@sahil_vi @PraCharvaka @NeilBahal Don't know enough apart from that its a very well managed BPO. Their Canada health healthcare division took a long time to gestation, management has been focusing on it since many years. Been tracking it since 2014 with a small position and listening to commentary.
@sahil_vi @PraCharvaka @NeilBahal HGS is not completely clean on governance, but the promoters do not suck it dry perhaps because it is a much better businesses than the other ones they have. Related party transactions still leak a fair bit of cash to promoters, check out Note 40 in current and past accounts.
@sahil_vi @PraCharvaka @NeilBahal Business-wise, I started tracking them in 2013-14 because of the extremely low PE, good yield and simple operations. It was valued like a low-end BPO back then, which isn't a completely unfair assessment either. The Canada division has been the most promising part...
@sahil_vi @PraCharvaka @NeilBahal And they've been focusing on it for a while because they have very good market share in that segment. So that is where that part of their ops became a much more niche, specialized BPO operation with a very sensitive end user base. It achieved critical mass couple of years ago...
@sahil_vi @PraCharvaka @NeilBahal and now it's been sold. While I haven't gone through management commentary since the pandemic, I would look closely at what remains, because if it is low-end BPO operations then they may not have yet built any competitive advantage in those sectors...
@sahil_vi @PraCharvaka @NeilBahal ...and investors may have to gestate the remaining businesses now. I would also look closely at the utilization of sale proceeds. RPTs show large deposits to Hinduja entities. If most of the money is not paid out, parts of it may leak out.
@sahil_vi @PraCharvaka @NeilBahal Overall I never got the conviction and belief to invest more into HGS because I didn't want to stick around to watch the gestation of the Canada healthcare division. It worked out well for them.
@sahil_vi @PraCharvaka @NeilBahal Overall, I would worry less about corporate governance in HGS than I would worry about the growth and valuation. If you're looking at it now, you're looking at waiting for more gestation IMO. Is that a bad thing? Not necessarily, my small position from 2014 is up 5x in 7 years.
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