FY– Are we in-line to achieving 30% growth for this FY
– Any headwinds and tailwinds you forsee specific to the industry or region specific
– Are we looking to add any new regions in this quarter
Acquisitions related
– What will be the timeline for due-deligence completion. Are we seeing any red flags as of now– What will be the steps post deal signing and timeline to complete the acquisition…when will we start looking at these numbers as part of Brightcom
– What will be gross and net margins of the this company…will it be better in comparison to BCG’s own DM business
– Given that BCG’s market valuation is not high both in terms of Revenue to Market cap and in terms of PE; and assuming we will be paying higher than BCG’s current valuation …how do we see this impacting BCG and what will be our approach to bring in this parity
– Is this company cash flow positive
– What percentage it would add to BCG’s topline and bottomline
– Will this deal also include performance linked payments or its one time cash and stocks
– Will the new company continue to operate with their existing brand or it will operate as Brightcom brand
– Will the founders team also will be part of Brightcom or will they be completely exiting
– Are there any other investments done by this company, if so will these deal includes those investments too
– How many active customers the target company has and how much percentage it overlaps with BCG’s customers
– How much percentage of cross selling we expect between these two companies …. can we expect Netflix, Disney, Hulu using BCG’s products and adtech services in near future
– Does this company has any products which can be integrated with Compass or other BCG products
– Are we looking at any other acquisitions apart from the current DM and audio ad tech companies
hw_twRegistered BoarderI see a lot of discussions in MC board on bonus shares not credited and it’s timeline.
Sharing these articles from Zerodha which states that it generally takes around 15 days post record date for the shares to be credited.
4+hw_twRegistered Boarder@explorer – Good find. I guess this is the company. Lot of things are matching.
I could see some of MediaMint employees working with Netflix, Hulu, Disney etc;
This is the profile of one of their ex employee…he has mentioned all these companies
hw_twRegistered BoarderCongratulations to SKR on BCG family growing to 1 lakh investors mark…and congratulations to fellow long term investors who boarded this early… this is one of the item which he tracks pretty closely and close to his heart. I guess he will be pretty excited about reaching this milestone and the speed with which this community has grown in recent days.
Thanks to @admin, @Logan and all other fellow members who are contributing to a useful, healthy and insightful discussions and helping this investors community stay strong in tough times and helping it to grow
Leaving aside the difference in opinion on increase of retail investors and their stability, I feel the pros will be
– BCG is now known to more retail investors than ever before
– Increase in awareness of the adtech, digital marketing business
– Increased confidence in the future of this business
– Most importantly it also shows increased confidence in credibility of BCG’s numbers
Hoping this would soon attract big fund houses and other stable long term investors
hw_twRegistered BoarderThe IR page of BCG website seems to have recently updated … It now has all the latest and old information which investors can go through
One thing which especially caught my attention is the ownership document of Brightcom Israel / Online Media Solutions … an important document for the people who keep saying that BCG India doesn’t own OMS, Israel
hw_twRegistered Boarderhw_twRegistered Boarder@myainvest – this rule applies only to the stocks which are listed exclusively in BSE and so there is no question of price difference. between the two exchanges.
It does apply to companies like Sportking which is listed only in BSE and has run up more than 10X times in recent period.
BCG is listed both in BSE and NSE and so this rule doesn’t apply to BCG.
hw_twRegistered BoarderSomeone posted in MC forum about some new BSE/ NSE rule which would affect BCG.
Found this ET article on this rule
As per this notification, any stock which has run up more than 6X times in last 6 months will have a weekly, monthly and quarterly limits too.
BCG seems to fall under this category but we need to note that it is only for those stocks which are listed only in BSE and not for both
I guess this is one of the reason for the fall in all midcap and small cap stocks across
Request everyone to please verify this news and don’t sell your stocks in panic … especially people will be spreading negative news that this rule also applies to BCG
hw_twRegistered Boarder@vgsatwork – Given that the new acquisition will be paid 20% in equity, what’s your view on these things
– will it be a fresh equity issued or ESOPs issued right away or ESOPs issued on yearly basis based on performance targets achieved
– do we assume this event is also lined up before 20th so that the management of the acquired company also gets bonus shares
hw_twRegistered BoarderOn revenue per employee, BCG is having a superlative figure of 10X+ times compared to Indian IT companies avg. ranging around 30 – 50 lakhs per employee (20 to 35 dollars per you billing rates)
My view on the revenues of target DM company might be somewhere in comparison to IT industry standard range or somewhat lower (12 to 25 dollars range as per Uplers rate card) …Note that in some engagements it could go higher if the billing also includes outcome based incentives like no. of leads generated etc;…I would be happy if their numbers are any better than normal IT industry average.
At the outset this numbers may not look encouraging in comparison to existing BCG numbers…this was the reason why I was suggesting in my earlier post to not have much expectations on the numbers especially going by no. of employees count
Basis today’s discussion, I feel SKR is looking to leverage this team also as the backend for their digital ad business. We need to note that a strong backend team and systems are very important for the growth. For example their sales team might quickly sign up huge number of publishers and brands, post that it is the backend implementation team which has to do the heavy lifting and ensure that they keep up with the pace of sales team. All this has to happen without adding too many head counts and I feel going with SKR words this target DM company seems to have better systems in place and they have cracked ways to scale up (without adding too many head counts).
Overall I feel the revenue per employee might dip for a quarter or two… anyway this is not a cause of worry given the huge ROLE margin with which BCG operates compared to normal IT industry or other adtech companies. Also we need to note that market never looked at BCG from this lens or whomsoever has looked at it from this angle they probably have seen it as a negative thing saying it is a too good number to believe…Hope
this perception changes in near future.I feel once this integration happens this backend team will give them a strong base to go agressive on the sales (probably with LoC amount) and help them to scale and achieve back the same or higher revenue per employee.
In terms of EBITDA and EPS improvement, I feel this will contribute small as of now but will boost up significantly in coming quarters helping BCG to achieve EPS multiples target as mentioned by SKR.
Disc: This is my early analysis and this views are subject to change post the acquisition and the impact of it in coming quarters post integration. This is not intended to drive any sentiments in either direction.
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