The Story of a Single Aircraft that made more profits than many huge fleet - TAAL Enterprises.

Summary

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• The Only Company in Aviation sector to have an ROE above 30.
• Debt free company
• The Largest Subsidiary being a Tech platform holds the company and its reputation during its tough phase.

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Detailed Analysis of Taal Enterprises

 

Who is TAAL Enterprises and What do they do?

For the past 3-4 Financial years, TAAL has been the choice for all those who are seeking Air Charter Solutions. BE it traveling for personal reason or for professional purpose, there’s always an ultimate experience when it comes to travelling in Charter flights. Apart from the travel what makes it even more special is that the passengers need not wait in queues, need not wait for connecting flights, roam around in finding belt and wait to pick your baggage. All the above makes the travelers feel special and delightful.

 

TAAL is meant for the Luxury and Comfort.

• They provide the below air-charter services:
• Luxury private Air Charter flight to any destination.
• Best service with flexibility to meet your requirement
• Depart from and arrive at any airport and suitable timings.
• Increased levels of personal security for the passengers.
• Fully inclusive quotations with zero hidden charges unlike other companies in Aviation Industry.

 

What is TAAL doing now?

 

TAAL was operating in the Air Charter segment of the Aviation Industry. The Best part is that the company had only one aircraft. Yes, you read it right. TAAL was operating a Cessna Citation CJ2+ type of aircraft. It was taken at lease and has a seating capacity of seven passengers. The aircraft had its base at Pune airport. The Company had a loyal set of Charter customer base in and around Maharashtra.

Everything was going fine for the company but suddenly one fine day during the Financial Year 2019-20, the only aircraft that was operated by the company ran off the runway during a landing. It resulted in huge damage to the aircraft. The insurance company has also accepted the aircraft as a total loss and accordingly paid the full insurance claim. As per their official website, the only flight has met with an accident so the company is not operating any aircraft right now. It is currently analyzing and exploring various business options after the accident caused huge loss for the company.

 

Revenue Model of TAAL Enterprise:

As there is no aircraft available, TAAL Tech played a huge role in contributing to its financials. TAAL Tech India Private Limited is the largest operating subsidiary for the Company. Even though the business of this subsidiary was affected on account of Covid-19, the profitability for the year was better.

 

Industry Scenario:

When it comes to Civil Aviation market in the world, India stands 7th in the world according to the International Air Transport Association. As the Inflation and Living standards increase simultaneously, Flight passenger count is also increasing hand in hand. India is one of the fastest growing aviation markets, Not to forget that our India has overtaken major domestic aviation markets like Australia, Japan and Russia in terms of key parameters like Revenue Passenger Kilometers flown.

There is a point that we need to note after our honorable PM Shri Narendra Modi`s recent speech. Under UDAN Scheme, India is going to have 100 more airports by 2025. He also told that the remote areas in India are connected through UDAN scheme at an unprecedented pace.

As per news, Minister of State for Civil Aviation Mr. V K Singh told the media that the Centre has given in-principle approval for establishing 21 greenfield airports in India. Financial incentives from the Centre, state governments, and airport operators are given to the very few airlines to support operations from unserved airports and thus keeping airfares at an affordable price.

Looking at this, All I can say is that India is about to experience a rapid upswing in the business aviation sector due to its strategic untapped geographic locations, favorable government schemes, demographics and robust economic growth. The civil aviation sector in India is booming with a YoY double digit growth in passenger traffic. It would have continued its run if Covid hadn`t hit the markets.

One more news to be noted is the fact that our Govt is ready to spend 25k Crores on Civil aviation sector. Non Scheduled Aviation Services in our country is picking up slowly. Especially after lockdown, most of the celebrities, HNIs, businessmen have started to take this in order to assure safety and comfort. There is a huge long term prospects for this industry and it remains very positive for me.

Financials:

 

Market Capital	318.51 Cr.
Earnings Per Share [EPS]	110.40
Price-Earnings Ratio [PE]	9.26
Industry PE	NA
Book Value Per Share	271.80
Price to Book Value	3.76
Dividend Yield	-
No. of Shares Subscribed	0.31 Cr.
Face Value	10

 

 

 

Balance Sheet:

 

PARTICULARS	MARCH 2021 [Rs in Crores]	MARCH 2020 [Rs in Crores]	MARCH 2019 [Rs in Crores]
Share Capital	3	3	3
Reserves and Surplus	73	47	46
Shareholders` Funds	76	50	49
Non-Current Liabilities	0	0	0
Current Liabilities	34	45	34
Total Capital and Liabilities	111	96	83
Non-Current Assets	1	5	6
Current Assets	110	91	77
Total Assets	111	96	83

 

 

 

Profit and Loss Statement:

 

PARTICULARS	MARCH 2021 [Rs in Crores]	MARCH 2020 [Rs in Crores]	MARCH 2019 [Rs in Crores]
Total Sales	105	130	149
Total Expenses	82	99	118
Operating Profit	23	31	31
Adjusted EPS	102.04	55.45	58.21
Equity Dividend	20%	0%	17%

 

 

Cash Flow Statement:

 

PARTICULARS	MARCH 2021 [Rs in Crores]	MARCH 2020 [Rs in Crores]	MARCH 2019 [Rs in Crores]
Cash from Operating	38	33	23
Cash from Investing	30	(24)	(9)
Cash from Financing	(6)	(9)	(6)
Net Cash Flow	62	0	8

Rationale:

• It`s something that we all need to have an eye if operating revenue increases Y-o-Y. Best part is the fact that their single aircraft isn`t operating yet their operating revenue is increasing. What if they start their aircraft services again? Hence, its a positive news
• Net Cash flow is positive in the past three years and that`s indeed a positive one.
• They are reducing their debt.
• They are increasing their reserves and surpluses consecutively for the past 3 years. Its always a positive news.
• Their Net profit is increasing Y-o-Y and are paying dividend also.

Is it Worth investing in TAAL?

Looking at the way how people have evolved, how people have started to travel via non-scheduled flights, I certainly believe that the demand for TAAL aircrafts are going to be more after it brings back it charter services. Past crash can be a hurdle in bringing the new customers but what is important is the way how management tackles the situation. In my opinion, it`s better to avoid/hold investment for this stock until the management comes up with a strong strategy to tackle and survive in the industry.

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Exclusivity:

This article is exclusive to investoguru.

Stock Disclosures:

The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Author Disclosures:

This Article represents the Author's own personal views. The Author did not receive any compensation and do not have any business relationship with any of the companies mentioned in the Article.