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TRG Records 40X Higher Profit YoY During Q1 FY21

TRG International (TRGI) and its portfolio companies recorded profit growth of 4,551 percent year-on-year during the first three months of the financial year 2020-21.

This massive growth is attributed to the cashing in on emerging business opportunities in the wake of the COVID-19 pandemic.

According to the financial results, the company recorded a profit of Rs. 816 million in the first quarter of FY21 as compared to a profit of Rs. 17.5 million reported in the same period last financial year.

The company’s enterprise software company doubled its revenue during the first quarter primarily due to enterprise rollouts with new clients.

In their statement, the company said,

The rapid work-at-home (WAH) model adopted by our health insurance marketing company in the wake of COVID-19 continues to yield positive results. The portfolio company has accelerated agent hiring in Q1 to maintain the growth momentum and prepare for the annual enrollment period which is the busiest time of the year for the health insurance marketing sector in the US.

The value of the company’s share in TRGI as of 30 September 2020 is Rs. 22.4 billion. This value was Rs. 21.8 billion on June 30, 2020. This represents an increase of Rs. 0.6 billion during the period and an overall increase that is nearly ten times the value of its original investment.

“As we approach monetization of our remaining assets, we expect this value to increase further. In addition to the company’s stake in TRGI, it also has other assets of Rs. 1.6 billion and liabilities of Rs. 4.1 billion resulting in net assets of Rs. 19.9 billion,” the company stated.

The fiscal year 2020 has been a period of significant growth and success for TRG. One of its portfolio companies, IBEX Limited, completed its initial public offering on Nasdaq Global Market on 7 August, 2020. The post-money valuation of IBEX at the time of the listing was approximately $350 million, with the total amount raised in the IPO before expenses of approximately $90 million.

One of TRG’s portfolio companies in the enterprise software industry signed a five-year pay-for-performance service agreement with a large US telecommunications provider in May 2020. The service fees from this agreement are expected to generate approximately $100 million in revenues in the fiscal year 2021.

Since the signing of the agreement, the monthly revenues of the portfolio company have more than doubled. As a result of the enhanced scale and profitability, TRG is targeting a partial monetization of the portfolio company during 2021.

The health insurance marketing company of the group continued its impressive growth, and revenues increased from $65 million to $113 million as a result of the continued investment in business and expansion of service delivery locations.

This larger scale has also translated into higher profitability, with EBITDA increasing from $28 million to $43 million. The portfolio company has successfully addressed COVID-19-related headwinds with a robust WAH operational delivery model which has allowed for operational results to be at levels similar to an on-site environment.

Moving forward, the company plans to further invest in technology and agent training, and move to an entire location-agnostic WAH model. Additionally, the company also closed a funding agreement with its existing lender which doubled its working capital line to $200 million. As a result, the company has adequate capital available for growth and expansion for the foreseeable future.

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