Category: SWOT

Stocks · SWOT

Jupiter Wagons

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Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

Jupiter Wagons

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Business

Jupiter Wagons Limited (JWL) is a provider of comprehensive mobility solutions, with diverse offerings across Freight Wagons, Locomotives, Passenger Coaches (LHB), Braking Systems, Metro Coach, Commercial Vehicles, ISO Marine Containers, and products such as Couplers, Draft Gears, Bogies, and CMS Crossings. JWL has manufacturing facilities located in Kolkata, Jamshedpur, Indore, and Jabalpur with full backward integration to its foundry operations.

With a rich legacy over four decades, the Company has leveraged its deep technological capabilities and robust financial position to emerge as a one-stop shop for mobility solutions and reinforce its position as one of the fastest growing within the industry.

Products, Segments

Railway Wagons

Commercial Vehicles incluising Electric Light Commercial Vehicle business (eLCV)

CMS Crossing

Brake Systems & Brake Disc

Containers including Flex Containers, Marine containers , BESS containers

Strengths and Certifications

  • The Group has established partnerships with leading global companies such as Tatravagonka (Slovakia), DAKO-CZ (Czech Republic), Kovis Proizvodna (Slovenia), Telleres Alegria S.A (Spain).
  • Marquee clients associated with company
  • JWL is one of India’s largest wagon manufacturers, with a capacity of 9,600 wagons per annum
  • Improving scale of operations
  • Healthy order book providing revenue visibility
  • Experienced Management and leadership team

Clients

Catering to industries such as Railways (Freight + Passenger), Metro Rail, Automobile, Transportation, Logistics, Construction Equipment, Municipalities, Healthcare, Energy, Mining and Infrastructure, the Company boasts a marquee client base including the Indian Railways, American Railroads, Indian Ministry of Defense, Tata Motors, GE, Volvo Eicher Motors

Joint Ventures

Fundamental Ratios, Cash, Loans, EBITDA,PAT margin, Shareholding pattern

Consistent increase in sales over last 12 qtrs barring a quarter or so 994
Profits have multiplies by 8x in last 2 years

Consistent Tax records

ROCE and ROE is reasonably above 20%

Promoter has skin in game, FII is increasing stake, DII stake is stable

Recent Developments and Key Triggers

Dedicated Freight corridor, Projected Wagon demand, Improving logistics share through Railways are big triggers for continuous growth of this segment

  • JWL has made a strategic entry into the global markets by signing a long-term Memorandum of Understanding (MOU) with RITES Limited, a prominent PSU associated with the Indian Railways, to explore opportunities in the international market for railway rolling stock projects. JWL’s focus is on the design, manufacturing, and supply of Railway wagons.
  • The Company is focusing efforts on achieving Import Substitution, particularly in the areas of High-tech and Highend Containers. To further elevate global competitiveness, manufacturing facilities have been fully automated, enabling consistent production and maintaining world-class quality standards. The manufacturing facility is certified by both ‘LRQA’ and ‘BVQI’.
  • A new foundry is scheduled to be established in Jabalpur over the next 18 months with a capacity of 2,000 tonnes, catering to both captive use and exports. This initiative is expected to yield cost savings in freight expenses.
  • In the Marine Container Business, the outlook for specialized containers is improving as the Company has: Secured a contract for 40-foot ‘Open Top, Coil Containers’ with a pilot order worth ₹ 1,000 lakh.
  • Received a Letter of Intent (LOI) from an Indian Subsidiary of a Prestigious Global Group for the supply of 1,000 units of special Flex Inverter containers for the fiscal year 2024-25.
  • JV Company JWL DAKO CZ India Ltd. has received an order aggregating ~₹ 11,200 lakh for axle-mounted disc brake systems from Indian Railways.
  • The BESS container, a key element in Solar and Data Centre Containers, offering energy storage capabilities has a huge market opportunity in round-the-clock Renewable Energy Projects as well as Commercial Industrial Energy storage in both domestic and international markets. With Jupiter’s expertise in making containers for this application, we now are looking forward to adding more value for the same by creating complete integrated solutions for varied markets.
  • Successful Qualified Institutional Placement (QIP) in May and December 2023 amounting to ~ ₹ 528cr which includes prominent investors, including DIIs like Tata MF, HSBC MF, Bandhan Equity Fund, and FII’s like Societe Generale, and Copthall Mauritius Investment Limited.
  • JWL is one of India’s largest wagon manufacturers, with a capacity of 9,600 wagons per annum with plans to enhance capacity to 12,000 wagons per annum by Q1 fiscal 2025.
  • JWL has also ventured in brake disc, brake systems for rolling stock and weldable CMS Crossing manufacturing during fiscals 2023-24 equipping JWL to capitalize on robust spendings for developing high speed train infrastructure, and to fortify its market position in this segment, in Q1 fiscal 2024 JWL has acquired Stone India Limited, having extensive infrastructure and licensing for brake manufacturing. 

Valuations

Looking at their growth currently and opportunity size in coming years, Stock is trading at fair value. Once the capacity comes online and if company executes the order well , it might look undervalued intermittently

Risks

Exposure to risks relating to fluctuation in raw material prices and intense competition: The key inputs include steel and related products. While the IR projects generally have a long execution period and are covered by a price-variation clause to a large extent, private sector orders are generally fixed in nature.

Cash flows poses a big risk due to intensive working capital operations

Valuations are subjective but definitely its not hugely undervalued in short term

Most orders are from Railways and have this dependency in business, though company is trying to diversify

Technicals on 11-May-24

Conclusion

If you have understood the triggers and industries it cater to + RISKS which can materialize and have patience then think of buying this company in every dip, market offers, else Ignore the stock

Stock might be volatile in short term and give a chance to buy around 425-525 range for long term investment purpose

Also Read : Savita Oil

ALSO READ : SS7 (Diwali to Diwali)

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.

Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.

Stocks · SWOT

Savita Oil : Oiling is important

Its real ALPHA1 Comment

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

Savita Oil

Read Pick1, Pick2, Pick3, Pick4, Pick5, Pick6, Pick7, Pick8, Pick9, Pick10, Pick11, Pick12

Business

Savita Oil Technologies Limited, established in 1961, is a specialty petroleum products company engaged in manufacturing Transformer Oils, White Oils etc.

The Co manufactures products like Transformer Oils, Liquid Paraffins, White Oils, Automotive and Industrial Lubricants, Coolants and Greases, among others. These products are essentially obtained through refining base oil, and topped with additives to derive the required characteristics. A wide range of lubricants, greases, and coolants of the Co are sold to retail customers under the brand SAVSOL

The Co has a market share of ~35% in the domestic transformer oil and white oil segments.

The Co’s manufacturing facilities are situated in the state of Maharashtra and at Silvassa in the UT of Dadra and Nagar Haveli and Daman and Diu with total refining capacities of 450,000 kilolitres per annum. Its windmills are located at 18 sites in the states of Maharashtra, Tamil Nadu, and Karnataka and have an installed capacity to produce 54.15 MW of wind-powered electricity

Company has 80 % domestic sales vs 20% exports

Revenue distribution 75% from petroleum and 25% from lubricating oils

Unit I – Navi Mumbai, Maharashtra
Unit II – Mahad, Maharashtra
Unit III – Kharadpada, Silvassa
Unit IV – Silli, Silvassa

  • 41 Stock points,
  • 20,000 Retailers
  • 400 Distributors
  • 1,500 Franchise Dealers

Products, Segments and Strengths

Two major segments : Petroleum Oils and Lubricating Oils

Petroleum oils : Transformer oils, White and Mineral oil, Speciality oil : ~75% sales as portion of total sales over last 2 years

  1. Transformer oils : These oils are used as an insulating and cooling medium in distribution transformers, power transformers and instrumentation transformers
  2. White oils :
  • Offer wide range of highly refined specialty mineral oil based products under the “TECHNOL” and “SAVONOL” brand.
  • They manufacture petroleum jellies like Ultima White, Snow White, Yellow Petroleum Jelly and other specific industrial grade petrolatum’s under the brand “Savogel”
  • Key properties of this fluids are good lubricity, smoothness, softness and resistance to moisture in the formulations
  • Specialized waxes and emulsions including paraffin wax emulsions, microcrystalline wax, Polyethylene wax, oxidized PE wax and a range of wax emulsions. Wax Emulsion protect coating and ink surfaces for diverse applications
  • Cable filling and flooding compounds for copper cables as well as Optic Fiber Cables under “Savofil”, “Savoflod” and “Vitagel” brand names. This compound helps moisture tolerance, softness and stability at an extreme temperature

3.Formulated & Specialty Products

  • The 5G Telecom spectrum auction held in 2022 and subsequent rollout of the network is expected to generate healthy demand for this product
  • › Growing demand from end user market
  • › Government Linked PLI Scheme
  • Key Growth Drivers
  • Optic Fibre Cables
  • Textile & Leather
  • Auto components
  • Polymers
  • Refrigeration Compressors
  • Construction Compounds

Lubricating oils : Automotive and Industrial oils

Automotive oils

  • The lubricant brand SAVSOL manufactures and markets high performance lubricants, fluids, coolants & greases and is amongst the fastest growing lubricant brand of India
  • It has a comprehensive range of automotive lubricants meeting the growing demand for sustainable products in various categories, i.e., Passenger Car Oils, Motorcycle Oils, Commercial Vehicle Oils, and Other Specialty Products
  • SAVSOL portfolio has products which successfully meets the latest & stringent BS VI emission norms for automobiles
  • Savita Oil Technologies known for its high quality lubricant manufacturing with state-of-the-art plants and technology centre has been amongst preferred supplier to automotive OEMs for a wide range of lubricant applications
  • Trusted partner for leading automotive OEMs. Some of our OEM associations are existing for over two decades
  • A fully equipped technical and quality control lab ensures high quality standards

Industrial oils

  • Savita Oil Technologies has been a trusted partner to Industrial OEMs for a wide range of lubricant application needs.
  • › It has an elaborate product portfolio under Brand “SAVSOL” catering to various Industrial applications and provides
  • excellent lubrication, performance and protection to different types of Machines and Industrial Equipment
  • The exhaustive portfolio includes wide range of Hydraulic Oils, Turbine Oils, Thermic Fluids, Heavy Duty Industrial Gear
  • Oils, Transmission Oils, Greases, Heat Treatment (Quenching Oils), Metal Working Oils and other Specialty Oils

Strengths

Multi-decade relationships with many of our OEM and B2B customers across all product lines

In-house technology and R&D is the backbone of our company and has manifested many high quality products across the product portfolio.

Focus on innovation

Focus on sustainable products development

Management has almost 3 decades of experience.

Company has ISO and other necessary certifications in its field of operations

Clients

Fundamental Ratios, Cash, Loans, EBITDA,PAT margin, Shareholding pattern


Consistent record of Dividends since listing in 1994
Healthy cash generation over the years
Debt free balance sheet
Consistent track of profitability despite market volatility
Longstanding relationships with customers and vendors

Consistent Tax records

Cash conversion cycle and working capital cycle is good.

Cash flows seems good

ROCE is reasonably above 20%

Shareholding pattern

Promoter has skin in game. SBI energy fund has entered recently

ALSO READ : SS7 (Diwali to Diwali)

Recent Developments

Key triggers

Transformer oils : Rising Investments over the next decade in transmission segment to support higher generation capacity and rural electrification
Rising demand for modernization of aging grid infrastructure coupled with large scale capacity addition will boost the market

White oils : The Indian personal care industry is witnessing a boom due to changing perceptions, growing awareness, and the rise of direct-to-consumer (D2C) companies making waves in the online retail space
Growing demand of cosmetic and pharma products from urban & rural India

Product Innovation

Company is focused on building an independent distribution network for our industrial lubricants and with this now in place , they want to rapidly scale up industrial lubricant volumes

Company has created a subsidiary and moving towards plastic recycling

Savita Greentec Limited (a subsidiary of Savita Oil Technologies Limited) is expected to commence construction of Greenfield Projects in plastic recycling in theQ4Fy24

SAVSOL Bio Boost, one of India’s most biodegradable engine oils is launched

Oct23 – successfully commissioned new Synthetic Ester manufacturing plant

Commissioned new Synthetic Ester manufacturing plant at Mahad, Maharashtra with a designed capacity of 5,000 metric tons of which current operational capacity would be ~3,000 metric tonnes per annum

The new synthetic ester manufacturing plant will provide a strategic advantage to Savita by making it the first company in the world to manufacture and market all three classes of Transformer Fluids vis. Mineral Oil Based, Natural Ester Based as well as Synthetic Ester Based Transformer Fluids. The applications of these Esters are very versatile, and we will be able to leverage our existing client base to cross-sell these products while tapping new clientele. With these plant-based esters, we will have a more sustainable and environment friendly product range in the premium and synthetic categories. We plan to launch a new range of EV Coolants and immersion Cooling Fluids based on Esters from this plant. One of our products has already been approved by a reputed OEM as an EV coolant. We are also undertaking trials with another potential customer for immersion cooling.

Environment friendly products

Company have evaluated the introduction of versatile ester-based compounds (esters) in product range to enhance our diversified offerings of environmentally friendly products.
Group V Base Oils comprising Polyol, Phosphate and other Esters are the most superior performing fluids that exceed the performance of synthetic base oils on parameters of lubrication, thermal stability, oxidative stability, compatibility with most metals and sealants and biodegradable with low toxicity

Modernisation of Existing Transformers: Majority of India’s transformers and power infrastructure components are ageing and need replacement or modernisation. This drives the demand for newer, more efficient, and technologically advanced transformers.

Implementation of Smart Grid: The development of smart grids requires intelligent transformers that can handle bidirectional power flow, manage voltage fluctuations, and support grid automation. This opens avenues for technologically advanced transformers. Moreover, the demand for energy-efficient transformers that reduce transmission losses and improve overall grid efficiency is steadily expanding in India.
The transformer fluids market in India holds promising opportunities as the country strives to meet its increasing
power demands while addressing environmental concerns and adopting technological advancements.

Company is seeing a substantial increase in customer order books within the Power and Distribution Transformer sector, with their production capacity reserved for the coming 12-16 months. This heightened demand extends beyond India; the export segment to North America and other regions is also demonstrating promising growth potential. This is attributed to India’s competitive manufacturing ecosystem for transformers, well-suited to meet global requirements.

Alternative Fluids
Bio-Based – Your Company also produces bioTransol, a natural ester-based insulating fluid designed for transformers. This groundbreaking product was originally launched by Savita Polymers Limited (earlier a wholly-owned subsidiary of your Company which is in the process of being merged into your Company), in 2015. Remarkably, it marked the first instance of an Indian company introducing such a product to the market.
With an extensive reach, bioTransol has been applied to over 300 projects, solidifying its impact. This product promotes environmental consciousness with a high proportion of biodegradability. Moreover, its safety and efficiency surpass conventional options across various equipment applications.
Your Company is actively engaged in collaborating with major national and state utility boards, as well as Original
Equipment Manufacturers (OEM) clients, to showcase the product’s merits. Not only does bioTransol offer a more
effective solution within its grade, but it also embodies environmental sustainability. In an environment where global OEMs are compelled to reduce their carbon footprint, the appeal of such products is further enhanced.
Company is confident that the adoption of Natural Ester-Based Transformer Fluids will witness substantial growth, becoming an integral component of OEM consumption.


Synthetic Based – Your Company is poised to introduce Transol Synth100, a cutting-edge synthetic ester-based
insulation fluid. This fluid represents a significant advancement in transformer fluid technology, surpassing
existing solutions across a range of parameters.
Transol Synth100 stands as the most robust transformer fluid to date. As this product comes at a higher cost compared to mineral or natural esters, Transol Synth100 finds application in highly sensitive applications such as Locomotives (Metro and Rail), Mining, and Floating Solar projects. The overall lifecycle cost of this fluid effectively offsets its initial investment which will serve as a key driving force in the gradual transition from mineral to ester fluids within the ecosystem. With the launch of Transol Synth100 in the coming financial year, your Company will achieve a remarkable milestone, emerging as the sole manufacturer of the entire spectrum of transformer fluids – Mineral, Natural, and Synthetic.

Capex 

Capacity Expansion Increasing capacity through continued investments for efficient leveraging of comprehensive and balanced product portfolio

Valuations

Reasonable valuations with PE <20. If the company shows growth in coming years as per their talk and opportunity size, this price looks undervalued

Risks

During the quarter under review, two critical components – Base Oils and the Exchange Rate have witnessed major volatility and both of these impacted us adversely. Base Oils Prices have fallen about 25% since June 2022 and the Indian rupee also depreciated significantly in the Quarter ending December, 2022. This resulted in
inventory and foreign exchange losses which have impacted our margins

Any policy changes can impact the company hard

Technicals on 28Apr24

Stock has given a breakout and volumes are supporting upmove as well

Conclusion

If you have understood the triggers and industries it cater to + RISKS which can materialize and have patience then think of buying this company in every dip, market offers, else Ignore the stock

Stock might be volatile in short term and give a chance to buy around 500-650 range for long term investment purpose

Also Read : ICEMAKE Refrigeration : Time to Chill

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.

Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.

Stocks · SWOT

Inox India

Its real ALPHA2 Comments

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

Inox India

Read Pick1, Pick2, Pick3, Pick4, Pick5, Pick6, Pick7, Pick8, Pick9, Pick10, Pick11

Business

Inox India is World’s leading provider of customized cryogenic equipment with Over 30 years of experience in design , manufacturing and installation of cryogenic equipment
Global customer base across 100+ countries
Large-scale serial manufacturing facilities at four locations in India and part manufacturing and service distribution from one location at Brazil with service distribution extending to Brazil and the Netherlands

Products, Segments and Strengths :

Income in different segments and Export : Domestic Contribution

Orders in different segments and Export : Domestic Contribution

Serving Industrial Gas, LNG and Cryo Scientific Division

Working continuously towards Clean Energy initiatives in – LNG, Liquid Hydrogen & Fusion Energy

Company has done good over years , some of the things mentioned below

  • Completion of supply & installation of Cryogenic equipment’s for second launch pad project of ISRO
  • Manufacturing, installation and commissioning of COMNAVAC thermal vacuum system for ISRO1
  • Installation of mini-LNG terminal, in Scotland, UK
  • Commissioning of LNG dispensing station in Dahej & CNG cascade filling facility in Nagpur
  • MOU with a Japanese conglomerate for exploring opportunities in virtual LNG pipeline
  • Completion of manufacturing of cryolines & warmlines for ITER2
  • Awarded contract for setting up of mini-LNG terminal for Caribbean LNG Inc, West Indies
  • Manufactured and delivered an MRI cryostat for a GOI project
  • Ventured into manufacturing stainless steel kegs for varied applications including beverages
  • Produced and shipped 238 KL & 311 KL Liquid Hydrogen Tank to a South Korean customer

Company has

  • In-house technology, and engineering capabilities
  • Strong Product Development & Engineering Focus
  • Integrated Facilities in India and Service Support Internationally

Clients and Certifications

Professional Management team

Fundamental Ratios, Cash, Loans, EBITDA,PAT margin, Shareholding pattern

ROCE and ROE are at reasonably good levels

Debt to Equity is almost Nil

Promoter has skin in game.

Sales, OPM, Net profit has been on rising trend continuously, OPM stable above 20%

Cash conversion cycle needs to be monitored.

Working capital days are good

ALSO READ : Pick1, Pick2, Pick3, Pick4, Pick5, Pick6, Pick7, Pick8, Pick9, Pick10, Pick11

Recent Developments

Orders received for thermal shield repair, LCNG stations, Export orders as well in Q3FY24

Order Inflow was at ₹.295 Cr, up by 7% YoY
Company recorded highest revenue in Industrial Gas division of ₹. 214 Cr
As on 9MFY24, the Order Backlog was at ₹.1,043 Cr with 50% orders from Industrial Gas, 23% orders from LNG and balance 27% orders from Cryo Scientific Division and export order comprised of 47% of the Order Backlog

Capex

Company has incurred greenfield capex at Savli plant of ₹.100 Cr, entirely funded through internal accruals

Focus on LNG and Hydrogen

Agreements

ATGL and INOXCVA enter into a mutual support agreement to strengthen LNG ecosystem in the country
Both companies will accord a preferred partner status for delivery of LNG equipment and services

Memorandum of Understanding towards collaboration for the development of technology for the design and manufacture of SuperConducting Magnet based System for clinical, industrial, defense and research applications.

Patents

Company has received Patent Rights from Patents Office, Government of India titled: “A METHOD FOR SUSPENDING INNER VESSELS OF DEW AR TYPE CONTAINER TO STORE CRYOGENIC FLUID” bearing
Patent No. 530403

Company jointly with Institute for Plasma Research has received Patent Rights from Patents Office, Government of India titled “DISPLACEMENT DECOUPLING ARRANGEMENT FOR PIPING SYSTEMS” bearing Patent No. 502670

Company has received Patent Rights from Patents Office, Government of India titled:

  1. ”A METHOD AND AN APPARATUS FOR DISPENSING LNG AS FUEL” bearing Patent No. 492614.
  2. “SLIDING SPACER AND ITS ASSEMBLY TO SUPPORT THE INTERNAL CRYOGENIC PROCESS PIPE CRYOLINE” bearing Patent No. 503868

Valuations

Company is richly valued and at price of 1356 could be Fairly overvalued as well. Due to certain moat in business it is doing, it is commanding rich valuations while Earnings Growth is only around 25%.

Risks

High Cash conversion cycle due to inherent nature of business. It needs to be monitored closely

Rich valuations. One bad quarter can lead to correction in stock prices

Exports having a significant contribution in sales. Any disruption due to escalation of ongoing conflicts like China Taiwan or Israel Palestine, Iran can cause temporary issues

Exposure to intense competition in international markets: 

The  company operates in the capital goods sector, which is cyclical in nature and susceptible to international policies governing end-user industries, such as oil and gas and industrial gases. 

Technical Chart on 14Apr24

Survived well in last one month market correction and Recently made new highs. ANy correction towards 1250 zone, I would be tempted to add to my Position

Conclusion

If you have understood the triggers and industries it cater to + RISKS which can materialize and have patience then think of buying this company in every dip, market offers, else Ignore the stock

Also Read : ICEMAKE Refrigeration : Time to Chill

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.

Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.

Stocks · SWOT

Transportation Solutions

Its real ALPHA4 Comments

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

AVG logistics

Also Read Pick1, Pick2, Pick3, Pick4, Pick5, Pick6, Pick7, Pick8, Pick9

Business

AVG Logistics Ltd, incorporated in 2010, provides road transportation services, warehousing facilities and Railway transportation to various domestic and multinational companies.  AVG Logistics provides customized and technology-driven solutions across transportation, warehousing, distribution, and supply chain management. Furthermore, the Company also offers Third-Party Logistics Services (3PL), effectively complementing its wide range of logistics solutions. Company mission is to offer an integrated Multimodal network of Logistics
solutions across varied industries

Products, Segments and Strengths

Transportation: Express Delivery, Refrigerated Transportation, Freight Forwarding, etc
Warehousing: Manpower Handling, Packaging, Multi-User Warehouse facility, etc
Value-Added Services like custom clearance, E2E solution, Multimodal transportation, Reverse logistics, etc.
The Co. also undertakes transportation services to Nepal, Bangladesh and Bhutan

AVGL had the agreement of 1 – 3 years with all its major customers and the agreement includes the escalation clause based on the 5% change in the diesel cost

Fleet Size
The Co as of 31st December 2023 has a fleet size of more than 3000+ vehicles, including hired & owned dry/reefer vehicles. Owned vehicle fleet is approx 500+

Network
The Co has a pan India presence with 50+branches and 7 zonal offices.

Company caters to 6 rail routes and can deliver 1 to 40 tons of logistics

9 trans-shipment hubs for LTL services, 1 owned fleet maintenance hub
~7,.05L sq. ft. of warehousing footprint pan India ( 81,000+ sq. ft. Owned and 6.24L leased Warehousing Space). Further expansion happening

Company has certain moats/advantages wrt new entrants in terms of

  • 3 decades of promoter experience
  • End to end solution provider
  • Multimodal transport
  • Distribution network is strong pan India
  • Client relationships with dedicated warehouses for Nestle, HUL and Mother dairy
  • Reverse logistics
  • Tech-enabled fleet with GPRS systems
  • and Asset light model of fleet
  • Company also offers Rail logistics
  • Also offers Cold chain logistics
  • Versatile Solutions For Efficient Storage & Operations (caters to liquid, container, Agri, FMCG, chemicals)

It offers a range of rail logistics services to its customers, including Full rack and piece meal transportation, container movement, and terminal management across all CONCOR ICDs. This is very important in bigger scheme of things in coming years

Cold chain logistics is the segment to watch out for in coming decade

Company has a clear focus on Tech Initiatives regarding its operations. Company keeps on finding Disruptive & Innovative Customised Solutions. Zero Residual Food Grade Tanker is one of the solutions. Curtain Multi-door Truck is another solution

Clients

Reputed clientele in diverse sectors like FMCG, Chemicals, Power, Electrical, automotive like Nestle, Mother Dairy, ITC Ltd, Coca-Cola etc

Well recognized by clients and external agencies in terms of awards and recognition

Fundamental Ratios, Cash, Loans, EBITDA,PAT margin, Shareholding pattern

Similarly ROCE and ROE are decent.

Debt to Equity is high and needs to be closely monitored

Cash conversion cycle is stable and Working capital days are also stable

Shareholding pattern

Promoter has skin in game. FII adding, DII selling. Public domain have few strong holdings as well but overall public holdings have increased

ALSO READ : SS7 (Diwali to Diwali)

Recent Developments in last 1.5 years

Tie up with railways :Signed 6 tenders worth ₹510 cr with Indian Railways for 6 leased parcel trains.

They also got 150 crore contract from Indian Railways for operations of Leased Parcel Express Train. This special train, connecting Bangalore to Ludhiana (Punjab), will complete one round trip every week over the next 6 years, totaling 313 trips. The Express Service will cover the distance in ~72 hours ensuring expeditious, seamless connectivity between the important locations. Ludhiana is an invaluable addition to our railway network, opening doors to a gigantic textile market -largest hosiery manufacturing, cotton textiles, cycle manufacturing amongst others

QSR clients :Started servicing QSR clients

Expanding the cold chain and parcel division. Company is acquiring 50+ fleet of cold chain vehicles to enhance its cold chain capabilities

Also is Upcoming 50,000 sq. ft. Owned Warehousing Space In Agartala

JV : Joint Ventured with Sunil Transport for liquid logistics.

EV Fleet : They are planning to introduce electric vehicles in their fleet in the future.

Company also recently had a collaboration with Blue Energy Motors (BEM), India’s only LNG truck manufacturers. This represents a significant leap towards a more sustainable and eco-friendly future in the transportation industry. This landmark collaboration is formalized through a strategic Transportation as a Service (TAAS) Agreement, wherein AVG Logistics and BEM join forces to integrate LNG-powered vehicles. The collaboration underscores a shared commitment to advancing sustainable transportation practices and fostering a greener future.

Backward integration for last mile : Incorporated a Wholly owned subsidiary named ‘Galaxy Packers and Movers’

They have onboarded Gazal Kalra, co-founder of Rivigo, as a strategic advisor to guide them on sustainability and technology. She also Subscribed to Warrants at 371 Rs

Company has also raised funds at 371 Rs/Share through

  • ISSUE OF CONVERTIBLE WARRANTS ON PREFERENTIAL BASIS TO PERSONS BELONGING TO PROMOTER CATEGORY
  • ISSUE OF CONVERTIBLE WARRANTS ON PREFERENTIAL BASIS TO PERSONS BELONGING TO NON-PROMOTER CATEGORY
  • ISSUE OF EQUITY SHARES ON PREFERENTIAL BASIS TO NON-PROMOTERS

Govt Initiatives to Improve Infrastructure aid Logistics growth : India aims to reduce logistics cost from 13% – 14% of GDP to 8% – 10% of GDP. It is estimated that a 10% reduction in indirect logistics cost will result in 5% to 8% rise in exports. GOI to undertake multiple logistics specific initiatives, such as GatiShakti, National Logistics Policy and others. These programs aim to streamline India’s logistics sector by making it more green, agile, transparent and integrated.

Valuations

Expected sales projections for FY25 is ~700cr and with PAT margin of ~7-8.5%, we get PAT of 50-60 cr. So stock price may move towards 700-900 by 31Mar25. There could be volatility in stock which can be used for accumulation

Risks

High Debt to Equity Ratio. This needs to be monitored very closely

New warehouse opening and its utilization

Renewal of contracts with customers on favourable terms needs to be watched out

High capital working requirements remain a risk.

High competitive industry

Technicals on 11Feb24

Stock has been consolidating between 400-460

Technical chart on 16 Mar24

Conclusion

If you have understood the triggers and industries it cater to + RISKS which can materialize and have patience then think of buying this company in every dip, market offers, else Ignore the stock

Stock might be volatile in short term and give a chance to buy for long term investment purpose

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.

Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.

Stocks · SWOT

Capex is the key

Its real ALPHA3 Comments

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

Kilburn Engineering

Read Pick1, Pick2, Pick3, Pick4, Pick5, Pick6, Pick7, Pick8, Pick9, Pick10

Business

Kilburn Engineering Limited is primarily engaged in designing, manufacturing and commissioning customized equipment / systems for critical applications in several industrial sectors viz. Chemical including Soda Ash, Carbon Black, Steel, Nuclear Power, Petrochemical and Food Processing etc.

Company has cutting-edge manufacturing facility for fabrication, machining, and assembly of equipment located in Thane, Maharashtra (India). Manufacturing plant spans an area of 30,960 square meters and is equipped with state-of-the-art technology and machinery.

Products, Segments and Strengths

Company operates in two segments viz. Process Equipment and Tea Drying Equipment

Food Processing Equipment -During FY23 Company had bagged a total of 103 orders in the domestic market and 5 from overseas Market
for tea dryers

40+ Years of rich experience with 3,000+ Installations globally done
200+ Workforce and 15+ Sectors catered by products and solutions

Kind of Equipment’s & system’s orders got by company

  • Silos for storage of PTA.
  • Metal extraction plant for extraction of exotic material from refinery spent catalyst.
  • Dryer, cooler, Granulator and Coater for fertilisers.
  • Calciner package for API (Active Pharmaceutical Ingredients) industry.
  • Hydrogen Fluoride Reactor package (Rotary Kiln)
  • Rotary Dryers
  • VFBD for wet clay
  • Tea Dryers and others

In the wake of increasing concerns about environmental degradation, our Paddle dryers have emerged as a sustainable solution for drying sludge. These advanced dryers play a vital role in states where strict pollution norms have been enforced, making it imperative for industries to adopt ecofriendly practices. By efficiently removing moisture from sludge, these dryers significantly reduce the volume of waste generated, thereby minimizing the environmental footprint of industrial processes

Sewage treatment — The market size for water and wastewater management in India was 216.03 billion in 2022. By 2027, it is anticipated to grow to518.15 billion, with a projected CAGR of 15.95% during the period 2023-2027.

On similar note, many other industries catered by Kilburn are expected to grow at 5-14% CAGR till 2030 and further

Eextensive and sophisticated R&D facility that are equipped with a full range of pilot plant dryers,
including

  • Paddle Dryers
  • Vacuum Paddle Dryers
  • Band Dryers
  • Fluid Bed Dryers,
  • Vibrating Fluid Bed Dryers

Company has good manufacturing capabilities and order book of 236cr in hand at 31st Dec23.

Order received in Q3FY24 94cr. Executed 73cr

Continuous order inflow in Q4FY24 as well

Order Enquiries –> Approx 100cr

Clients

Reputed clientele lik ACC, JSW , Reliance, Arvind, PCBL, Fnolex, Granules, Coromandel, SRF, LnT and many other renowned names

Professional Management team

Fundamental Ratios, Cash, Loans, EBITDA,PAT margin, Shareholding pattern

Similarly ROCE and ROE are at reasonably good levels

Debt to Equity is under control

Sales, OPM, Net profit has been on rising trend continuously

Cash conversion cycle needs to be monitored.

Working capital days are good and have been improving

Shareholding pattern

Promoter has skin in game. One of the old promoters has been selling and other has been buying. Now its settled and Public domain have few strong holdings as well.

ALSO READ : SS7 (Diwali to Diwali)

Recent Developments

Promoter buying from open market

Promoter has been buying from open market continuously. Good buying happened between 270-310 zone

Last buy around 320

Acquisition of ME energy 

This acquisition will help the company to grow faster

Company has put an estimated target of 500cr revenue by FY25 as ME energy has a 118cr pending order book

Capex

Expecting small capex of 15-20 cr till Dec25

Valuations

Expected Cumulative sales projections for FY25 is ~500cr (considering orders and Acquisition) and with PAT margin of ~12% after merger, we get PAT of 60 cr. So stock price may move towards 500 by 31Mar25. There could be volatility in stock which can be used for accumulation

Risks

Chequered history of non-payment of loans and subsequent new promoters on board.

Due to the non-payment of its loan obligations to RBL Bank Limited (RBL) starting in March 2020, KEL underwent debt restructuring in FY21. The resolution plan (RP) sanctioned by RBL in accordance with the Reserve Bank of India’s criteria was accepted by the company board on March 4, 2021, and it was put into effect on March 31, 2021. As per the RP, the outstanding principal loan of Rs 95 crores and interest of Rs 9 crores due to RBL up to 31 March 2021 was to be restructured. As part of the debt restructuring, Rs 65 crores of sustainable debt was converted into long- term loans with a 12.5 year payback period at an annual interest rate of 9%, Rs 13.5 crores in equity shares were allocated to RBL, and Rs 25.5 crores in 0.01% cumulative redeemable preference shares (CRPS) were also allocated to RBL.

Chemical companies are facing challenge to make sales. Their capex plan may be delayed further leading to slow flow of order to companies like Kilburn

Economy impact because of possible US recession might delay things by a year or more

High capital working requirements remain a risk.

Delay in Acquisition of ME energy. This is major risk in short term

Technicals on 10Feb24

Stock has been consolidating between 260-290 for almost few months and given a breakout recently and then got good results as well

Technicals on 31-Mar-24

Survived well in last one month market correction

Conclusion

If you have understood the triggers and industries it cater to + RISKS which can materialize and have patience then think of buying this company in every dip, market offers, else Ignore the stock

Stock might be volatile in short term and give a chance to buy around 270-340 range for long term investment purpose

Also Read : ICEMAKE Refrigeration : Time to Chill

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.

Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.

Stocks · SWOT

Chemical and Pharma Player : AMI organics

Its real ALPHA5 Comments

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

Ami Organics

SS9

CMP 1116, Market cap ~4100cr

ROCE ~20%, ROE ~15%, D/E ~0.16 PE ~57 (based on screener)

Also Read Pick1, Pick2, Pick3, Pick4, Pick5, Pick6, Pick7, Pick8

Business

AMI Organics (AMI) is a research and development driven manufacturer of specialty chemicals with varied end usage and is focused on the development and manufacturing of advanced pharmaceutical intermediates for regulated and generic active pharmaceutical ingredients (“APIs”) and New Chemical Entities (“NCE”) and key starting material for agrochemical and fine chemicals. AOL has three manufacturing facilities (excluding the recent acquisition of Baba Fine Chemicals [BFC] during H1FY24). Company manufactures intermediates from the ‘N minus 8’ to the ‘N minus 1’ level (where N is the final active pharmaceutical ingredient [API])

Products, Segments and Strengths

Company operates in two segments

Advance Pharma intermediates — 185+ Products, Intermediates across 17 therapeutic areas, Chronic Therapy focus: ~90%, Majorly backward integrated to Basic Chemical level, 50-90% global market share key molecules

Fermion had been among the biggest clients for Ami Organics in this domain. Ami Organics had been supplying intermediates for APIs like Darolutamide (prostate cancer), Entacapone (Parkinson) and Trazodone (Antidepressant). Company would be supplying an advanced intermediate for the Darolutamide API, starting from Q4FY24. At present, the company is the exclusive supplier for the same.

Speciality chemicals –This is where we are interested in coming future

Niche KSM for Agrochem and Finechem companies, Parabens & paraben formulations, Salicylic Acid and other specialty chemicals that
find end-use in cosmetics, dyes, polymers and agrochemical industries, animal foods, and personal care industries
New segment – Electrolyte used in manufacturing cells for energy storage devices. This also has huge potential in solar industry, automobiles industry

Clients

Advance intermediates : Speciality chemicals sales ratio –Approximate is 82:18 which is expected to go towards 75:25 in coming time. FY23 Ratio was 84:16

Export Sales: Domestic Sales ratio is approx. 58:42 in FY23, Q2FY24 ratio was 54:46 due to China oversupply and price erosion factors

➢ Well established and long-term relations with domestic and MNCs across large and fastgrowing markets globally
➢ Diversified customer base, 58% of revenue from Top 10 customers in FY23, 13 customers associated since last 10 years, 50 customers associated since last 5 years
➢ Long term supply contract with key customers
➢ Prolonged adherence to stringent client requirements leads to new business from existing customer base as well as from new client. ➢High entry barriers due to long gestation period to be enlisted as a supplier, Involvement of complex chemistries, Regulatory requirements. First to Market in most of the products

Strong focus on R&D

120 R&D members with 16 PhD, 14 process patents, Average approx expense on R&D is 1.7% of Revenue over last 4 years. In absolute terms its almost 7-8Cr per year

The Patent Office, Government of India, has granted Pracess Patents to Company for its inventions titled:

  1. A PROCESS FOR THE PREPARATION OF 2- (PIPERIDIN-4-YL)-1H-BENZO[D]IMIDAZOLE
  2. APROCESS FOR THE DIRECT SYNTHESIS OF FEDRATINIB INTERMEDIATE
    for the term of 20 years in accordance with the provisions of the Patents Act, 1970. The above mentioned patented processes have been indigenously developed at the R&D Centre of Ami Organics Limited. With this the total number of Patents granted to Company for its innovative processes and technology stands at 9.(march2024)

Fundamental Ratios, Cash, Loans, EBITDA,PAT margin, Shareholding pattern

Sales and Profits have been growing decently(>25-30%) over past few years while for current FY24, it has slowed down, FY25 and FY26 seems to be the major booster for company going forward

Similarly ROCE and ROE has come down in last 2 years but still at reasonable levels

Debt to equity is at comfortable levels and can afford more debt for future expansions

Cash conversion cycle is on uptrend (not a good sign) and Working capital days are also increasing . Need to be monitored closely

Shareholding pattern

Increasing promoter holding, FII, DII are increasing stake, Public domain have few strong holdings as well

ALSO READ : Company at Y2K moment

Recent Developments

Advance Pharmaceutical Intermediates

➢ Fermion contract: – Signed a new contract for additional advanced intermediate taking total product under CDMO contract to 3 products. On track to start the production from Q4FY24 onwards from Ankleshwar Unit

15-sep-23 Ami Organics Limited has signed another definitive multi-year, multi-tonne agreement with Fermion. As part of the agreement, Ami Organics will supply an additional advanced pharmaceutical intermediate to Fermion. Based on the supply projection shared by Fermion, the total minimum contract value is expected to be multi-million Dollar, spread across multi-year horizon. The product is expected to start contributing meaningfully to the revenue from FY25. Ami Organics had signed its first agreement with Fermion in November 2022 for supply of an advanced pharmaceutical intermediate. This agreement is in addition to previous agreement and further increases the total value of the CDMO contract with Fermion.

14-Dec-23 Ami Organics and Fermion ink another agreement for two additional Advanced Pharmaceutical Intermediate with Fermion. The products are slated to be manufactured at the Ankleshwar Facility and is expected to start contributing meaningfully to the revenue from FY25

Specialty Chemicals

  • Received orders for a UV Observer product used in Paint Industry. Expect commercial production to start from Q3 FY24
  • Electrolyte additives update- Advanced stages of negotiation of contract with couple of customers.
  • Process upgradation for existing products – methyl salicylate and parabens
  • it is working on two additives, not been manufactured so far by any other company in India. In this space, the company has received approval from nine customers and expects a large commercial order

Ami Organics Limited has signed a non-binding MOU with a global manufacturer of Electrolytes for manufacturing of electrolytes for battery cells and allied materials in Gujarat, India. In furtherance to this, the company will also sign an MOU with Government of Gujarat for
investment amounting up to Rs 300 crores for set up of dedicated manufacturing facility for electrolytes business in the state of Gujarat, in the upcoming Vibrant Gujarat Summit 2024.

Capex ongoing

Pharma intermediates capacity to expand to 4x

Related to the Fermion contract is the capacity expansion plan in Ankleshwar at a capital outlay of Rs 190 crore. Here, one block is dedicated for Fermion. This would carry on supplies related to the recent contract. Machinery installation in progress in block-1 at Ankleshwar unit, Started the recruitment process for the new facility. On track to commence the production activity in Q4 FY24 .The Ankleshwar facility is envisaged to have 436 KL — nearly 3x bigger than the existing facility 

Acquisitions

Baba Fine Chemicals Acquisition – Completed acquisition of majority partnership stake in Baba Fine Chemicals during Q2FY24. The acquisition of Baba Fine Chemicals (55 percent stake) is interesting as it deals with high entry-barrier products (photo-resistant chemicals), having applications in the semiconductor industry.

To reduce operational cost , the board has approved investment in a 16 MW solar power plant which along with already work in progress 5 MW solar power plant that will nullify our electricity expense once fully operational.

Company decided to fully impair the existing investment of Company, in the joint venture Ami Oncotheranostics LLC, as it is presumed that revenue generation from Ami Oncotheranostics will take significant time considering the inherent nature of its research activity in terms of
longer gestation period and uncertain success rate

Transformation of acquired entities like Gujarat Organics

Recently they acquired two manufacturing facilities Gujarat Organics (which was making loss makings as they did green field expansion in 2018) as Guj Org was making losses, it was bought by AMI Organics and turned EBITA margin moved from meagre 2% to 10% as of now (expected to touch 18% by next 2 year – also highlighted in their conf call as they are moving from batch processing to continuous flow chemistry). This acquisition enhances its specialty and fine chemical portfolio to enter Agrochemical, Cosmetics & Polymer Industry.
Due to this acquisition, one of client of Guj Organics referred them to make this electrolyte addictive. And hence, they have ventured into electrolyte addictive (belonging to carboxylic group) which is made by AMI in the whole Asia (except for few Chinese companies)

Details about Baba Fine chemicals

Valuations

Expected Cumulative sales projections for FY25 and FY26 is 2800-3500cr (considering existing business will also grow at 18-20%) and with PAT margin of 14% , we get PAT of 390-525 cr cumulatively. So stock price may move towards 2000-4200 Range by 31Mar26. There could be short term downside in stock which can be used for accumulation in case we are convinced about projections and sales

Risks

Susceptibility to raw material cost could affect Company profitability.

Inherent regulatory risk (USFDA compliance)

Competitive nature of industry driving pricing pressures. Oversupply from China does impact company growth in targeted markets

Combination of low margin and high margin products causes volatile OPM –This risk is expected to reduce with integration and business of other acquisitions done in recent years

High Capex ongoing and timely completion and start of production along with capacity utilization is a risk which needs to be monitored

High capital working requirements remain a risk. This is due to its wide portfolio, AOL needs to maintain sufficient inventory of the raw material as well as finished products.

Fermion contract getting cancelled midway

No major breakthrough in BFC business or electrolyte business

Technicals on 13Jan24

Stock has been consolidating between 900-1300 mostly in last 2+ years

Technicals on 3-Mar-24

Conclusion

If you have understood the triggers and industries it cater to + RISKS which can materialize and have patience then think of buying this company in every dip market offers else Ignore the stock

Stock might be volatile in short term and give a chance to buy around 1000-1200 range for long term investment purpose

Also Read : ICEMAKE Refrigeration : Time to Chill

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.

Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.

Stocks · SWOT

Astra Microwave

Its real ALPHA1 Comment

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

Astra Microwave

Business

Astra Microwave Products Limited (Astra) was incorporated in 1991 by a team of distinguished scientists with experience in RF/Microwave/Digital Electronics and management of projects with high technology content. Astra Microwave Products Limited, engaged in the business of design, development and manufacture of RF and Microwave Components, sub-systems and systems used in defense, space, meteorology and telecommunication

With over 30 years of experience in microwave radio frequency (RF) applications, AMPL has moved up the value chain from sub-systems to high value-added systems

Astra has 3 Automatic assembly lines for PCBA assembly, 5 class 10K cleanrooms, functional test infrastructure that extends from 30MHz up to 40GHz, in-house Environment test facilities including EMI/EMC facility and a first for any Indian Private Industry – Near Field Antenna test and measurement range.

Total workforce (as on March 31st, 2023) – 1,290

Subsidiaries

In fiscal 2014, AMPL floated the 100% owned BEPL as a captive supplier of raw material for overseas orders. In fiscal 2015, AMPL floated the 100% owned ASPL in Singapore, as a supplier of MMIC products for semi-conductors. In fiscal 2019, AMPL set up a joint venture, Astra Rafael Comsys Pvt Ltd, with Rafael Advanced Defence Systems for production of communication systems and sub-systems for defence.

Product Portfolio
The company’s product portfolio spans across Defense, Space, Meteorology, Homeland Security and Systems Vertical

Has a diverse range of microwave products like filters, transmitters, receivers, antennas etc.

Manufacturing facilities

5 facilities in Hyderabad, Continuous investment in World Class Infrastructure for Assembly, Functional and Environment testing. Astra’s facilities are approved by several foreign companies for production

R&D Capabilities
Track record of new product development; now graduated to a SYSTEM integrator in Radar. Dedicated R&D facility at Bengaluru to manufacture radars

Strong in-house capability in the microwave radio frequency (RF) applications domain.
Executes orders through BTS (Build To Specifications) and BTP (Build To Print) route

Customers and Regions of Revenue

  • Clientele includes Indian Government Laboratories, Indian Defense
  • Public Sector Undertakings, Indian Space Research Organization
    and many foreign OEM’s

Revenue mix

Geographical spread of total revenue stands as follows: India – 60% and Exports – 40%

Applications

Defense

  • Radars
  • Electronic Warfare
  • Missile Electronics
  • Telemetry
  • Counter-Drones

Space

  • Flight Model Application
  • Ground based
    Application
  • INSAT MSS Terminals

Hydro/Meteorology

  • Water Level Measurement (Bubbler/
    Radar Sensor)
  • Automatic Weather Stations (AWS)
  • Agromet Met Stations (AMS)
  • Automatic Rain Gauge (ARG) X
    Band Doppler Weather Radar

Other areas of work

  • Antennas
  • MMIC
  • Contract Manufacturing
  • Homeland Security

Awards and Certifications

The company has various certificates such as AS9100D & BS EN ISO 9001:2015, ISO27001:2013, ISO9001:2015, ISO14001:2015, ISO45001:2018, ISO/IEC17025:2017.

Awards

LAToT Ceremony for Coastal Surveillance Radar

Excellence in Innovation, Design Technology, R&D 2021

Counter-Drone System LAToT Handing over Ceremony

Award for Excellence in Aerospace lndigenisation-2021

ELCINA EFY Award for Business Excellence

Fundamental Ratios, Cash, Loans, EBITDA,PAT etc

Debt to equity is under control < 1

ROCE> 17

Pledge 0%

Short and long term liquidity under control

Recent Q1FY24 have been weaker than expected

Opportunity Size

Various tailwinds in the defence sector are creating a wide range of opportunities for Indian firms. Company expected to hit 6000-8000cr cumulative revenue in next 5 years if TAM is correctly addressed

Triggers

Defence spend in India has received a mega boost
Opportunities to develop and supply products which are published as negative import list by GOI
Government of India’s Atma Nirbhar Bharat initiatives

Favorable policy initiatives like Buy (IDDM – Indigenously Designed, Developed and Manufactured),MAKE-II, MAKE-Ill

Expansions and Acquisitions for future growth

QIP has been done at 270 rs for Reducing working capital and corporate purposes

Operating margins can improve further

Focusing on domestic defense order can lead to 20% OPM in coming years.

We aim to achieve 70% Domestic 30% Export Revenue distribution over next 2-3 years. Domestic business on an average carries 40 to 45% of gross margin as against 8 to 10% gross margin in exports.

Order inflows

Orders are worth an aggregate amount Rs. 158 crores for supply of Software Defined Radio (SDR) by Astra Rafael Comsys Private Limited (Joint Venture) Company has received an order from India Meteorological Department (IMD) for Supply of C-Band Dual Polarized SSPA based Doppler Weather Radars for a total value of Rs.32.97 crores. Order is to be executed within a period of 18 months.

Orderbook as of March 2023 is Rs. 1,544 crores. This order book consists of only 24% of export orders rest 76% are domestic orders. The BTP segment is a major contributor of our export orders, which are executable in the next 24 months. The sales mix is anticipated to be skewed towards domestic, high margin business.

Orders are worth an aggregate amount order(s)/contract(s) awarded in brief; of Rs.16.8 crores for supply of Satellite sub-systems and weather data processing system from ISRO

Company has bagged orders worth Rs.158 crores for supply of Satellite sub-systems, Airborne Radar and sub-systems of Radar and EW projects, from DRDO, ISRO and DPSU’s

Targeting JV and exploring fields like

Through JV or strategic alliances, offer improved technology and products.
Target the offset requirement in large defence procurement programmes of Gol.
In discussion with our JV partners to develop EO (electro-optics) product line. Bidding for the whole system – the complete radar system – for both DRDO and for future MoD requirements

Risks

Lumpy nature of domestic defence/space programs –Orders come in bulk and so are the payments.

Large working capital requirement: Gross current assets (GCAs) improved to 346 days as on March 31, 2022, from 398 days a year before, led by reduction in debtor days. GCAs are expected at around 400 days over the near to medium term with increased execution of domestic orders. The group primarily caters to domestic defence research and space establishments that usually have a long production cycle and longer working capital cycle compared with overseas orders. Though export revenue may be realised faster, it will be offset by stretch in receivables from domestic orders as domestic order execution is expected to increase in the future and thus working capital intensity would be a key monitorable. Furthermore, the group must maintain sizeable inventory to cater to all segments, as products are customised, and thus, requirements vary across segments.

Susceptibility to risks inherent in a tender-based business, and long gestation period for projects: The business depends on success in bidding for tenders invited by defence public sector undertakings and research establishments. Establishments such as the DRDO invite tenders from qualified vendors for their R&D requirement and commence bulk production on successful completion of product development. Long-term revenue visibility is primarily driven by the success of R&D projects at DRDO and the subsequent mass production of products.

Margins Volatility is high. Export vs domestic order execution changes margin profile and needs to be seen closely in coming quarters

Technicals on 25th Aug23

Disclosure –Invested. Do your own diligence before buying/selling

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.

Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.

Stocks · SWOT

Time to Forge bonds : Ramkrishna Forgings

Its real ALPHA1 Comment

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

Ramkrishna Forgings

Business

Ramkrishna Forgings Ltd is primarily engaged in manufacturing and sale of forged components of automobiles, railway wagons & coaches and engineering parts. Company mission and vision is to be the most preferred supplier of forged, rolled, machined, fabricated and cast products for all end use industries like Railways, Automotive, Earth Moving, Mining, Farm Equipment, Oil & Gas and General Engineering globally by supplying products meeting highest quality standards at highly competitive costs

Manufacturing facilities

RKFL’s facilities in eastern India are located in close proximity to automobile manufacturing hubs and key suppliers of of raw material

  • Less chance of supply interruptions
  • Lower logistics cost
  • Reduced working capital requirements

Customers and Regions of Revenue and Product verticals

Products

Company focus is on de-risking business from few customers or few segments or few geographical areas

They have succeeded quite well in last 4 years

When a company has to grow to large company, many such things will give stability to company to perform well

Experienced promoters and established track record of the company

Promoters have 40 years of experience in forging industry

Fundamental Ratios, Cash, Loans, EBITDA,PAT margin, Shareholding pattern

PAT , ROE, ROCE, PAT margin showing improved profile

8x sales growth and 35x profit growth in 10 years

Stock price is also 20x in 10 years and its quite possible to become 2-3x in next 3 years with CAGR of 24-30% approximately

Debt to equity has come down considerably and now close to 1 while Debt to EBITDA also is planned to reduce to 1 by FY25

Cash conversion cycle has improved to 100 days and Working capital days has also improved

Topline and bottom-line has improved significantly in last 3 years and trajectory is expected to continue in similar fashion

Shareholding pattern

Good promoter holding, skin in game, FII are increasing stake, Public domain have few strong holdings as well

FY23 Fundamentals ratios

ALSO READ : Company at Y2K moment

ALSO READ : Dream come true

Strengths

Manufacturer and supplier of a variety of auto and non-auto components
Global presence with footprints in North America and Europe
2nd largest forging player in India with over 40 years of experience Promoter possessing multi-decade forgings industry experience
Continued focus on diversification with foray into EV components
Longstanding relationship with marquee customers

Outstanding Credit ratings –perfect recipe for large cap progerssion in coming years

Triggers

Opportunity size in exports and domestically

There is a huge requirement in India and in various overseas countries. Compant exports are grwoung well

Capacity Enhancement and future growth from internal accruals

Commissioned 7,000T Press Line in 2021 and also commissioned a Warm Forging Line and a Fabrication Facility in 2021

The company has commissioned 23,800T of capacity as on 18th July 2023 and the remaining 32,500T will be commissioned by September and overall Increasing to 2,10,900T (current installed capacity 187000T)

In addition, the company has planned to setup cold forging capacity of 25,000T. The Company has sufficient capacity for the next phase of healthy & robust growth. Capacity ramp-up along with operating leverage will result in faster improvement in profitability

Cold Forging Press line to be commissioned by Q1FY25
Entire 100% capacity has been booked by an OEM, the contract of the same is valid for 7 years

Management guidance in Q1FY24 Call

Subsidiaries and Strategic Acquisitions

Company has done a JV with Titagarh rail company for manufacturing and supplying of forged wheels for Indian railways

Ramkrishna Forgings announces strategic acquisition of Multitech Auto Private Limited and its wholly owned subsidiary Mal Metalliks Private Limited along with Mal Auto Products Private Limited. This can lead to 20% of current revenue addition

Source

Also company has done some acquisitions in ACIL , JMT auto and Tsuyo. This push will help company to foray into tractor, PV segments, Heat treatment, gears, BLDC EV segments

Industry growth rate

Various forecast showing industry will grow between 6-10% for next few years. Important to understand here is the industries the company caters to

All these segments have Government focus and will grow heavily in next 5-7 years. So I believe company is present in right segment and right regions (fastest and biggest regions)

Recent Order wins

Just listing few wins in last one year

Source
Source
Source
Source
Source
Source
Source

Risks

Susceptibility to raw material cost could affect Company profitability.

US landing into recession may also trigger less future orders in short term. Stock may consolidate before moving up

Stiff competition from peers like Bharat forge but this risk is bit mitigated with many order wins recently and consistently

Higher revenue concentration from Auto segment and CV domain in that is a risk–though company is taking utmost steps to remove this risk as highlighted above

High capital working requirements remain a risk

JV falling off with Titagarh rails for reasons is a small risk

Railways not going ahead with orders and new tenders in coming time is another risk which we need to consistently monitor

Technicals on 22 July 23

Conclusion

If you have understood the triggers and industries it cater to + RISKS which can materialize and have patience then think of buying this company in every dip market offers else Ignore the stock

Stock might be up in short term and then give a chance to buy around 400-450 range for long term investment purpose

I am holding it from lower levels and I reserve the right to add more or exit as per company performance without a followup /update here

Also Read : ICEMAKE Refrigeration : Time to Chill

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.

Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.

Stocks · SWOT

Time to Chill : ICEMAKE Refrigeration

Its real ALPHA5 Comments

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

ICEMAKE Refrigeration

Business

Ice Make Refrigeration Limited is a leading producer of Cold Rooms, Freezer, Refrigeration System and Chilling Plant, etc. having a plant at Dantali, Ahmedabad. Company is leading supplier of innovative cooling solutions and manufacturer of over 50 plus refrigeration equipment in India. The company has started its business with a mere of Rs. 3 lakh & has crossed the market cap of Rs. 500 crores recently

Manufacturing facilities

Company has two manufacturing units in Gujarat and Tamil Nadu and also they have setup one more unit of manufacturing in West Bengal that is expected to be operational in the next one month

R&D Capabilities, Employee strength

Employee strength 625+, increased from 560+ in last 2 years

Company keeps on introducing new products in market. Ice Make’s innovative equipment product range also includes ice cream mix
preparation for small and medium scale, specially designed mix plant units. Its chiller product range includes Air Cooled Chiller, Water Cooled Chiller, liquid Chiller, Brine Chiller, and Screw Chillers.

Customers and Regions of Revenue and Product verticals

The Company operates under key business verticals including Cold Room, Commercial Refrigeration, Industrial Refrigeration, Transport Refrigeration & Ammonia Refrigeration and caters to wide range of Industries in India and also exports its products to overseas clients in 24 countries

The diversification in IMRL’s client profile also remained healthy with top clients contributing only around 25-40% of its total revenue over the last three years ended FY22. Around 70% of IMRL’s revenue is generated from direct sales whereas the balance is through its dealers and distributors spread across the country

Awards and Certifications

The company over the years have received several awards and accolades including Indian Leadership Award for Industrial Development, Best Medium Enterprise Canara Bank and SKOCH Award for manufacturing, India SME 100 Award and Gold Award for Excellence within its Core Industry category

Experienced promoters and established track record of the company

Promoters have 30 years of experience in cold chain industry

Fundamental Ratios, Cash, Loans, EBITDA,PAT margin, Shareholding pattern

PAT , ROE PAT margin showing improved profile

Debt to equity has come down considerably

Cash conversion cycle has improved to 64 days and Working capital days has also improved

Topline and bottom-line has improved significantly in last 2 years

Shareholding pattern

Strong promoter holding, skin in game

Triggers

.New product launches in last few years as industry is evolving

Opportunity size

There is a huge requirement in India and in various overseas countries for innovative cooling and cold chain storage solutions and ICE Make is well positioned to take advantage of these opportunities. Continuous Penal business is expected to grow at a 14 % CAGR YOY & Cold Chain and storage business is expected to grow at a CAGR of 15% to 17% between years 2022 to 2027”

Need of cold chain infrastructure for Dairy, food and pharma

Capacity Enhancement

Company has acquired approximately 44,538 Sq. Mtr land situated at Mouje : Dhanwada, Taluka : Bavla, District : Ahmedabad, for “Continuous Panel” business. Project shall be fully functional by April 2024. Continuous penal business is a part of our refrigeration business which shall be used in big cold storage projects as well as in infrastructure projects

Company also setup one more unit of manufacturing in West Bengal that is expected to be operational in the next one month

Ice Make’s new project for Continuous PUF Panels has a revenue potential of over Rs. 200 crores in a single shift.

Subsidiaries and Acquisitions

Ice Make Refrigeration Limited has incorporated a Subsidiary of the Company in the name of ‘IceBest Private Limited’. As per the certificate of incorporation dated 28th December, 2022. runrate of 10cr expected, which will increase market share from east India

Industry growth rate

Various forecast showing industry will grow between 14-16% for next few years

Venturing into new markets

Expansion in east for manufacturing will help with voluminous products. Expansion in south, once the current lease gets over for subsidiary may happen. So company has that vision of expanding pan India

Recent Order win

lcemake has bagged Dairy Project for Design, Supply, Installation, and Commissioning of Civil, Mechanical & Electrical work for 1.0 LLPD (Exp. 1.5 LLPD) on Turnkey Basis at Haringhata, Dist. : Nadia, State : West Bengal, from West Bengal Livestock Development Corporation Limited (A Govt. of West Bengal Undertaking) for which the Company has received Award of Contract, amounting to Rs. 65.48 Crore including GST and all other charges / taxes. Entire Job including Handing over shall be completed within 540 days.

Scuttlebutt shared by one of fellows Yogesh whose family is in Icecream business–adding details with his permission

Risks

Susceptibility of IMRL’s profitability to volatile raw material prices. The main raw material used by IMRL in manufacturing comprise of polyurethane (PU) chemical and galvanized steel sheets along with components made from copper and aluminium. Prices of these products are volatile in nature (as PU is a crude oil derivative, while prices of metals are inherently volatile), it exposes IMRL’s profitability to adverse movement in these prices. Considering raw material cost constitutes ~75% of Cost of Sales, any variability in the same could affect IMRL’s profitability.

Further the nature of contracts are fixed, price can not be changed for existing contracts easily.

Stiff competition from organized big logistics players

Subdued performance of its wholly owned subsidiary viz. Bharat Refrigerations Private Limited (BRPL).

Technicals on 11 July 23

ALSO READ : Company at Y2K moment

ALSO READ : Dream come true

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.

Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.

Stocks · SWOT

Pricol : Emerging Auto Ancillary

Its real ALPHA2 Comments

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

Business

Pricol Limited is an auto component supplier headquartered in Coimbatore, Tamil Nadu that manufactures various products such as driver information systems, oil/water pumps, chain tensioners, cab tilts, fuel sensors, temperature/pressure sensors, speed limiting devices, and wiping systems. Company is the world’s second largest DIS manufacturer for 2 wheeler.

The promoters, and related family members/family-owned entities hold a 36.53% stake in Pricol.

Manufacturing facilities

9 Manufacturing Locations, 8 Manufacturing Plants in India , 1 Subsidiary Plant in Indonesia. 3 International Office in Tokyo, Singapore & Dubai

Two direct subsidiaries in Indonesia (produces and markets instrument clusters, oil pumps and fuel sensors), and Singapore (procurement arm).

R&D Capabilities

2 Technology Centers at Coimbatore, ~ 4.5% spend on total revenue for R&D, As of march 2022, co. has made 13 inventions for which 18 patents have been filed. Out of which 12 are granted and remaining are under review.

Employee strength 850+, Engineers 300+

Customers and Regions of Revenue

Two-wheelers accounted for 61% of revenues and domestic sales constituted over 90% of its revenues in FY2022. Exports as a % of total revenues have dropped from ~30% to ~10% from FY20 to FY22. primarily due to divestment of various loss-making foreign subsidiaries.

In FY21 , DIS and pumps & mechanical products accounted for 50% and 33% of consolidated revenues respectively. Target is to take it to 70:30 ratio

Awards and Certications

Leading Industry Certifications IATF 16949:2016, ISO 14001:2015, ISO 45001:2018

Pricol has been recognized with the “Business Innovation” Award by the Confederation of Indian Industries (CII) Tamil Nadu for the various innovations done on Driver Information and Connected vehicle solutions

Award received from Honda Motorcycle and Scooters India “Best Delivery Management”

Award From TATA Motors (TML) on 07-Sept-2022

Award received under the category “Technology Excellence Award 2022” for the Best Interactive Product in Automotive.Award From Quantic India on 14-OCT-2022

Award From Hero MotoCorp on 07-NOV-2022. Award received under the category “Best In Innovation & Technology” at the Hero – NEXT 22

TOP 50 INNOVATIVE COMPANIES
Confederation of Indian Industries (CII) awarded Pricol as one of the “TOP 50 INNOVATIVE COMPANIES” as a part of Industrial Innovation award 2022

Product verticals

Driver information and Connected Vehicle solutions

This vertical is having products which are becoming need of every vehicle, 2W, 4W, CV, PV, LCV. Next stage could be CV, 3W and EV penetration

Moreover with EV domain coming up, this vertical has more legs

Customers

All Major customers are their clients

Experienced promoters and established track record of the company

Fundamental Ratios, Cash, Loans, EBITDA,PAT margin, Shareholding pattern

PAT transformation is sustained and growing, OPM got stable at 12%, we can expect OPM in range of 10-15% in coming years. Chances are it might get stable at 13-14% in next 2-3 years. EBITDA margins target of 15% from company side

ROE is improving over last decade and stands at 18%, ROCE at20%

Stable Cash conversion cycle and Working capital days are just under 25

Shareholding pattern

Low retail presence

IN house excellence

MANUFACTURING EXCELLENCE
PCB Assembly with SMT Lines
Robotic Lines with EOL Testing
State of the art Tool Room
Plastic Injection Molding
Pressure Die Casting
Machine Building
Sintering

Subject Matter Experts in Electronics
(Hardware & Software), Mechanical and
Electro-Mechanical domains
ASPICE level 2 practices

TESTING EXCELLENCE
EMI – EMC
Hil Lab
Environment
Endurance
Product Reliability

Triggers

Key partnerships of company with SIBROS, BMS, Technology provider, PSG institutions and Candera CGI studio can propel the company technically and come up with advanced products and solutions

Below snippet is from Q1FY23 Confcall Aug22 —talking about 12-36 months for different engines to fire

So 9 months has passed from that time.

New product launches in Q4FY23

In FY22, co. has launched certain new products, including some marking products especially for TVS on their iQube, the electric vehicle, a seven inch TFT the first of its kind, a hybrid TFT plus LCD instrument cluster, among others

Increase in exports to 20% of revenue

Exports as a % of total revenues have dropped from ~30% to ~10% from FY20 to FY22. Currently Plan of company is to take to 20% by 2025. Big deal with Caterpillar done and things will roll out in coming years

Capacity Enhancement and new machines

Production capacity enhancement in Tool room, Plastic Component Manufacturing Shop and SMT (Surface Mount Technology) for PCB assembly line by adding new machines.

Acquisition of shares by Minda

Minda holds 15.7% and wants to increase till 24.5%, That can trigger an open offer and push share price might move up. As of now Pricol is opposing the deal

Diversified product profile comprising of driver information systems, pumps and mechanical products mitigates product-specific risks to a large extent

Established relationships with OEMs with healthy share of business – Pricol is a reputed player in the Indian auto component industry with presence for over five decades and supplies to original equipment manufacturers (OEMs) like Hero MotoCorp Limited, TVS Motor Company, Bajaj Auto Limited, Ashok Leyland Limited and Tata Motors Limited.

Company has the target to reach 4000cr revenue by FY26. The company has an order pipeline for the next 3 years

Past Disposal of loss-making businesses–No overhang there
In order to reduce debt, co. has disposed off certain loss-making businesses and divested subsidiaries, for example, co. disposed off its Wholly Owned Subsidiaries – PWS India and Pricol and Pricol Espana in 2019 and 2020 respectively.
It has written off ~400 crores in the process of selling its loss-making foreign businesses

Venturing into new markets
Co. has plans of Venturing into motors and actuators, such as new sensors and newer technologies in driver information systems, like areas in EV vehicles and they have identified certain areas. 
In FY22, co. has won many new businesses across various segments including products like Connected Vehicle Solution and around 10 % of the revenue of FY 22 was contributed by new business

PLI scheme approval and CAPEX plans

Pricol is approved for PLI (Production Linked Incentives) Scheme The PLI scheme (outlay of $ 3.5 bn(or)Rs 25,938 crore) for the automobile sector proposes financial incentives of up to 18% to boost domestic manufacturing of Advanced Automotive Technology (AAT) products and attract investments in the automotive manufacturing value chain…PRICOL LIMITED is approved by the Ministry of Heavy Industries(MHI) for the Component champion Incentive scheme

From Aug22 confcall

Targeting Exports and EV segment India’s growth story will be muted in the next 3 years for 2W auto segments; the company’s target is export. Company has a LOI for next 30 months and on the basis of that company projected the target of 4000cr. The company is working on premium products so even at low volume growth the target will be achieved. 8. Company is EV ready and in touch with all EV players in India. Currently 8% revenue is from EV in the DIS segment. Working with 22 EV players in the country. Margins are same from EV as well; also share of EV will go up as EV adoption increases in India

Demerger possibilities to unlock value To unlock value for shareholders, if there is a need to align with some other company to get technology from MNC players, then Pricol may demerge into 2 different companies for DIS and other businesses

Risks

Muted growth in Indian 2W Market

Company has shared at multiple times that next 2-3 years they expect muted growth in Indian 2W market, though with supply of premium products and margin, company may grow better than industry

Exposure to volatility of raw materials and forex rate fluctuations due to high reliance on imports
Semiconductors and electronic components account of ~20% of Pricol’s raw material requirements. Supplies have eased out in last few months. But any recurrence can again lead to volatile times

Heavy Dependency on few customers

High segment concentration with 2W contributing to over 70% revenues– Pricol continues to derive 70% of its revenues from the 2W segment, and 57% of its revenues from its top three customers. Further, over 90% of the revenues are from the domestic market

Heavy dependency on top 5 customers and top 12 customers for business –>12 strategic customers contributing to about (+) 85% for sale and we continue to
grow with all of these 12 customers and our primary sales are driven by these 12 customers comprising of two wheelers primarily followed by commercial vehicles and then passenger cars.

Hostile takeover bid by Minda

This creates an Overhang and use Management Bandwidth in wrong direction. Can lead to company stock price going nowhere

Technicals on 21st May

ALSO READ : Company at Y2K moment

ALSO READ : Dream come true

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.

Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.

Stocks · SWOT

Company at Y2K moment

Its real ALPHA4 Comments

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

Business

Incorporated in 2004, Syrma SGS Technology Limited is a Chennai-based engineering and design company engaged in electronics manufacturing services (EMS). The company provides integrated services and solutions to original equipment manufacturers (OEMs) from the initial product concept stage to volume production through concept co-creation and product realization

Syrma is a technology-focused engineering and design company engaged in turnkey electronics manufacturing services (“EMS”), specializing in precision manufacturing for diverse end-use industries. They are leaders in high-mix low volume product management and are present in most industrial verticals

Product Portfolio
– Printed circuit board assemblies (PCBA)
– Radio frequency identification (RFID) products
– Electromagnetic and electromechanical parts
– Motherboards
– Memory products – DRAM modules, solid state, and USB drives.

Manufacturing facilities
The company operates eleven manufacturing facilities in North India (Himachal Pradesh, Haryana, Uttar Pradesh) and South India (Tamil Nadu, Karnataka). The manufacturing facilities in Tamil Nadu are located in a special economic zone. The manufacturing facility in Haryana has been set up under the Electronic Hardware Technology Park scheme, which allows the company to avail of tax and other benefits.

R&D Capabilities
Co. has 3 dedicated R&D facilities, 2 of which are located in Chennai and Gurgaon, and one in Stuttgart, Germany. R&D efforts are focused on

(i) developing new products and improvement of the quality of existing products, and

(ii) driving the design and engineering capabilities and original design manufacturing capabilities of the company.

Customers and Regions of Revenue

TVS Motor Company Ltd., A. O. Smith India Water Products Pvt. Ltd., Robert Bosch Engineering and Business Solution Pvt Ltd., Eureka Forbes Ltd Limited, CyanConnode Ltd., Atomberg Technologies Pvt. Ltd., Hindustan Unilever Ltd., Total Power Europe B.V.
Company’s products are sold in 25+ countries, including USA, Germany, Austria, and the UK. In FY22, exports contributed 55% of the revenue.

Awards

Dec’22 Best EMS Supplier 2022 Award by Pricol
Nov’22 Innovation & Technology Excellence Award by Wabtec Corporation
Oct’22 Award for Techno Visionary – Industry for the Year 2022

Experienced promoters and established track record of the company
Syrma belongs to the Tandon group, which started its first manufacturing unit in 1976 for the manufacture of floppy drives for IBM. The unit was the first hard disk drive (HDD) manufacturing unit in South Asia then. Mr Sandeep Tandon, Chairman of Syrma, has over two decades of experience in the electronics industry. By 2000, the group diversified to high-volume electronics manufacturing services for leading IT majors of the world. The group’s range of products includes printed circuit boards (PCBs), magnetic disk drives, magnetic coils, RFID tags, etc. The promoters of the acquired entity – SGS – have more than three decades of experience in the electronics manufacturing industry, with operations across six manufacturing facilities. The company is led by four directors, who are also its founders. The promoters of the company are professionally qualified and have degrees in electronics engineering/management from reputed institutions. Mr J S Gurjal, who was the promoter of SGS, is now the Managing Director of Syrma.

Industry and prospects
The global EMS market traditionally comprised of companies that manufacture electronic products, predominantly assembling components on PCBs and box builds for OEMs. EMS differs by service providers, and any particular partner may provide any combination of the following: PCB assembly, cable assembly, electro-mechanical assembly, contract design, testing, prototyping, and aftermarket services. The market in India is highly competitive and there are more than 30 organized companies in the EMS industry, but the commercial semi-conductor fabrication operation is almost non-existent. The competition concentration is moderate as the top three companies account for about 30% of the market. The companies follow either of the two unique business models – high volume/low mix or low volume/high mix.
In terms of government initiatives for the sector, the Indian Government is attempting to enhance manufacturing capabilities across multiple electronics sectors and to establish the missing links in order to make the Indian electronics sector globally competitive. India is positioned not only as a low-cost alternative but also as a destination for high-quality design work. Many multinational corporations have established or expanded captive centres in India. Post the COVID-19 pandemic, many global electronics manufacturers are contemplating on the China+1 strategy and looking for alternate manufacturing locations for exports business, which is advantageous to Indian manufacturers. Syrma’s presence in the ODM segment offers the company a better position and margins. However, the company’s ability to scale up operations amid the improved demand for the sector and the capability of the company to manage the shortage of raw materials and the working capital cycle remains key to the prospects

Revenue mix

Quarterly basis

Nine month basis

Current mix of the Auto, Consumers, Healthcare , Industrials, IT and Railways

Fundamental Ratios, Cash, Loans, EBITDA,PAT margin, Shareholding pattern

Company has sufficient Cash to grow

Stable PAT and EBITDA margins , ROCE is approx 13%

Opportunity Size

The Indian ESDM market is expected to grow at about 40% annually. The company expects to grow in line with industry growth rates.

Triggers

The company IPO has given sufficient cash for capex. Capex will involve around Rs.38 crore for setting up a R&D facility in Chennai, Rs.108 crore for setting up and expanding the manufacturing facility at the Chennai Plant, around Rs.52 crore for setting up new manufacturing facilities in Hyderabad, around Rs.228 crore for setting up and expanding of manufacturing facilities in Manesar, around Rs.62 crore for setting up new facilities in Bawal, and around Rs.83 crore for setting up new facilities in Hosur.

Q3Fy23 bringing up our new facility in Manesar and Chennai for the design and development

Incorporation of new subsidiary

Syrma SGS Electronics Private Limited is incorporated as a wholly owned subsidiary of the Company on March 03, 2023

To carry on the business of designers and manufacturers, buyers, sellers, assemblers, exporters, importers, distributors, agents, and dealers in memory chips, memory modules, PCB assemblies and other storage products, printers, readers magnetic or otherwise, CRT displays and terminals and all other electronic and communication equipment and parts, components, assemblies and subassemblies to be used in the computer and electronic industry
including voice coils, voice coil actuator assembly, antenna coils, smart cards and radio frequency identification devices.

Acquisitions of SGS and PerfectID

This is playing out already in right direction as businesses acquired are complementary

Syrma acquired a 20% stake in SGS in November 2020. Funds of Rs.92.04 crore from private equity funds and other shareholders have been infused in Syrma in FY21, partly as equity and partly as preference capital, which has been utilised for the purpose of inorganic growth by way of acquisition of SGS. The erstwhile promoters of SGS now hold 9.23% share each in Syrma, totaling to 37%.
SGS, incorporated in 1986, is an Indian EMS company that primarily assembles PCBs for its clients. In terms of customer and geographical profile, there is no overlap between Syrma and SGS, thereby diversifying the segment and client profile on a consolidated basis.

Syrma also acquired 75% stake in Perfect ID India Private Limited in October 2021. PerfectID manufactures RFID label tags and passive inlay tags, which is in addition to the existing capabilities for the manufacturing of RFID hard tags, thus expanding the RFID products portfolio.

PLI approvals

Company has received 2 PLI application Approvals in the telecom and in white goods air conditioning sector. As of date, the telecom PLI investments are on track, new facility at Manesar has been commissioned, it has gone into production in the second quarter of FY23 and expect huge traction in that business going forward in the coming quarters. The air conditioning PLI for products are under validation and it would be some quarters before we see any outcome. Products for the Indian market both inverter and non-inverter are under validation.

Company is focused on building out more ODM type development with current and new customers.

Very strong audits done by new marquee customers throughout facilities are done, so company is expecting new business to roll in over the next six to nine months with those customers

Order book size 1700 cr Sep22, 2100cr in Dec22–which is executable within 12 months is about Rs.1800 Crores and the spillover is about Rs.300 Crores

Capacity utiliation of old plants 75% approx, new plants commisioned approx 50%

Top 10 client concentration is 47% Dec22

In future margins increase can come from healthcare shipments which is export oriented business, or box build assemblies going more or asset turn increases with more production line and bulk order in consumer segment

Company is the single source for a lot of customers

Company is expecting rebound in Europe in two quarters

The growth is primarily led by continuous efforts on design lead manufacturing and has broadly been across sectors, but led by auto and consumer. The growth in a few sectors like healthcare and exports has been muted and slow because of the recessionary conditions and inflation in Europe, but we are very confident on the long term story and expect this to rebound in the coming quarter or two quarters.

Q3Fy23 call

Consumer growth business is primarily lead by our entry into the fiber to home devices and the telecom PLI scheme and the visibility which we have received makes us confident that this will lead to a sustainable growth in this segment in the coming quarters. It is not a one off growth, but a sustainable growth and we have also added more technology partners in this segment, which will further broaden the base and derisk the segment from the risk of a particular technology partner going down or a customer going down so we are broadening the base on this front.

In the automotive, the higher traction of growth will be in the EV segment

Next cycle of growth from EV charging infra and energy storage infra

Risks

High Valuation in short term

One needs to keep long term view, buy as SIP for risk mitigation of valuations

Exposure to volatility of raw materials and forex rate fluctuations due to high reliance on imports
Syrma’s raw materials consist of many components, including ICs, among others. Majority of the components, chips and PCB ICs, are imported and Syrma has the liberty to choose the buyer in most cases. Most of the contracts of Syrma with its suppliers are back-to-back contracts. Also, though the prices with most of Syrma’s customers are negotiated and agreed to initially, they are reviewed regularly. Recent times have seen a severe shortage of key components like ICs and this may also impact the operating margins and the working capital cycle of the company. Due to the high lead time for chips, which extends up to 52 weeks in some cases, the inventory-holding has increased. The company has to make advance payments in some cases to secure the raw materials, which has increased the working capital borrowings of the company. In the short term, this is expected to continue and the margins and working capital will remain affected by the shortage of semi-conductor chips.


Technological obsolescence risk
Electronics manufacturing companies are constantly exposed to obsolescence risk, which requires the company to keep up with the changes and advancements by constantly upgrading its products and technologies. But the company has seen and adapted to changes since inception and has been aware of the technological advancements, right from floppy disks manufacturing to RFID tags now. Syrma has recently forayed into manufacturing RFID tags, considering that the market for the same is expected to grow exponentially in future. The ability of the company to continuously enter new advanced product categories will be key to its future prospects.

Impact of the slowdown in the European and the U.S. market would only on this portfolio? Or it could be in any of the other segments of the exports of EMS?
In general, there’s a softening of the growth, I would say there is a reduction but there is a softening of the growth which we had projected, which we believe is for maybe 2 quarters or I don’t know, it’s just the geopolitical situation. But because of the diversified portfolio which we have, we have been compensated by other segments of the business, which is the domestic-led business. So, we would see the export business impacting on our overall plan for this year, in terms of our customer mix

Technicals on 14th May

Technicals when I entered

Disclosure –Invested from lower Levels . Do your own diligence before buying/selling

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.

Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.

Stocks · SWOT

Its a DREAM come true

Its real ALPHA7 Comments

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

Business

Dreamfolks in India’s Largest Airport Service Aggregator Platform. Company provides clients the option of providing their end consumers different mechanisms to access certain airport-related services like lounges and all the other services

DreamFolks platform is proprietary and has been developed in-house. The platform and the technology is cloud-based and it allows lounges and other operators to check the benefits of the consumers based on the cards, memberships, or vouchers, and also allows access to the different facilities based on the benefits or integration as per our clients, such as banks or networks, processes, and their systems

Company’s platform actually comprises of quite a few components. There is benefit configuration, there is benefit calculation, there’s an entire management engine, there are data exchange, APIs with different banks and networks, and integration options to embed into different mechanisms, including with company partners. Platform also facilitates the use of hybrid access modes depending on the client’s preference, so they can use whichever mechanism that is most beneficial for them. It also facilitates lounge access processes so that consumers benefit such things in real time across various access modes. And that drives accurate accounting and is designed to prevent abuse and denial of services to consumers

Major expenses are linked to employee compensation and in-house R&D expenses. And being an extremely asset-light company with a very lean organizational structure and size, Company don’t have any major capex needs or other outlays and Company seems confident of financing any future scale-up or expansion through internal accruals

Revenue mix

Current mix of the lounge versus other services 95% versus 5%, Similar margins

Seasonality

40% to 45% in the first half and rest in the second half of the year, due to the simple reason that the festivals and the holiday season kicks in only starting from August, September.

Coverage

100% coverage across all 60 Airport lounges operational in India

Market share of ~95% of all India issued card based access to domestic lounges in India (FY22)

68% share of the overall lounge access volume in India (FY22)*

Present currently in 10 railway lounges across the country and witnessed a steep growth rate with our modernization of railway stations happening at great next speed

Golf Games, Lessons and Railway lounges are new categories

This association will give customer access to golf games and lessons at 40+ golf clubs throughout India and 250+ golf clubs and resorts in the Asia Pacific region.

Price Realization on the blended basis is INR 940 approximately. Domestic is close to INR 840-INR 845. And internationally, that would be between INR 1,200 to 1,400.

Client 52 —Employees 60 –Nov 22 update, 64 employees Feb23

Touchpoints 1450 in Nov 22, 1486 in Feb23, might cross 1500 by Apr23

Touchpoints refer to a service fulfilment point at Airports across India and overseas owned by service providers with whom Dreamfolks has a contractual arrangement

Opportunity Size

Triggers

  • Rising preference of Air Travel amongst travelers over rail and road
  • Jump in India’ Ease of Doing Business – Enhanced economic activity
  • Rising class of leisure travelers – 72% extend business trip for leisure
  • Declining Air travel cost compared to AC Rail travel
  • GoI push through UDAN Scheme – Increase Air Travel in Tier 2 & Tier 3 cities
  • Increasing Credit & Debit cards base bodes well for DreamFolks – Key beneficiary from Bank led Card Loyalty Programs targeting Airport Lounge Access
  • Domestic air traffic grew by ~16.7% in Q3FY23 as compared to Q3FY22.
  • Strong growth of ~63.0% in domestic air traffic in 9MFY23.
  • Witnessing 98 Mn footfalls in Indian Airports during 9MFY23.
  • Credit Card base in India grew by ~18% witnessing 81 Mn cards as on Dec’22

Next phase of growth is centered upon three levers;

Cross-selling and up-selling to existing clients,

Acquiring new clients in existing and new sectors and

Via geographic expansion from a purely domestic focus currently to an international focus in pre-determined geographies.

With the existing clients, we aim to increase wallet share and expand our association beyond airport lounge services to include F&B, spa, meet and assist.

As regards new clients, we aim to expand into new sectors to create customer engagement and provide loyalty management solutions. Another focus area is to focus on customer engagement and loyalty solutions for corporate clients and build specific solutions for loyalty companies, ecommerce companies, new age digital companies, hospitality sector companies, and neo banks amongst others

Replication of similar successful operating model by leveraging deep knowledge of industry, technology innovation, process expertise and business model across new high growth markets which include Central and Eastern Europe, Middle East, Africa and Southeast Asia.

Recent developments

ASPIRE Lounges Australia – Delighted to tie up with ASPIRE Lounges Australia. With this partnership, air travelers can now experience exclusive luxury lounge access in Sydney, Melbourne, Perth and Brisbane as part of 66 Aspire Branded Lounges globally.
Dhanlaxmi Bank – Tie-up for access to Indian Lounges for their customers
FCM Travel – Corporate tie-up to provide their customers with domestic lounge access, Meet & assist and Airport Transfer Services

Onboarded 5 New Clients Including Akasa Air, one of the newest LCCs in India

Lounge area and capacity expansion at T3 Indira Gandhi International Airport, Delhi from 2,500 sq ft to 10,000 sq ft.

Added Lounge at Bengaluru’s KempeGowda International Airport, T2

Strategic tie-up with the leading Golf Service provider for access to golf games and lessons at 40+ golf clubs throughout India and 250+ golf clubs & resorts in the Asia Pacific region.

Strengths

MOATS

Company is is getting into exclusive contracts with the lounges.
In terms of the technology company is deeply integrating with banking partners. So that is one of the strong points because the step of integrating with these clients itself is a very long process, And there are a lot of compliance as well.

Value added services:- airport meet, assist in transfer, golf, railway lounges not easy to start and pickup by competition

Amazing aspect is almost Nil CAC

Risks

RBI may reduce the MDR rates on credit card companies so going forward, what credit card companies also have indicated that if this were to happen, and they will reduce rewards and services they offer to protect their margins – that will negatively impact company business in short term

International lounge vs domestic lounge traffic can change margin profile on either side

Any situation like Covid can again lead to bad times for company

UPI payments can pose a small risk

Competition like Priority Pass etc –this risk is somewhat mitigated as competition have been in this market and they
have been the global player across for more than 30 years now. So, in their presence, Company have actually taken away the India share from them

IMAGES FROM INDIAN AIRPORTS over last 10 months showing lounges are high in demand, runway are back to back lined up with airplanes signifying air travel increasing and travellers interest in lounges also increasing–so Increase in travelers and increase in interest of traveler for lounges can be huge tailwind in coming decade 2023-2033

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

In case you have any questions/ queries, please feel free to reach me through Contact Form

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Defense · Stocks · SWOT

An insight into Defense company : Data Patterns

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Disclaimer – Below Analysis is NOT a BUY/SELL/HOLD Recommendation. It is for educational purpose and it can be used for educational purposes further. There could be lot of things which might have been missed in my analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

Data Patterns

Business —

Data Patterns is a leading player in India’s Defence and Aerospace industry. The Company is respected for its proprietary capabilities: design to manufacture, testing to validation and support for products throughout the life cycle. Data Patterns is the only Indian company in the Defence and Aerospace sectors to offer complete systems.
Data Patterns’ core competence covers the entire spectrum of electronics including Processors, Power, RF and Microwave, Embedded Software & Firmware. This unique capability allows Company to offer complete solutions, an area addressed only by international OEMs.
Data Patterns has succeeded in building products in high technology domains such as Radars, Electronic Warfare (EW), Communications, Satellite Systems, Video, Control Systems and Navigation, besides others. It is one of the few Indian companies offering indigenously developed products catering to the entire spectrum of Defence platforms – space, air, land, and sea. The Company established its quality management system in line with the demanding standards of AS9100 Rev. D by TUV-SUD, an internationally acclaimed certification

Product offerings and Clients

Can they do 3x in next 6yrs for revenue? Chances are bright with emerging tailwinds

Moats —

Biggest moat is long term relationship with Indian Defense companies built over years. A new company will take years to develop, manufacture, provide and test the integrated systems and then won new orders

Data Patterns is the only Indian company in the Defence and Aerospace sectors to offer complete systems.
Data Patterns’ core competence covers the entire spectrum of electronics including Processors, Power, RF and Microwave, Embedded Software & Firmware. This unique capability allows Company to offer complete solutions, an area addressed only by international OEMs

Strengths

  • Data Patterns’ modern manufacturing facility consists of 2,00,000 square feet factory built on 5.75 acres of land in SIPCOT IT Park, Chennai. It has facilities for design, manufacturing, qualification and life cycle support of high reliability electronic systems used in Aerospace and Defence applications. The facility includes an EMS line, clean rooms, board, box and rack level integration capability and environmental testing to cater to the requirements of quality and complex production
  • Vertically integrated defence and aerospace electronics solutions providers catering to the indigenously developed defence products industry
  • Diversified order book with marquee customers along with state of the art manufacturing facilities
  • Experienced management team and skilled workforce
  • Highest Revenue growth, EBIDTA margin, ROCE and ROE (for FY20 &FY21) amongst key Indian defence and aerospace companies
  • Strong Balance Sheet; Net Debt Free Company

Capabilities and Opportunity

Some triggers and updates ( Market size, order wins etc)

Opportunity Size

TAM (total addressable market) of USD 4.65 bn by 2030 growing at CAGR – 9% from 2020*

Make in India, Indigenous manufacturing defense Theme

Beneficiary of shifting procurement trends in Defence – Aatma Nirbhar Bharat , Make in India, new defence acquisition policies among
others

Increasing indigenization, Domestic defence procurement, Higher share of electronics in warfare

Defense modernization program

Expansion of facilities

Data Patterns is in the process of upgrading and expanding the current facility, with a proposed doubling of available floor area and manufacturing capacity, as well as addition of capability of handling large and heavy equipment, integration of large radars and mobile electronic warfare systems, satellite integration facility. The new infrastructure is slated to be ready by September 2022.
Data Patterns is also in the process of acquiring an additional 2.81 acres of adjacent land for further expansion

Promoter holding

Promoters have sufficient skin in game, along with FII and DII holdings and big players leading to only 21% approx for retail investors

Risks (tried to see major risks, please do due diligence to understand more on this part)

Fast rampup in orders is key along with execution. Will fast orders and execution can lead to profitability, we need to see in coming quarters and years

The business has long gestation period and inherited execution delays, consequently causes volatility in revenue recognition

Company face challenges to meet the requisite financial criteria of tender based business, for which it needs to rely on bigger entities

Cash conversion cycle and working capital cycle has been really a big risk. Need to be watchful on these two parameters consistently. Major trigger is inventory levels, which should come down with normalized operations and betterment of chip availability

Seasonality Improving but Q4 still Significant

Valuations —

Valuations for such company is difficult to judge as growth can happen exponentially and company one good year can turn the tables on valuations and vice -versa. As per experience start with specific risk reward and then performance observed over a period of time and as and when orders emerge.

Looking at past, such companies look overvalued, Looking at future opportunities, Company seem undervalued

We entered around 700 even when valuations look high and markets took it to 1540+ –so Premium companies might be rerated faster than one can imagine –hence our focus is to ride as long as growth happens in company but 1-2 quarters should not deter us to stop holding long enough and give chance to company to perform

Only thing here is if valuation blow up faster than business –we need to book some partial profits

Your strategy can be different than mine. Your selection of company might be different than mine. So let’s not be a BLIND FOLLOWER

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It is for educational purpose and it can be used for educational purposes further. There could be lot of things which might have been missed in my analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.

Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.

Stocks · SWOT

An insight into Equipment company

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Disclaimer – Below Analysis is NOT a BUY/SELL/HOLD Recommendation. It is for educational purpose and it can be used for educational purposes further. There could be lot of things which might have been missed in my analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

Valiant communications

Business —

Established in 1993., Valiant is a manufacturer and exporter of a wide range of communications, transmission, protection, synchronization and cyber security products to a wide range of sectors including Power Sector Infrastructure – Sub-stations, Distribution, Transmission, Utilities – Water, Oil and Gas, Solar and Wind Energy, Railways and Metro Rail, Airport Communication Networks, Corporate Networks, Financial Institutions, Mobile / Cellular Communication Networks, Defense Networks, Synchronization applications for autonomous driving technology – automobiles, providing cyber security to core services (Power, Railways, Airports, Utilities) and other emerging sectors and technologies.

It is an approved manufacturer to some of the major power utilities including Power Grid Corporation (India) and various National and State Electricity Boards, with track record of successful installations in more than 3000 power sub-stations worldwide including at 765kV power sub-stations, one of the highest functional power sub-station levels in the world.

Customers or target industries

Power Utilities

Cybersecurity

Government and Corporations

Moats —

Biggest moat is long term relationship with clients including home grown Tejas networks (a growing company acquired by Tatas)

Being the only Indian manufacturer for various products in select domains, the Company has a distinctive advantage over its MNCs
competitors. VCL is the only manufacturer of PMUs in India.  There are a very few successful manufacturers of the PMU in the world with  Valiant  being  among  those  few.  The  VCL  PMU  has  been tested, validated, approved and Type Tested by CSIR‐National  Physical  Laboratory, New Delhi,  India. 

Strengths

  • An ISO 9001:2015, ISO 10001: 2007, ISO 14001: 2015, ISO 18001:2007 and ISO/IEC 27001:2018 certified equipment manufacturer of Communication, Transmission, Protection, Synchronization and Cyber Security solutions.
  • Successful installations in over 110 countries, worldwide.
  • Global footprint
  • Valiant has the technical know-how and expertise to integrate legacy communication equipment, that is already installed in the network, and to inter-operate with modern communication hardware

Region of operation

Global footprint with offices in U.S.A., U.K., Canada and India.
Regional Distributor offices in 25 countries

Company has three subsidiaries with one each in UK and USA

Valcomm USA, has now been an approved vendor with Hargray Communications Group and Anixter (a Fortune 500 company).
Valcomm USA made pilot project supplies of communications and synchronization equipment in the US to Power Utilities, Energy Cooperatives, Shale Oil & Gas, Hydro companies, regional Cable TV, Broadband Internet Service Providers and Government
organizations. Whereas, Valiant UK has also been approved now as registered vendor with Siemens for Lithuania and Latvia.

Some triggers and updates ( Market size, order wins etc)

Opportunity Size

Two research reports on different segments shows huge scale of opportunity in MPL router and Cybersecurity market size in next few years

Company is also engaged in emerging technologies and Next generation transmission equipment

IP/MPLS Aggregate Routers
• IP/MPLS Edge Routers
• 1G / 10G
• 40G / 100G
• 1G (optical and electrical)

TDM and IP/Ethernet communication for transmission for military/defence
PRP (Parallel Redundancy Protocol) Switch for zero packet-loss transmission-switching
Fail-Safe, Transparent Firewalls designed for IEC-104, DNP3 and MODBUS RTUs
Phasor Measurement Unit (PMU)*
Phasor Data Concentrator (PDC)
Data Encryption Equipment.

Recent order wins

Valiant has been recently won orders from EGAT Thailand to provide Synchronization solutions in the Thai Utility network.

Valiant has received orders worth 34cr for supply commissioning of its Communication, Protection and Automatic Ethernet Failover solutions from Tejas Networks to be executed in FY23

Valiant has also been short-listed by Emerson and Yokogawa for their requirement of Synchronization solutions.

Valiant has entered into 4-year rate contract last year under a frame agreement with the engineering major, Balkantel OOD for Bulgarian state-owned Power Utility ESO EAD, for supply and installation of its power utility products and solutions for the contract awarded to Balkantel OOD.

Make in India, Digital India Theme

Various initiatives taken by the Government of India, such as “Aatmnirbhar Bharat”, “Make in India”, “Digital India” and “PMA Policy”, are helping indigenous manufacturers of communications, transmission, synchronization and cyber security equipment in India. Various products of the Company have been approved by major corporations such as PGCIL (Power Grid) and almost all , ISRO State Electricity Boards (SEBs). Valiant is working on various opportunities to scale its products and technologies across various utility sectors and corporates.

The Company has recently completed fully indigenous design of Routers, Firewall, IEC 61850-3 complaint Ethernet Switches along with its exclusive range of related cyber-security products which it shall be offering for the forthcoming Bharatnet, Power Grid and Railway projects.

Addition of big names as customers

Valiant Communications Ltd. (VCL) has added the following prestigious customers to its customer reference list. These include Tesla (applications for Time Synchronization of high‐speed cameras for crash testing), Embark Trucks (Self-Driving Trucks) and GE renewables (Grid  solutions)

Expanding Marketing and RnD network

The Company is expanding its marketing network in Europe and South America. The Company has appointed distributors in
France, Spain, Portugal, Peru and Chile for its recently introduced Cyber-Security and Power Utility products.

Valiant Communications Limited has opened its New Office, Research & Development Center in Bengaluru, India near Bengaluru airport

Promoter holding

Promoters have been buying and increasing stake

Risks (tried to see major risks, please do due diligence to understand more on this part)

Very Small company kind of nano cap ( < 100 cr Mcap) so many inherent risks for survival for such companies

Fast rampup in orders is key along with execution. Will fast orders and execution can lead to profitability, we need to see in coming quarters and years

The communication sector being part of a rapidly changing technology orbit, the level of risk increases due to high technology obsolescence.

The business has long gestation period and inherited execution delays, consequently causes volatility in revenue recognition

Company face challenges to meet the requisite financial criteria of tender based business, for which it needs to rely on bigger entities

Cash conversion cycle and working capital cycle has been really a big risk. Need to be watchful on these two parameters consistently. Major trigger is inventory levels, which should come down with normalized operations and betterment of chip availability

Valuations —

Valuations for such small company is difficult to judge as growth can happen exponentially and company one good year can turn the tables on valuations and vice -versa. As per experience small qty in such companies can be taken and then performance observed over a period of time and as and when orders emerge.

Looking at past, such companies look overvalued,

Looking at future opportunities, Company seem undervalued

Truth lies somewhere in between!! Hence Risk management and Portfolio allocation is the key

Another important thing is to give long rope to company to perform

Your strategy can be different than mine. Your selection of company might be different than mine. So let’s not be a BLIND FOLLOWER

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It is for educational purpose and it can be used for educational purposes further. There could be lot of things which might have been missed in my analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.

Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.

Investing · Long term trend · Stocks · SWOT

Jubilant Ingrevia : on path to be gigantic

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Jubilant Ingrevia Ltd (JVL) houses the Specialty Chemicals, Nutrition & Health Solutions, and Life Science Chemicals businesses, which have been demerged from Jubilant Pharmova Ltd (erstwhile Jubilant Life Sciences Ltd)

It has a Strong presence in diverse sectors and its vertically integrated and due to this , it is Globally Lowest cost producers for most products.

Multi Location Manufacturing & Operation Excellence is achieved by company over the years

Leadership team has an average 30 years of industry experience

Company has expertise in 35 technological platforms at large commercial scale and

Company also has an expertise to handle multistep chemistry (up to 13 steps) at large scale.

Three major segments of Speciality chemicals, Nutrition and Health solutions and Life sciences chemicals

As shared from Company presentation 25% of Life sciences chemicals are consumed in house by specialty chemicals segment while for Nutrition and health solutions segment (vitamin B3, 100% in house sourcing done from Speciality chemicals)

Financial Highlights– RoE, RoCE stood at 15%+, EBITDA grew by 53% YoY while revenue from all segments growing well

Jubilant Ingrevia

Growth triggers

Company is planning to invest 900 cr (550 cr,100cr, 250 cr in different segments by FY24) and expecting 2x revenue in ~5 years

Multiple products in different segments are in pipeline to be launched in coming years

There is a strong demand for Acetic Anhydride and there is no new facility addition announcement globally in the recent past. Company’s customers are exploring to shift from high cost to low-cost countries. They are adding another Acetic Anhydride facility to increase capacity by ~35% by investing ₹250cr over next 3 years.

Co is planning to increase focus to leverage its long standing relationship with innovator pharma & agro-chemicals companies to expand its CDMO operation.

Company is also moving up the value chain in most of their product segments

In the process of launching its diketene (highly complex due to high temperature cracking and storage hazards) and its value added derivatives.

Risks

Raw Materials Prices: Key raw material for life sciences biz is acetic acid. Hence, dependent on the prices of Acetic Acid(Very volatile). 

Large capex in next few years: he funding of this 900cr capex will largely from internal accruals. But if for some reason this capex is not completed on time or need more debt then it may affect profits in coming years

Exit Strategy

Acetic acid Raw material prices hurting company growth or

Any ban on application of its pyridine and similar substances by other countries can hurt the company growth

In such cases , its better to exit and have a relook on invested amount

Current Market price of 760 Rs, Company looks optically expensive for investment but looking at big picture if it sustains 10.5 eps for next 3 quarters giving 42 eps for FY22 , stock price looks to have decent upside available

Update on Q2FY22 by Company on business outlook

Update on Q3FY22 by Company on business outlook

Company presentation
Company presentation
SWOT Analysis : DHANUKA
Finance · Stock Markets · Stocks · SWOT

SWOT Analysis : DHANUKA

Its real ALPHA1 Comment

This is in series of posts where you can find the SWOT of a listed company along with factors to watch out for in coming quarters.

SWOT means

S – Strength of a company

W- Weakness of a company

O- Opportunities available for a company

T – Threats for a company

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

 Also Read – SWOT- Parag Milk Foods

Also Read – SWOT- SBI CARDS

SWOT : Dhanuka Agritech
SWOT : Dhanuka Agritech

Also Read – New to Stock Market : Part 1 : As Investor or Trader?

Also Read – Invest in stock markets only if

SWOT : Dhanuka Agritech
SWOT : Dhanuka Agritech

Investing is buying right stocks with right allocation at right price at opportune time with exit strategy in place Experience counts!!

Lets invest!!

Join our Equity booster plan at very nominal fees get in touch https://wa.me/919740311223?text=interestedinequityboosterplan

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SWOT Analysis : SBI Cards
Finance · Stock Markets · Stocks · SWOT

SWOT Analysis : SBI Cards

Its real ALPHA2 Comments

This is in series of posts where you can find the SWOT of a listed company along with factors to watch out for in coming quarters.

SWOT means

S – Strength of a company

W- Weakness of a company

O- Opportunities available for a company

T – Threats for a company

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

 Also Read – SWOT- Parag Milk Foods

Also Read – New to Stock Market : Part 1 : As Investor or Trader?

Also Read – Invest in stock markets only if

SWOT ANALYSIS : SBI CARDS STRENGTH AND OPPORTUNITIES
SWOT Analysis : SBI CARDS Strength and Opportunities
SWOT ANALYSIS : SBI CARDS WEAKNESS,THREATS AND WATCH OUT THINGS
SWOT ANALYSIS : SBI CARDS Weakness,Threats AND Watch OUT things

Also Read – SWOT- Dhanuka

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.

Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.

SWOT Analysis : Force Motors Ltd
Finance · Stock Markets · Stocks · SWOT

SWOT Analysis : Force Motors Ltd

Its real ALPHA2 Comments

This is in series of posts where you can find the SWOT of a listed company along with factors to watch out for in coming quarters.

SWOT means

S – Strength of a company

W- Weakness of a company

O- Opportunities available for a company

T – Threats for a company

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

 Also Read – SWOT- Parag Milk Foods

Also Read – New to Stock Market : Part 1 : As Investor or Trader?

SWOT : Force Motors
SWOT : Force Motors

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.

Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.

Finance · Stock Markets · Stocks · SWOT

SWOT Analysis : NRB Bearings Ltd

Its real ALPHA1 Comment

This is in series of posts where you can find the SWOT of a listed company along with factors to watch out for in coming quarters.

SWOT means

S – Strength of a company

W- Weakness of a company

O- Opportunities available for a company

T – Threats for a company

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

 Also Read – SWOT- Parag Milk Foods

Also Read – New to Stock Market : Part 1 : As Investor or Trader?

SWOT : NRB Bearings
SWOT : NRB Bearings

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.

Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.

Finance · Stocks · SWOT

SWOT Analysis : Parag Milk Foods

Its real ALPHA6 Comments

This is first in series of posts where you can find the SWOT of a listed company along with factors to watch out for in coming quarters.

SWOT means

S – Strength of a company

W- Weakness of a company

O- Opportunities available for a company

T – Threats for a company

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There could be lot of things which might have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

Also Read – 

New to Stock Market : Part 1 : As Investor or Trader?

SWOT: NRB Bearings

SWOT: FORCE MOTORS

SWOT : Parag Milk foods
SWOT : Parag Milk foods

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.

Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.