Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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.
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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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Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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.
Axiscades Technologies Limited
Key Investment thesis –> Company focus on Aerospace, Defense, Semiconductor, Electronic system verticals and gearing up for FY26, FY27
Business
AXISCADES is a leading, end to end technology and engineering solutions provider aiding creation of innovative, sustainable and safer products worldwide. AXISCADES is headquartered in Bangalore with subsidiaries in USA, UK, Canada, Germany, India and China; and offices in Germany, France, Denmark, USA and Canada. AXISCADES has a diverse team of over 3,100 professionals working across 20 locations across North America, Europe, UK and Asia-Pacific, striving to reduce the program risk and time to market.
The company offers Product Engineering Solutions across Embedded Software and Hardware, Digitization and Automation, Mechanical Engineering, System Integration, Test Solutions, Manufacturing Engineering, Technical Publications, and Aftermarket Solutions. The solutions comprehensive portfolio covers the complete product development lifecycle from concept evaluation to manufacturing support and certification for Fortune 500 Companies in the Aerospace, Defense, Heavy Engineering, Automotive, Energy and Semiconductor industries.
Company Portfolio
Current serving Major Industries
Aerospace
Heavy Engineering
Products engineering
Products and Solutions for Defense
AIP and Energy
Semiconductors
Awards
Received 3rd consecutive Diamond supplier award from Bombardier for 2022. This recognition is a testament to our unwavering commitment to excellence, innovation, and delivering with the highest standards of quality.
Opportunities :
Unique positioning with deep domain capabilities ranging across competencies, with respect to – Electronics Products, Engineering Services and Defence
Growth driven by leveraging Digital ER&D and Defence
ER&D Services – A large and underpenetrated market with a Global TAM of ~$1 Tn
Strong Defence-Tech Play with leadership in Radar, Sonar and Electronic Warfare systems
Revenue Breakup
FY24 revenue breakup
Q1Fy25 revenues breakup
Q2Fy25 revenues breakup
Fundamental Ratios, Cash, EBITDA, PAT, SHP
Stable OPM, Stable tax, Quarterly YOY growth in sales and PAT, Borrowing reducing
DE ~0.4 , Free cash flow is good , Pledge is Nil, ROCE < 15 and ROE<10%
Promoter has sufficient skin in game, Cash flows are good, Cash conversion cycle is elongated
Triggers
Macro Trends :
Recent Triggers in last 1 year or so
Appointment of Chairman Mr. Abidali
Appointed Mr. Abidali Neemuchwala as Chairman of the Board and Non-Executive Director at AXISCADES. With a distinguished career spanning over three decades in the technology industry, he has earned enviable reputation for his expertise in aligning organizations, driving business results, and consistently leading transformational initiatives.
Strategic partnerships and Opening Engineering design center
Signed a strategic partnership with with Cantier, a Singapore-based powerhouse in Manufacturing Execution Systems (MES), with a specialization in Industry 4.0 integration to create a synergy that promises to elevate precision, efficiency, and innovation in the manufacturing sector.
Inaugurated Engineering Design Centre in Saltney, UK to serve the long-term requirements of the Aerospace Industry and various promising opportunities in the region.
Signed a strategic partnership with KANZEN Institute Asia-Pacific Pvt Ltd (KIAP), for new age Industry IIoT, Digital Automation and MES 4.0 implementation for delivering enhanced value to our Global customers.
Mergers and Acquisitionsand QIP
Completed the acquisition of add solution GmbH which will strengthen our service offerings and bring opportunities to deliver enhanced value to our combined global client base. . This will provide us with a strategic foothold in the automotive space, with significant offshoring opportunities and access to marquee global automotive OEMs.
The board has also approved the acquisition of EPCOGEN., a niche service provider in Energy space, specializing in engineering design and solutions. This proposed acquisition will strengthen our presence in energy vertical, provide access to Middle East and North American Energy markets
QIP in Jan2024 at 657Rs/share — The Company successfully concluded the Equity Raise of INR 220 Crores in January 2024, with marquee Institutional Investors subscribing to the issue. This will strengthen the balance sheet and improve profitability, Reduction in Net Borrowings by 60% from INR 214 crores to INR 85 crores, which will significantly reduce Finance Cost
Deal Wins
Deal win with Aerospace OEM with TCV of $ 18 Mn in the areas of in-service repair and manufacturing support
Design and prototype wins in several defense programs, such as HISAR, next generation ERP for combat aircrafts, Intel based SBC, DEAL satellite terminal design, DF for Naval program, adding to the production order pipeline
Digital Team ramped to 75+ FTEs with deep competencies in automation, AI/ML and robotics, with complete digital project execution capabilities
Acquisition of add-solutions GmbH and EPCOGEN, opens new vistas in Automotive and Energy Space, adding strategic logos and competencies
Q4FY24 updates
Revenue from new customer logos grows to Rs.69 crores, a growth of 5 Times over the previous year
Deal win with Aerospace OEM with TCV of $ 18 Mn in the areas of in-service repair and manufacturing support
Defense Production Revenues in Mistral triples from Rs.39 crores to Rs.112 crores, with Rs.272 crores in executable production orders
Commencement of delayed delivery of Man Portable Counter Drone System (MPCDS) to the Indian Army, with significant addressable
market in Indian Defense and Global Markets
Design and prototype wins in several defense programs, such as HISAR, next generation ERP for combat aircrafts, Intel based SBC, DEAL satellite terminal design, DF for Naval program, adding to the production order pipeline
Digital Team ramped to 75+ FTEs with deep competencies in automation, AI/ML and robotics, with complete digital project execution capabilities
Advanced level discussions with leading helicopter manufacturer for engineering and design support
New opportunities in counter drone system over next 5 years are highly promising with addressable market more than INR 3,000 Cr. 40 Nos of one of a kind Man Portable Counter Drone System (MPCDS) cleared for dispatch to the Indian Army. Balance 60 Nos under production.
Onboarded world’s largest phone and consumer electronic manufacturer as a customer with clear glide path on engagements into FY25
Order book at 30th Ap24 — 749Cr
Q1FY25 updates
Mistral Solutions received order of ₹90 crores from BEL for supplying Radar Processing Systems
Ramp up in aerospace with European OEM focused on production and plant migration efforts
Ramp up in high end cybersecurity solutioning with UK automotive manufacturer.
Onboarded an EPC major from Middle East as our customer with long term contract
Completed second tranche of delivery of Man Portable Counter Drone System (MPCDS) to the Indian Army
Expenses hit in past Q3/Q4 Fy24
Increase in finance cost due to debt funding for Mistral acquisition . In Q2 FY24, the material cost has increased due to increase in production orders in Mistral and increase in employee expenses on account of annual increments and investments in building competencies in Embedded and Digital for future growth
Q2FY25 Update
Defence revenues grew by a healthy 73% QoQ, with Defence production revenues surging by 84% QoQ, bolstered by a significant order backlog set for execution in fiscal years 2025 & 2026. With a healthy pipeline and focused approach, over the next 12-18 months, we aim the defence revenue to reach around 60% of the overall company’s revenue
Management commentary With latest focus areas
Unmanned combat, we are having anti-drone, drones, and drone controllers
Foreign OEMs, we have a three-pronged, that is, weapon package, submarine, and avionics. preferred offset partner for the weapon system, weapon package
new programs, all our missile programs, one is the largest missile program in India, another is an upgrade of the existing missile program, another is ground system for key programs
Product focus : particular product direct RF. Then there is, of course, our product X-band radar, which is primarily used in the submarine and marine systems.
Airbus, we have major programs running in India. C295, MRTT, Multi Role Transportation Tanker, which is going to be 330 based, And AVEX, of course, 319 based.
Tying with AgniKul, having an MOU with them, and approaching the ISRO, ISRO and other space agencies for two major things, NGLV, New Generation Launch Vehicle, and Bharatiya Space Station. So we want to add value to them significantly, and there could be opportunities in 3D additive manufacturing, and designing of certain subsystem blocks, etcetera. Then there is also chances for electronics-based algorithms and advanced systems, and for the guidance and navigation, that product we’ll be able to make. The third one is AI-based anomaly detection in the launching
Capturing some discussions from Dec24 confcall
C2P strategy, that is, chip to product. That is Mistral’s non-defense activity, or our group’s non-defense activity., we are shifting the center of gravity of C2P to US. Basically it will be driven out of US. We’ll have a small team there and driving the offshore team here. That’s the strategy
We are a very, very good RF in RF. We consider we are among the best in India for RF. RF and RF activities. Second is probably we are one of the best in handling mixed signals. We can handle analog, digital, RF, everything together. That is one of our forte. Third is sensor fusion. We can handle multiple sensor. Sensor fusion comes very, very handy when you deal with multiple sensor in a new AI environment, in new robotics or auto-driven and those kinds of things. We are extremely good in both. Then we are very good in ruggedization. We are especially because we are very defense focused. We can ruggedize any product and do that. And finally that we are very good in the chip, chip level, post-silicon, whatever it is, validation, verification, and take the chip to the product and then product to the customers
Continuous Hiring of Talent
Orders winning, Expansion in Middle east and Outlook for different segments by Management
Added this latest development on 17Jun25
INDRA SIGNS AGREEMENT WITH AXISCADES TO BOOST PRODUCTION OF CUTTING-EDGE SYSTEMS IN INDIA
Indra, a European-based global leader in defense, aerospace, and strategic systems, and AXISCADES a prominent technology solutions provider in defense, aerospace and strategic electronics, are proud to announce a strategic alliance.
Indra is keen to acquire defense-related products and services from AXISCADES, which will be delivered through AXISCADES’ comprehensive design, development, production, and supply chain center.
Both companies are actively exploring joint product development for the Indian and global markets, potentially adapting existing Indra products or creating new ones specifically tailored to meet customer needs.
TechnicalChart
Technical chart on 15-dec24
Technical chart on 29-dec24
Risks
Highly competitive industry
Acquisitions dont play out as anticipated
Customer concentration risk – On a consolidated basis, ~26% of ACTL’s revenues in FY23 were from its top two clients (35% in FY22).
Slowdown in Europe impacting automotive revenues
Heavy Engineering vertical remains a drag for few more qtrs although optimization work going on
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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.
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Impact Of Data Localisation Laws The Indian government’s push for data localisation, under policies like the Digital Personal Data Protection Act, has accelerated the establishment of data centres. Global players such as AWS, Microsoft, and Google are investing heavily to comply with these regulations, while Indian companies like Jio and Yotta Infrastructure are scaling up their capacities.
Green Data Centres On The Rise Sustainability is a key focus for Indian data centres in 2025. Operators are investing in renewable energy sources like solar and wind to power facilities, with states such as Rajasthan and Gujarat leading in renewable energy adoption. Innovative cooling technologies, including liquid cooling and the use of natural resources for temperature management, are becoming standard practices to enhance energy efficiency.
Edge Computing And Regional Growth India’s shift towards edge computing is transforming data centre architecture. With the rollout of 5G and the proliferation of IoT devices, smaller edge data centres are being established closer to users in Tier 2 and Tier 3 cities.
Expansion Of Colocation And Hyperscale Facilities By 2025, colocation and hyperscale data centres will dominate the Indian market. Colocation facilities, which allow multiple organizations to share infrastructure, are becoming the preferred choice for startups and small businesses due to cost efficiency. On the other hand, hyperscale data centres, built to support massive data volumes for global giants like Amazon and Google, are rapidly expanding to cater to India’s growing digital needs.
Advances In Security And Automation With increasing cyber threats, Indian data centres are integrating advanced security measures such as Zero Trust Architecture, AI-powered threat detection, and biometric access controls. Automation is playing a vital role in optimizing operations. AI systems are managing energy consumption, predicting maintenance needs, and ensuring seamless uptime, reducing operational costs while improving efficiency.
Government Support And Policy Initiatives The Indian government’s initiatives, such as the National Policy on Software Products and state-level incentives, are creating a favourable ecosystem for data centre growth. Many states are offering subsidies on land, power tariffs, and taxes to attract data centre investments.
Opportunities In Tier 2 And Tier 3 Cities As data consumption grows beyond urban centres, data centre operators are expanding into Tier 2 and Tier 3 cities. These locations offer lower operational costs, ample land availability, and growing demand for digital services, making them attractive for future investments.
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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.
Jash Engineering
Key Investment thesis –> Increasing Demand of Water Intake Systems, Water and Waste Water Pumping Stations and Treatment Plants, Storm Water Pumping Stations, Water Transmission Lines, Consistent Business and Order book
Jash engineering is dedicated to offering varied products for use in Water and Wastewater Pumping Stations and Treatment Plants, Storm Water Pumping Stations, Water Transmission Lines, Desalination, Power, Steel, Cement, Paper & Pulp, Petrochemicals, Chemicals, Fertilizers and other process plants. Headquartered in Indore – India, Jash has six well-integrated state-of-art manufacturing facilities, four in India and one each in the USA & UK. Global presence with bases in India / USA / Austria / Hong Kong / UK
Employees > 1075, Countries served 45+, Manufacturing units 6, Capacity utilization 70% approx
Company has many accolades, and technical collaborations
Joint Venture with Invent , Germany to manufacture their range of aeration and mixing equipment.
Technical & Financial collaboration with Schuette, Germany for Bulk solids valves
Technical Collaboration with Invent, Germany for Disc Filter
Technical collaboration with Rehart, Germany for Archimedes screw pumps & hydro power generation.
Technical collaboration with Weco Armaturen, Germany to offer its range of Valves in Asian market
Business Segments and Revenue Contribution and Products
Domestic 40%, Exports 60%
Water control gates –60% (FY24) 49%(Q1Fy25)
Valves -15% FY24, 13% Q1FY25
Screening equipment 15% FY24, 31% Q1FY25
Hydropower and pumping solutions 10% FY24, 7% Q1FY25
Clientele
Strengths :
Long standing relationships with domestic marquee customers.
Efficient business model
Strong project execution capabilities
Diversified geographical presence in India and world
Strong Technical Qualification to bid for new projects
Highly experienced Management Team
Fundamental Ratios, Cash, EBITDA, PAT
ROCE>25% and ROE> 22%, DE ~0.23 , Free cash flow is good , Pledge is Nil
Net Profit went 67X+ in 10 Years, Consistent Dividend Payout
Consistent Profit growth, sales growth, ROE over 3 years, 5 years, 10 Years
Triggers
Expanding presence and Acquisitions
Acquired Waterfront Fluid Controls Ltd, UK in 2023.
WATERFRONT UK PLANT & OFFICE INAUGURATION After successful acquisition of Waterfront Fluid Controls Ltd, UK, the company has taken manufacturing plant on lease which is adjoining shed to the present Waterfront’s shed. This plant was commissioned on 31st May 2024.
A new plant for manufacturing process equipment is under construction in Chennai. This plant will be commissioned in December 2024/Feb25. This facility is being built at an approximate cost of Rs. 20 crores and this will start contributing to improvement in revenue from April 2025 onwards. This facility at its peak production capacity will contribute up-to Rs. 100 Cr to company revenue.
A new land has been acquired for expansion of Unit 4 (Fabricated Products Plant), SEZ Unit. This new plant of ~ 55000 sq. ft. will be commissioned in FY 2025-26. Manufacture Stainless steel products for the growing export market. The construction of this plant will start in October 2024 and the plant will be commissioned by year end 2025. This plant will be constructed at a tentative cost of Rs 22-23 crores inclusive of land and at its peak production capacity will contribute up-to Rs. 100 Cr to company revenue.
Good execution and order book and Consistent new orders
946 cr order book on 1st sep24, 74cr orders in pipeline, negotiation
FY25 guidance ~675cr
New Product developments
First Vortex Grit Mechanism with Grit Classifier For 26 MLD STP Jhansi, UP Jal Nigam
Combined Screening & Grit Removal System-1MLD (PTU) for Enviro-Infra, Bareilly, UP
First set of Bladder Vessel 9 m3 x 3, 1 m3 x 3 supplied to Varanasi WSP Project
3 Wheel Sealed Version Disc Filter for 6 MLD capacity for Delhi Jal Board
Technical chart on 6 Oct 24
Risks
Large working capital requirement, cash conversion cycle is bit high Trade receivables and Inventory on higher side Rising raw material and commodity costs Increase in competitive bids for procuring the projects
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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.
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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.
Likhitha Infra Limited (LIL)
Key Investment thesis –> Increasing Demand of Gas pipeline Infra, City Gas distribution and National Gas policy 2030, Expanding Geographically, Consistent Business and Order book
LIL was incorporated in 1998 and is engaged in the business of pipeline laying providing comprehensive erection, testing, and commissioning of Oil and Gas pipelines, city gas distribution projects, tankage and operations and maintenance services. It is based in Hyderabad, Telangana.
Company has two (02) Joint Ventures viz., CPM-Likhitha Consortium, India and Likhitha Hak Arabia Contracting Company, Kingdom of Saudi Arabia. In addition, Company held 60% equity share capital in Likhitha Hak Arabia Contracting Company, and consequently, now it became a subsidiary of the Company
Has successfully laid over 1500 km of steel pipelines and over 1500 km of MDPE of oil & gas pipelines in the past years. Additionally, the company is laying approximately 1000 km of oil & gas pipelines for the ongoing projects Executed the First Trans-National cross-country pipeline of South-East Asia connecting India to Nepal in the year 2019, for the supply of petroleum products
Strong presence in more than 20 states and 2 Union Territories in India.
Business Segments:
a) City Gas Distribution Projects: This Involves laying of steel and MDPE pipelines for consumers across domestic, commercial and industrial sector, creating a network of pipelines along with associated facilities, Last Mile Connections, CNG Stations b) Cross Country Pipeline Projects: Laying of Cross Country Pipeline projects along with piping, civil, electrical, instrumentation and other associated works c) Operation & Maintenance Services: O&M services include providing skilled manpower, executing emergency repairs, overhauling, scheduled maintenance activities and operation of the network d) Tankage: Construction of fuel depots including storage tanks, Combined Station Works, mechanical, instrumentation, electrical, civil works, F&G system, and other associated facilities
Strengths :
Long standing relationships with domestic marquee customers.
Efficient business model
Strong project execution capabilities
Diversified geographical presence in India
Strong Technical Qualification to bid for new projects
Strong promoter holding showing skin in game
Strong Order Book 1500cr in Jun24
Highly experienced Management Team
Credit ratings –>Long term facilities A/Stable and Short term facilities A1
ROCE>30% and ROE> 20%, DE ~Nil , Free cash flow is good , Pledge is Nil
Stable OPM, Net Profit went 33X+ in 10 Years, Consistent Dividend Payout
Consistent Profit growth, sales growth, ROE over 3 years, 5 years, 10 Years
Promoter has sufficient skin in game at 70% shareholding
YouTube link
Triggers
Macro Trends :
India has set a target of increasing the share of natural gas in the overall energy mix to 15% from present 6.7%.
As per the Government policies, PNGRB has increased the number of Geographical Areas (GAs) to 228 comprising of 402 districts spread over 27 States and Union Territories, covering 70% of Indian population and 53% of its area. These recent Government initiatives have provided lucrative opportunities for Oil & Gas infrastructure service providers
Recent policy moves, including a wide-scale rollout of CNG and the expansion of gas infrastructure including LNG terminals, long-distance transmission pipelines and city gas distribution networks, will help drive 30bnm³ of gas demand growth over the next decade through fuel switching away from coal and oil. A recent switch to CNG from coal in India’s brick industry is encouraging greater gas use.
India is set to dominate the number of trunk/ transmission pipeline projects that are expected to start operations in Asia during 2024-2028, contributing about 43% (62 projects) of the region’s total projects count by 2028. The transmission pipeline length of 29,800 kms is expected to be added, says GlobalData, a leading data and analytics company.
The gas pipeline infrastructure has been seeing intense development activity. The Government of India has set a target to reach 34,500 km by 2024-25 end from 22, 335 km as on January, 2023. Furthermore, plans to connect states with the trunk natural gas pipeline network by 2027 are gathering momentum.
In terms of investments, the Petroleum and Natural Gas Ministry said about ` 41,000 crore ($4.95 billion) are expected from companies to build natural gas pipeline infrastructure in the northeastern states and northern federal territories of Kashmir and Ladakh. The thrust on natural gas and government policy initiatives are in line with India’s global commitments to boost the use of cleaner fuels and cut carbon emissions with the ultimate goal of achieving net zero carbon emissions by 2070.
Expanding presence
In line with growth strategy, Company has entered new markets such as the Kingdom of Saudi Arabia and the United Arab Emirates, where we see substantial opportunities in the oil and gas infrastructure sector. The company has been exploring growth opportunities beyond India. We have formed a joint venture firm in Saudi Arabia and have opened a branch office in Abu Dhabi, UAE to explore business prospects in the Middle East markets which promise long-term growth for pipeline infrastructure development.
The Indian government’s continued emphasis on expanding the oil and gas transportation network and promoting city gas distribution projects provides us with a steady stream of contracts.
India’s energy consumption is on the rise, with the country consuming 19.9 million metric tonnes of petroleum products and 5.51 BCM of natural gas during FY 2023-24. As the world’s third-largest consumer of energy, India’s demand for natural gas is expected to grow fivefold by 2047, in line with the nation’s vision of becoming a developed nation by its centennial year
Good execution and order book and Consistent new orders
Technical chart on 21st Sep24
Risks
Large working capital requirement, cash conversion cycle is bit high Trade receivables and Inventory on higher side Any change in CGD policy Rising raw material and commodity costs The Company is deriving significant portion of orders from major Oil & Gas distribution companies inducing a client concentration risk Increase in competitive bids for procuring the projects
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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.
A dark store is a small warehousing urban distribution centre exclusively for online shopping with an area ranging between 3,000 to 8,000 sq ft located close to densely packed residential areas to meet quick delivery requirements, Srinivas N, Managing Director, Industrial and Logistics, Savills India said.
Dark stores stock a variety of products and operate around the clock. This enables quick access to inventory, reduces transportation costs, has a quick turn-around time, and improves last-mile delivery capabilities.
However, unlike warehousing, dark stores maintain a limited inventory, often with products having a shelf life of less than 24 hours. In contrast, warehouses store a wide variety of materials in bulk quantities, without the same time constraints on product freshness or expiration.
“The current requirements from quick commerce necessitate dark store spaces of 5,000 square feet or larger. The evolution of quick commerce has managed to establish a firm foothold in the market, which indicates a likely increase in the number of these larger stores moving forward,” Abhishek Bhutani, Managing Director, Ahmedabad and Logistics & Industrials, Cushman & Wakefield said.
Where are dark stores usually located?
A 2021 study by JLL showed that in the e-commerce sector, about 10-15 percent of total kilometres travelled in urban areas contributed to 47 percent of total transportation costs.
This brought dark stores closer to the dense residential areas to ensure efficient and timely delivery. However, real estate costs in urban locations cannot meet retail rental expectations. Therefore, dark stores are usually located in smaller commercial building basements, parking spaces, and defunct facilities in the bylanes or alleyways.
Additionally, these stores are not visited by customers. So, low-cost space is most functional for a dark store.
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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.
Aeroflex Industries
Key Investment thesis –> Increasing Demand of HVAC system, Large Scale Industrialization, Modernization in Agriculture and Demand from new edge industries like Aerospace, Satellite, Solar and Robotics
Company is one of the leading Indian manufacturers of metallic flexible flow solutions made with stainless steel used for controlled flow of all forms of substances including Solid, Liquid, and Gas. Incorporated in 1993, co. is part of Sat Industries Limited.
Product Profile: Braided hoses, unbraided hoses, solar hoses, gas hoses, vacuum hoses, braiding, interlock hoses, hose assemblies, lancing hose assemblies, jacketed hose assemblies, exhaust connectors, exhaust gas recirculation (EGR) tubes, expansion bellows, compensators, and related end fittings.
Exports to 89 countries across Asia, Americas, Europe and Africa, through a diversified go-tomarket model
Scalable and Customized flexible flow solution products
Current serving Major Industries
Steel & Metal
Oil & Gas
Chemicals
Sea Port Terminal Handling
Paper & Pulp
Pharmaceutical
Strengths :
Extensive Promoter experience
Employee strength -500+
The company has 2500+ SKUs
Strategically Located Near JNPT Port
80+ machine lines
72+ Products across various stages of Research and Development
14 Qualified R&D Team
NABL Accredited Lab
ISO 9001:2015, ISO 45001:2018 and ISO 14001:2015 certified;
Adherence to global standards
Revenue Breakup
Fundamental Ratios, Cash, EBITDA, PAT
ROCE asnd ROE> 20%, DE ~Nil , Free cash flow is good , Pledge is Nil
Stable OPM, Net Profit went 8X+
Promoter has skin in game + Big Shark Ashish Kacholia holding 3.6%
Triggers
Macro Trends :
▪ Global market for SS flexible hose has grown at a CAGR of 8.2% to value at approximately USD 3.3 Bn in 2022 ▪ Traditionally, the demand for Flexible Flow Solutions made with Stainless Steel Corrugation was largely driven by the industrial sector – manufacturing plants and manufacturing products from chemicals to paper ▪ Between FY’18-9M FY23, over 1,840 projects (brownfield and greenfield) were completed in the manufacturing ▪ With Flexible Flow Solutions made with Stainless Steel Corrugation application being universal, this large base is believed to have supported a strong demand for the product ▪ Given the increasing preference for Flexible Flow Solutions made with Stainless Steel Corrugation in place of rubber / PTFE / polymer hoses, the demand for the former from the industrial sector would be stable
Company has worked on Capacity Expansion, value added products
Expanding our presence to:
Electric Mobility
Fire Sprinklers
Solar
Robotics
Semiconductors
Aerospace and Satellite
Management commentary in Q1Fy25 results
Increasing margins possibilities, Increasing orders from assemblies, Focus on value added offerings, possible inorganic Way of expansion, Acquisition
Technicals
Technical chart on 8th Sep24
Risks
PE is bit high in short term
Large working capital requirement, cash conversion cycle is bit high
Exposure to volatile raw material price
Acquisitions dont play as anticipated
Demand dont originate as anticipated
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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.
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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.
Servotech Power
Key Investment thesis –> Developing EV charging Infra and Delivering Solar Rooftop solutions across India. Key Business wins for EV charging Infra, Association with key businesses B2B
SPSL is in the business of high-end solar products and EV chargers. It develops ultra -fast DC chargers and Home AC chargers, and has installed over 2400 EV chargers in collaboration with oil marketing companies
Product Profile: a) EV Charger: Electric Vehicle Charging Station, AC Charger, DC Charger b) Solar Products: Solar Inverter, Solar Panels, Solar Batteries, ServPort, SMU c) Power & Backup: Battery, Servo Stabilizer, etc. d) LEDs: Domestic LED, Commercial LED e) Oxygen Concentrator: Oxygen Concentrator 5L and Oxygen Concentrator 10L f) UVC: UV-C Handheld Disinfection Lamp – 6W, Portable UV-C Disinfection Lamp – 36W (Sensor Equipped), Portable UV-C Disinfection Lamp – 38W, UV-C Disinfection RoboTruk – 150W, UV-C Sterilization Bag, UV-C LED Sterilization Box with 10W Wifi Charger, UV Sterilization Box with Charger, UV-C Car Intelligent Sanitizer, Car Air Sanitizer, UV Air Purifier, FAR UV-C Digital Sanitizer
Covered the thesis here in quick 12 min Video
Well-equipped 2 manufacturing facilities spanning over 80,000 sq. ft. and 1,44,000 sq. ft. respectively in Sonipat, Haryana
Capacity to manufacture 30,000 AC EV Chargers and 12,000 DC EV chargers annually
The company is majorly into B2B operations and having Marquee clientele comprising of BPCL, IOCL, HPCL, Nayara Energy, UPNEDA and others
Employee strength -500+
Revenue Breakup
Range of EV AC AND DC chargers
DC chargers have amazing features on fast port, advanced connectivity and user friendliness
Range of Solar solutions
Solar panels, Solar Inverters, Solar Batteries
ESS : Energy storage system (Major tailwinds may appear here)
Solar Street light (too much commodity)
Solar charge controller
EV CHARGER Components
Another interesting solution is Servport
Fundamental Ratios, Cash, EBITDA, PAT
ROCE and ROE > 10%, Pledging 0%, Debt to equity under control
High TTM PE and PB ratio
12X Sales and 12X PAT in 10 Years, Stable EBITDA numbers, Improving NPM
Promoter has good skin in game at ~60% shareholding, FII holding 5% approx
Cash conversion cycle have improved in recent years
Triggers
Macro Trends :
Developing EV charging Infra and Solar Rooftop solutions Infra across India
Journey and recent forays
Government subsidies & policies promoting local manufacturing of EV Components and sustainable energy resources
Growing need for carbon neutral has increased the demand forsustainable energy solution
Increasing demand for EV charging stations with healthy traction in order pipeline in addition to a sizable order backlog. Govt. allocate subsidies of INR 800 Cr to set up 22,000 fast chargers at various fuel pumps across India. The government has sanctioned 2,877 such charging stations across 68 cities in 25 states and UTs. In addition, 1,576 charging stations on nine expressways and 16 highways have also been sanctioned.
Projections indicate that fast-charging stations will witness a CAGR of over 40% by 2025.
New additions in budget 2024 like Pumped Storage Policy and exemption of customs duty on lithium will incentivize renewable energy integration and adoption
Rising urbanization and awareness of climate change have led to increase in demand for cost-efficient products
PM Suryodaya Yojana to solarize 1 Cr Households. 50 solar parks with an aggregate capacity of 37.49 GW have been approved in India
Company has worked on Capacity Expansion
Preferential shares allotment and warrants issued at 83 Rs (approx raised 74cr)
Backward integration efforts for key components (control set and power module) are on track, with the control set already being manufactured in India.
Solar Segment:
Regular monthly sales of ₹8-10 crores in the solar segment, targeting a total of ₹100-150 crores annually.
Plans to expand presence in 20-21 states within two months to leverage government schemes for household electricity.
International Expansion:
Export business is expected to grow, with previous year’s revenue at approximately ₹40 crores and positive momentum for future exports.
Attending international exhibitions and establishing a dedicated export team.
Patents; Innovation and Leadership
51% Growth in the Dealer & Distributor Network
Hired 128+ employees in Q1
Coninuous order wins from Major OEM’s —Current order book stands at approximately 8,000-8,500 pieces of DC chargers, indicating strong demand.
Order win from BPCL worth ₹120 Crs for the supply of 1,800 DC EV chargers
Order win from IOCL and other EV Charger OEM’s worth ₹111 Crs for the supply of 1,400 DC EV chargers
Order win from BPCL for the supply of 2,649 AC EV chargers
Order win from HPCL and other EV charger OEM’s worth ₹102 Crs for the supply of 1,500 DC EV chargers
Signed a contract with Adani Total Energies E-Mobility Ltd. (ATEL) for the supply of AC EV chargers
SPSL will be responsible for manufacturing, supplying and Installing AC EV Chargers at different Airports and other said locations
Collaborated with an international company to enhance its in-house components manufacturing.
SPSL will be constructing a cutting-edge manufacturing facility focused on the production of Power Modules, Control Circuits, and PLCs. The new plant will have an initial annual production capacity of 24,000 power modules & will ramp up its production capacity to 2.4 lakh power modules annually
Solar energy storage
Servotech Secures Order of around 1.2 MW Solar Energy Storage and Grid Connected Systems from Rural Development Department and UPNEDA. Servotech will be responsible for installing multiple 75kW solar-based energy storage systems, designed to provide reliable and uninterrupted power supply across Uttar Pradesh. Additionally, the company will also be designing, manufacturing, supplying, erecting, testing and commissioning 20 kW and 40 kW grid-connected solar power systems, contributing to the state’s renewable energy goals. This order will prove to be essential for overcoming geographical and infrastructural challenges in areas of Uttar Pradesh by enabling a broader reach of sustainable energy solutions and ensuring the penetration of renewable energy into the grid.
Creating new subsidiary “Servotech Sports and Entertainment Pvt. Ltd.”
Servotech aims to capitalize on the sporting fervor, its immense popularity, and global appeal to strengthen its brand presence and connect with a wider audience base. This strategic alignment presents an exciting opportunity for Servotech to extend its reach beyond its industry boundaries and tap into new avenues of success and engagement, establishing itself as not just a leader in the EV charging and solar energy sectors, but also as a prominent player in the sports industry.
Technicals
Technical chart on 21st Aug24
Risks
Consistent Equity dilution, consistent increase in borrowing and Negative cash flows poses risk to company business growth
PE is high and any 2 bad qtrs can screw the returns profile from the current levels
Large capital working requirements is another thing to watch out for
Highly competitive industry both in Solar and EV industry
Delay in projects due to Govt policies or Land acquisition issues
Components import is another risk
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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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Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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.
Oriental Rail Infra
Key Investment thesis –> Providing Infra to Railway sector. Govt focus and orders landing up fast to Railway vendors. Oriental rail Infra is prime contender for seats and birth for new coaches. Apart from that New wagons orders also flowing
Oriental Rail Infrastructure Limited (ORIL) (formerly know as Oriental Veneer Products Limited) is engaged in manufacturing and supply of rail products predominantly for Indian Railways(IR). It manufactures Seats and Berths, Chairs, Lavatory doors etc. for all types of passenger coaches. It also manufactures Heavy Engineering equipment’s like Railway Rolling Stock, a diverse range of products which includes Wagons, Bogie, Coupler & Draft Gears through its wholly owned subsidiary Oriental Foundry Private Limited (OFPL).
Manufacturing Facility for Silicon Foam, Seats and Berth, Rexine, Compreg Board, PU Foam used for Seats & Berths, Recron used for Seats & Berths
Only Listed player in Seats & Berths in Organised sector
RDSO Certified and preferred vendor
1000+ employee strength
This Wagon capacity has been increased to 2400 wagons in Sep2023
Preferential shares allotment and warrants issued at 169 Rs (approx 200cr raised)
Order Book and strength
Company has a strong order book of more than 1200cr
Strong promoter background
3 decade old company
Big clients
Fundamental Ratios, Cash, EBITDA, PAT
Sales and profit 7x and 10x approximately in last 9 years
ROCE and ROE >12 %
Debt to equity is okayish at ~1, Pledging is 0%
Promoter has good skin in game at ~55% shareholding and big players entered recently including Mukul Agarwal
Triggers
Macro Trends :
Amid rising demand for coal freight and an aggressive push towards diversifying its freight basket, IR is planning to buy 1,00,000 more Wagons over the next three financial years Under the National Rail Plan(NRP), Centre wants to significantly increase the national transporter’s freight numbers, along with its modal freight share to 45 per cent by 2030. As per GOI estimates, consolidated demand for freight will be over 6,300 Million Tons (MT) by 2026 and 8,220 MT by 2031 Having ferried 1,418 MT in this fiscal, the national transporter would need to account for over 3,600 MT in 2031 to meet its NRP targets.
Company has worked on
Backward integration, Capacity Expansion, High Value Products and Client Diversification
Technicals
Technical chart in 10th Aug24
Risks
Working capital intensive nature of operations
Operating Cash flows are not good. Working capital days, Cash conversion cycle, ROCE, ROE needs to improve
Strong dependency on big customer IR
Margins are fluctuating in past based on execution and delivery. Not easy to predict bad or good quarters for company business
Susceptibility of profitability to volatility in raw material prices – ORIL’s product mix mainly includes seats, berths, compreg boards wherein the major raw materials are wood, rexene, cloth, foams, recron and various other solvents. Major raw material is supplied inhouse like company manufactures rexene and foam useful in manufacturing of seats. Other raw material consumed for manufacturing of seats includes veneer, which is formed from timber and company procures timber from local market. Its profitability is susceptible to fluctuations in the prices of wood as it serves as the main raw material for manufacturing of veneers, particle boards, plywood and compreg boards. For wagons, bogies and coupler body, major raw material is steel or scrap of steel which is procured from local market whose prices are highly volatile in nature. However, the company has a price variation clause inbuilt for key raw material, i.e., steel and wheels if procured from Indian Railways, thus reducing the price volatility to that extant
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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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Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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.
Jaykay Enterprises
Key Investment thesis –> Defense and aerospace sector venture in precision manufacturing with big customerssupported by designing, development, manufacturing, and testing of advanced composite engineering products made or composed of fibre glass, glass mat, plastic, resins etc.with applications in defence/aerospace/ logistics & electrical industries. Company also developing good capabilities in Additive manufacturing and software systems to support above venture
Jaykay Enterprises Limited (JKE), part of J K Organisation and part of the 139 years old diversified JK conglomerate. JKE initially engaged in the business of manufacturing nylon and acrylic fibers and later went into Registrar and Share Transfer Agent activities.
Presently, the Company has diversified itself into Additive Manufacturing systems,Proto typing, powder metallurgy, large scale Digital manufacturing, Reverse Engineering, Plant modelling, In the area of defense & Aerospace we focus on areas of engineering products across various industry verticals, software designing and development, manufacturing of parts and accessories used in defence and aerospace sector, our work includes composite applications, Under water mines ,machining for aerospace sector.
Product segments
The Company has consolidated its business focus into specific dedicated opportunities. a) Defence & Aerospace; b) Digital Manufacturing & Advanced Systems c) Software &Services d) Real Estate & Hospitality. The Company is operating business of manufacturing of precision turned components and all type of engineering goods for the defence, aerospace and other allied industries including Manufacturing,trade and deal in all kinds of products related to Defence and Aerospace and Additive manufacturing and Technical Consultancy Services, 3D Scanning,Reverse engineering ,Plant Modelling, design, develop and market software products for 3D and activities through its subsidiaries, Joint Venture, partnerships and associates.
Management Pedigree
Mr. Abhishek Singhania is the Promoter, Chairman & Managing Director of Jaykay Enterprises Limited and scion of one of the best-known business families of India. He is the cofounder & has served as Managing Director of JK Technosoft Ltd (‘JKT’) and leads the company’s global operations together with the Board &Management Team. He has invaluable experience within JK Organization companies, handling various aspects of J K businesses, managing business units and operations as well as spearheading successful national and international expansion programs. He has rich experience in the manufacturing & IT services industry and multi-dimensional expertise in basic & core sector industries such as – textiles, synthetic fibres, cement and chemical processing, both in continuous as well as discrete manufacturing, Mr. Singhania has deep insights in Software Development Life Cycle (SDLC), Project Management, Strategic Planning, Business Development, Thought Leadership. Mr. Singhania spearhead in Carving new business opportunities and managing strategic investments in Defence & Aerospace, Digital Manufacturing (3D & Processing), Digital Transformation through acquisitions. He is an alumnus of IMD Business School.
SWOT
Fundamental Ratios, Cash, EBITDA, PAT
Sales and profit catching up in last 2 years
ROCE and ROE <10 %
Debt to equity is under control 0.35, Pledging is 0%
Promoter has good skin in game at ~56% shareholding and stake is increasing while Public stake is decreasing
Triggers
Macro Trends :
INDUSTRY OUTLOOK Defense & Aerospace Sector outlook is very positive owing to huge requirements from the domestic market. The A&D market in India is estimated to reach around US$ 70 bilion by 2030. With a focus on indigenization by GOI the sourcing from within the country will increase many fold resulting in great opportunities for companies in this sector. The additive manufacturing market in India is increasing slowly but surely. The GOI has already come up with a policy. The early entrants will have an advantage over others. The application of this technology globally has entrenched Defense & Aerospace, Health care and oil & Gas Sector. Digital manufacturing will lead the global manufacturing sector in a decades time
Joint Ventures And subsidiaries
JKE had entered into a strategic partnership with the global leaders in 3D Metal design and printing market. JKE had signed a Joint Venture and Shareholders Agreement with M/s Additive 3D Pte Ltd(A3D) an affiliate to M/s EOS Singapore Pte Ltd and consequent upon which a JointVenture (JV) company had been incorporated in the name of M/s Neumesh Labs Private Limited (‘Neumesh’) on 01st January, 2021, with shareholding of JKE and A3d respectively is 70% and 30% in said JV Company, inter alia, in the business of the 3D printing technology in India.
Neumesh Labs Private Limited
Neumesh Labs Private Limited (“Neumesh”) has established a Centre of Excellence (COE) in Bengaluru, the COE has state of the art EOS Software, Machines & Practices of cutting-edge 3D technology. Further Neumesh has developed a 3D printer JKPrint500, which was unveiled in IMTEX 23 Fair in Bengaluru. The product has received enthusiastic market response. Neumesh is also developing a lower price 3D printer which will be targeted at the mass market.
Neumesh, has also started its AM labs business. This is in line with various State Governments opening COE across engineering colleges and ITIs’. GOI in its 2023 budget announcement stated its intentions to establish COE’s across the country. Considering, huge numbers of COE’s that will be established, the demand for high quality polymer printers for training purposes will be high. Therefore, Jaykay Enterprises Limited along with its eco system partners have indigenously developed a polymer printer JK Print 300 and JKPM3 series, a Powder Management System which was unveiled in IMTEX 23 Fair in Bengaluru. The initial customer response has been encouraging. The JK Print 300 Printer is suitable for usage in prototyping, consumer goods, Automobile, and architecture for low volume production. The machine is ideal for usage in low volume production and training of students and technicians. The JK PM3 Powder Management System will optimize productivity and economics keeping in mind highest quality standards of parts produced by 3D metal printers. Neumesh, is working in tandem with the Governments Make in India program. Neumesh has started working on IAF prototyping projects and is looking closely at the MEA Oil & Gas market.
JK Defence & Aerospace Limited (“JK Defence”) and Allen Reinforced Plastics Private Limited (Allen)
JK Defence & Aerospace Limited (“JK Defence”) has acquired the 76.41% equity stake in Allen Reinforced Plastics Private Limited (Allen) which is engaged in the business of designing, development, manufacturing, and testing of advanced composite engineering products made or composed of fibre glass, glass mat, plastic, resins etc. applications in defence/aerospace/ logistics & electrical industries. Allen indigenously develops and supplies critical components to key defence projects in the country, such as BrahMos, Pinaka, SMILE, Akash missiles etc. to defence undertakings such as DRDO, ISRO, OFB, BHEL, BDL among others.
JK Defence stake in the step-down subsidiary i.e. Allen will increase from 76.41% to 92.92% after recent aquisition of shares through Rights issues
JK Defence & Aerospace Limited, Wholly Owned Subsidiary (“JKDAL”) of Jaykay Enterprises Limited, has been accorded an approval from the Office of the Commissioner for the Industrial Development and Director of Industries and Commerce, Government of Karnataka w.r.t. the investment proposal of JKDAL to establish a unit for manufacture of “Precision Turned Components and all types of Engineering Goods for the Defence, Aerospace and other Allied Industries including assembling in all kinds of products of Defence and Aerospace Equipments”. The approval includes allotment of 5 acres of land from KIADB at Devanahalli General Industrial Area (ITIR), Bangalore Rural District and necessary permission for water and power connections and associated NOC(s) from state industry authority. The unit will be eligible for incentives and concession as per applicable policy of the State.
Jaykay Enterprises Limited (“the Company”) has acquired 99% stake in Bangalore based partnership firm M/s. Silvergrey Engineers (SGE) inter-alia engaged in manufacturing and supply of parts and accessories to defence equipment manufacturing industry, catering to Customers including HAL, BEL, ISRO, Gas Turbine Research Establishment, Aeronautical Development Agency, Tata Advance Systems amongst others. SGE presently has manufacturing facilities located at Bengaluru
Representative image of 3D printers, digital manufacturing(not actual)
JK Digital & Advance Systems Private Limited
Incorporated on July 27, 2023, to provide digital and technical consultancy services, 3D scanning, and software engineering lab services. It aims to design, develop, and market software products for 3D applications and various industries.
Current Event
Company Share price has been adjusted for upcoming rights issue at 25Rs on 19th July24
Quarterly results have shown improvement –7th Aug24
12 acre Land parcel applied in lucknow
Details of recent triggers
Neumesh Labs Private Limited (Material Subsidiary) signs Memorandum of Understanding (“MoU”) with Agnikul Cosmos Private Limited Neumesh Labs Private Limited, material subsidiary of the company entered into a MoU with Agnikul Cosmos Private Limited, a Chennai headquartered Space-tech start-up Company on August 9, 2023. The MoU includes supply and maintenance of Metal Printer, Part Printing and Supply of Metal Powder. • Joint Venture with Phillips Machine Tools India Private Limited The Company had entered into a Joint Venture with Phillips Machine Tools India Private Limited, a subsidiary of Phillips Corporation, USA, to form and constitute a Limited Liability Partnership (LLP) under the name and style of JK Phillips LLP pursuant to the Limited Liability Partnership Agreement dated December 20, 2023. The LLP has been formed on December 28, 2023 to carry out the business of trading and distribution of Advance systems which includes CNC machines, lathes, hydraulic press, 3D printers, moulding machines and accessories originally produced by Phillips and other manufacturing/ trading activities including after-sales services. • Tripartite Agreement to manufacture Medical Implants executed between JK Digital & Advanced Systems Private Limited, EOS Electro Optical Systems India Private Limited and Meril Innovations Private Limited During the year, JK Digital & Advanced Systems Private Limited a WoS of the Company had completed the execution of a Tripartite Manufacturing Agreement on January 19, 2024 with Meril Innovations Private Limited, Gujarat (Meril Life Sciences), a leading MedTech Solutions Company, for production of Medical Devices/Implants through 3D Printing along with its technology Partner EOS, Chennai a WoS of EOS GmBH of Germany. The Agreement provides for JK Digital to Install, operate specified 3D Printers assisted by EOS, for manufacturing of Orthopedic Implants at Meril Life Sciences premises in Gujarat. • Merger of Business of Silvergrey Engineers into the Company In line with the approval of Board of Directors of the Company accorded on May 29, 2023 the Company had executed Dissolution cum Retirement Deed with Ujala Merchants and Traders Limited (UMTL) dated February 3, 2024, where in UMTL agreed to retire from the from the partnership of Silvergrey Engineers w.e.f. January 31, 2024, resulting the Company acquired the balance 1% stake in Silvergrey Engineers, pursuant to which the Company, will carry on the business of manufacturing of precision turned components and all type of engineering goods for the defence, aerospace and other allied industries as a division/segment of the Company. • Approval of Land Parcel to JK Defence & Aerospace Limited (WoS) in Bangalore Rural District JK Defence & Aerospace Limited WoS of the Company, had been accorded an approval from the Office of the Commissioner for the Industrial Development and Director of Industries and Commerce, Government of Karnataka on March 13, 2024 w.r.t. the investment proposal to establish a unit for manufacture of “Precision Turned Components and all types of Engineering Goods for the Defence, Aerospace and other Allied Industries including assembling in all kinds of products of Defence and Aerospace Equipments’’
The approval includes allotment of 5 acres of land from KIADB at Devanahalli General Industrial Area (ITIR), Bangalore Rural District and necessary permission for water and power connections and associated NOC(s) from state industry authority. The unit will be eligible for incentives and concession as per applicable policy of the State
Opportunity Size
Recently India has made 3D printed Semi cryogenic engine
Additive manufacturing expected to grow at more than 20% CAGR and coupled with defense and aerospace sector growth, oppportunity seems big enough
Technicals
Technical chart in 27 Jul24 (after Rights issue adjustment)
Technicals on 6-Jul-24 –ALD presentation
Technicals on 18-Jun-24
Risks
Operating Cash flows are not good. Working capital days, Cash conversion cycle, ROCE, ROE not upto the mark –outcome is high valuation which is typical characteristics for a turnaround company–Things look really bad before they turn decent, and then good and then turn very good.
Chances of turning very good?? We need to see –1 out of 100 companies turnaround succuessfully—rest of the companies bites the dust
Other income is high and skewing PAT
New business division of defense dont take off as anticipated
Dependency on limited customers for new contracts and
Competition from domestic and foreign players
There are related party loans to subsidiaries which may be susceptible to waivers
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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.
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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.
Zaggle Prepaid Ocean Services
Key Investment thesis –> Differentiated SaaS-based fintech platform with Strong network effect offering Comprehensive suite of products for a large & growing addressable market. Company has amazing cross selling and Up-selling opportunities across domains.
Zaggle builds financial solutions and products to manage the business expenses of corporates, SMEs, & Startups through automated and innovative workflows. Headquartered at Hyderabad, it is at an intersection of of SaaS (Software as a service) and Fintech. With 273+ employees, the company has 50 Mn+ co-branded prepaid cards.
Products Zaggle Zoyer: accounts management services Zaggle Save: Help employees save tax with Save’s flexible employee benefit plans Zaggle Propel: all-in-one solution for employee rewards, and channel partner incentives.
Stats in accounts/users and Revenue streams
Share in Prepaid Cards market –16%+, Transaction volume wise ~13%
Strength of company
#1 issuer of prepaid cards
Multilingual interface
In-house developed technology with strong network effect
Customizable products
Diversified customer relationships across sectors along with preferred banking and merchant partnerships
Low churn rate of customer (<2%), long term relationships
Seasoned management team and board
Awards
Company has received an award for “Best Spend Management System“ and “Best Cards Initiative for Zaggle ZatiX“ at 11th Edition Payments Industry Awards by KamiKaze B2B.
Company has received an award for “FinTech Brand of the Year“ at 4th Edition Festival of FinTech Conclave Awards 2024 in association with BW Businessworld.
Company has received an award for “Pride of Telangana “ Achiever” Start up Category 2024” by Round Table India and Ratnadeep.
Company has received an award for “Excellence in Innovation Business Spend Management Software India 2023” in the Global Banking and Finance Review Awards 2023.
Fundamental Ratios, Cash, EBITDA, PAT
Amazing Sales and Profit growth of 11x in 5 Years
ROCE and ROE close to 15%
Debt to equity is under control and close to Nil
Pledging is 0%, Promoter has good skin in game at ~44% shareholding
Though FII, DII decreased stake in last 2 qtrs but still stake held by FII, DII + HNI is big, Public holding only ~20% stake . Big Shark Ashish Kacholia has increased stake over few quarters towards 4%+ shareholding
Triggers
Macro Trends :
Moving towards Digital payments ; Increasing scope of Prepaid cards ; New companies coming up
PREPAID CARDS Growth till 2027 expected to be in range of 30-40% CAGR
Management Guidance and commentary
We doubled our revenue over the last 3 years and are poised to double our revenue over the next 2 years through organic growth. Our expectation of revenue growth for this fiscal year is to the tune of 45%-55%. We are focused on garnering more market share and making significant investments in technology, specifically building deeper AI capabilities to cater to the massive demand for Spend management solutions. We intend to pursue inorganic growth opportunities through mergers and acquisitions. Additionally, we plan to expand geographically into the US markets as part of our growth strategy.
New Vertical
In Q1FY24, Zaggle introduced corporate credit cards and vendor management platform – Zoyer.
Launch of credit cards as a product in FY24 . The monthly volume of transactions for credit cards exceeded the monthly volume of transactions for prepaid card
Zaggle Zatix – our analytics platform launched this FY & offered by Banks as bundled solution of Corporate Credit Cards + SaaS.
New contracts in Last 1 year
In Q1FY24, company entered into contract with BOB Financial Solutions Limited for implementing commercial card Onboarding & value-added services platform and launch of the Zaggle Yes Bank Corporate Credit Card, powered by Zaggle Zatix – a spend analytics platform that allows corporates to streamline business and employee expenses, budget better and negotiate favorable supplier terms.
Zaggle Save (Expense Management platform & Employee benefits)
Employees of Hero Motocorp Limited.
Lifestyle International Private Limited
Quess corp limited
Bennett, Coleman & Co. Ltd.
ARCADIS CONSULTING INDIA PRIVATE LIMITED
Wipro Limited
Benetton India Pvt. Ltd.
Emcure Pharmaceuticals Limited
Europ Assistance India Pvt. Ltd.
Axis bank limited
Expleo Solutions Limited
Yokohama India Private Limited
Eversub India Private Limited (Subway)
Contract with Torrent gas for 2 years , approx 200cr business for Implementing Close Loop Fleet Program
Agreements with ecosystemplayers in varied domains like Domestic card, corporate cards, forex cards, Travel, Cross border payments
Agreement with VISA -In Oct,23, company has entered into a growth agreement with VISA. This alliance is in support of the issuance of Forex CoBrand Cards. Visa will pay the launch bonus for supporting the launch of Forex Cobrand Cards. and will also pay incentives on Forex transactions basis spend commitments. Zaggle can leverage existing Corporate base to sell forex cards to employees of the Corporate client, and it can be tightly coupled with Zaggle expense management solution. The deal size is ~$20 Mn for next 5 years.
Company has entered into an agreement with Skydo Technologies Private Limited. This is to enable facilatate cross border payments for Zaggle corporate customers
Zaggle is contracted to provide services to Bank whereby Zaggle’s accounts payable software & expense management software and the Axis bank Corporate Credit Cards are bundled and jointly offered to Zaggle corporate customers to drive card spends & greater usage of the software
Zaggle & EaseMyTrip will leverage its Existing Corporate base to sell Integrated Travel & Expense Management Solutions to Corporate Clients.
Zaggle & Riya Travel will leverage its Existing & New Corporate base to sell Integrated Travel & Expense Management Solutions to Corporate Clients.
Zaggle is contracted to be a Co-brand partner with Nishi Forex who is an Authorised Dealer II for forex card to carry out activities such as Sales and Distribution, Marketing and Campaigning bundled with Zaggle expense management to drive card spends & greater usage of the software. Subject to RBI approval the product launch will be done in due course.
Strategic alliances and partnerships with PSU
Opportunity Size
Zaggle Propel itself Can hit potentially 3000cr in revenue with overall revenue may hit 5000cr by 2030. Net profit margin may remain between 4-7%. Company may see profits of 250-350cr if opportunity size is grabbed. With an Eps of 19-25 and PE of 40-60 –Future Price Range oscillates between estimated 750-1500. Getting such a business at 100-150 Rs price point could be super deal (dont know if we get that price)
Peer analysis
Technicals on 6-Jul-24
Risks
Operating Cash flows are not good. That needs to be monitored closely
Working capital days, Cash conversion cycle is also expanding
Business is heavily titlted towards H2 of FY
Other income will go down once cash from IPO is Utilised
Lot of investment is being done in Zoyer for product enhancement and building of Zatix, an analytics platform. If products fails to takeoff, then a good amount will be written off from assets
Increased Regulatory Compliance poses many risks for Fintech companies
High valuations in short term is another risk though runway seems long for company growth
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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.
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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.
Allied Digital Services (ADSL)
Key Investment thesis –> Smart city contracts and infrastructure solutions
ADSL global IT Consulting and Services provider and Systems integrator offering infrastructure solutions and services to clients across 70 countries. It designs, develops, and deploys digital solutions and delivers end-to-end IT infrastructure services including, End user IT Support, IT asset life cycle, enterprise applications and integrated solutions
CMMi Level 3, SOC2 certified, ISO 9001, 27001 & 20000 – Highest standard for IT Service Management Tools
Customers, Global Presence and RevenueMix
Increasing clients. Deals from big clients
Fundamental Ratios, Cash, EBITDA, PAT
Stable Ebitda, Pat margins. Debt to Equity under control. ROCE is on uptrend in medium term
Working capital days and cash conversion cycle have been improving
ADSL when i first published the report
ADSL NOW
Triggers
Securing new projects of Smart city
Securing of prestigious contracts, exemplified by projects like the Ayodhya Smart City and Taloja Smart City.
In February 2024, ADSL received a Letter of Intent for the Taloja Smart Industrial City Solution contract in Navi Mumbai. This groundbreaking initiative will unfold over an 18- month implementation phase, followed by a 60-month Operations and Maintenance period. The project’s scope involves establishing an Integrated Command & Control Centre (ICCC) at both the Corporation’s Head office and the Industrial Township. The ICCC software will seamlessly integrate with a Cloud-based Data Center/Disaster Recovery system. Furthermore, the project encompasses the deployment of a cutting edge CCTV-based Surveillance System to bolster security and monitoring capabilities. In January 2024, was selected as a Master System Integrator (MSI) for the Integration of CCTV Surveillance with Existing ITMS Control Room for the Ayodhya Smart City Project. This project entails the establishment of a multi-location CCTV surveillance system. The capital expenditure (CAPEX) and implementation phase is anticipated to last three months, followed by a five-year operational and maintenance (O&M) phase.
Completed 12 smart city projects with 2 new wins.
Expecting an opportunity size of Rs. 50,000 crore in the smart city projects in the next 5 years.
Seeing traction in the smart city space with upcoming tenders.
Future Outlook,Targeting Acquisitions and exploring fields like
Eyeing opportunities in Cybersecurity and Cloud arena for potential acquisitions.
Focused on improving margins in O&M contracts and government projects.
Expecting better traction in IT business with growing interest in European and APAC markets.
Revenue Plan
Plans to reach INR1,000 crores in revenue over the next 2-3 years with a focus on improving margins
Order book outstanding at Rs. 1,600 crore, with execution period of around three years (Nov23)
Digital Desk (formerly ADiTaaS):
Rebranded to ‘Digital Desk’ with enhanced features in AI, conversational AI, and generative AI.
Seeing traction with 100+ customers globally.
Leadership Augmentation
Allied Digital has added Mr. Ramanan Ramanathan as “Global Head Strategy – Growth, Innovation, Partnerships” to its Senior Leadership Team. Mr. Ramanathan, a seasoned strategist and growth consultant, has advised global entities and served as the Mission Director of the Atal Innovation Mission, where he established over 10,000 Tinkering Labs and 75 incubators.
In his new role, he will assist the company in its expansion by identifying new market opportunities, fostering innovation, and establishing strategic partnerships. Additionally, he will identify and evaluate potential partners to enhance business capabilities and achieve strategic objectives.
With a distinguished career at TCS and CMC Limited, he continues to shape innovation, entrepreneurship, and sustainable development across various sectors.
8th October 24
Allied Digital awarded Pune Safe City (FY 2024) Project for Total Contract Value of Rs. 430+ Crore
Key project highlights include: Comprehensive surveillance: Track 1 of the project shall cover O&M of the existing cameras for a period of 6 years and Track 2 shall cover Implementation of new infrastructure over 12 months followed by 5 years of O&M.
Advanced technology: The project will feature advanced Artificial Intelligence-enabled video analytics, an Automatic Number Plate Recognition (ANPR) system, Vehicle Over speed Detection System (VDS) a Facial Recognition System (FRS), Drones, and Mobile surveillance vans to ensure robust security and monitoring.
Upgraded infrastructure: The Command-and-Control Center at the Commissioner of Police office and supporting Data Center will be upgraded with implementation of additional capacity and installation of advanced software leading to improved efficiency and 24×7 real time monitoring. Additional viewing facilities will be established at various police stations and key government offices
Risks
Concentration of revenue from top clients
Working capital intensive nature of operations
Highly competitive nature of IT industry
Technicalchart
on 17-Oct 24
on 29-Jun-24
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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.
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Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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.
Ceinsys Tech
Business
Ceinsys Tech Ltd. is engaged in providing value added Solutions for various segments into SMART CITY solutions and Software under the ITES business segment and is primarily dealing in providing Geospatial, Enterprise & Engineering Services and software products. The Geospatial engineering services and Enterprise solutions offerings encompass various aspects of geospatial intelligence, including Data Creation, Data Analytics, Decision Support Systems (DSS), Enterprise Web Solutions, and Dashboards.
Its services include GIS, Remote Sensing, LiDAR (Light Detection and Ranging), Photogrammetry, Energy System and solutions, Engineering Design Services, Surveys and Customized Application Development.
The Manufacturing Solutions span the entire product development process – covering both the product engineering activities and industrial automation solutions for various verticals such as two / three-wheelers, passenger cars, commercial vehicles, and off-highway equipment.
In the FY22 Ceinsys, strategically expanded into mobility sector by acquiring Allygrow Technologies, a specialized engineering service provider with a strong international presence. This acquisition allowed Ceinsys to enhance its capabilities into manufacturing technology solutions covering the entire product development process and industrial automation for diverse sectors such as two and three wheelers, passenger cars, commercial vehicles and off highway equipment.
Its a Pure-Play GIS and MF Services Company
Employee strength –1000+ and 200+ Customers (40% business from Repeat Customers}
CTL had two direct subsidiaries ADCC Infocom Private Limited (involved in activities like software engineering, software development, business computing, data communication and networking, image processing and remote sensing etc ) and ATPL (specialised in manufacturing engineering services) and 5 step down subsidiaries i.e. Allygrow Technologies B.V, Technology Associates Inc., Allygrow Engineering Services Pvt Ltd, Allygrow Technologies, GmbH and Allygrow Technologies Ltd., UK
Geospatial Overview
Clients in Geospatial
Manufacturing Solutions overview
Customers, Global Presence and RevenueMix
The company boasts a marquee list of customers ranging from large corporates, OEMS, asset management companies and government bodies in the Geospatial and Manufacturing sectors, globally
It has a global presence with offices in India, the United States, United Kingdom and Germany
Applications
Smart city solutions
Spatial Data Infra
Disaster Management
Fundamental Ratios, Cash, EBITDA, PAT
Debt to equity is under control < Almost Nil
ROCE>20, ROE> 15
Pledge 14.6%
Good Sales and Net Profit Growth
Fluctuating OPM, Good NPM, Good Cash flow from operations
Triggers
Expansions and Acquisitions for future growth
ATPL has a track record of around 8 years and is a technology driven engineering service company and has its presence in US, Europe and India and specializes in Product design and Robotics automation. The company derives majority of its revenue from international market. With acquisition of ATPL, CTL is likely to derive benefits from the transaction by leveraging ATPL’s overseas network and expand its geographical presence.
The company is leveraging on India’s projected geospatial market growth which is expected to grow at CAGR of 13.5% by 2025
New Vertical
The company is also into software product development, Artificial Intelligence (AI), Machine Learning (ML) and Embedded Electronics space through a new vertical formation which focuses on product development activities related to Metaverse, EdTech, Gaming and Mobility.
Order inflows
Order book 710cr in March24
Current order book 750cr on 30th Jun24. ~550 crore is towards the geospatial and engineering services, and around +200 crore is towards the technology related solutions services. Bidding done for 200 crore of which there are 70% of the tender pipeline we are already L1
Targeting Acquisitions and exploring fields like
Acquisition of Ally Grow Technologies facilitates entry into the mobility services sector, capitalizing on the convergence of GIS and autonomous driving technologies
Establishment of a new vertical MEG-Next which focuses on innovative product development activities related to Metaverse, EdTech, Gaming and Mobility.
Further acquisitions being planned in the Geospatial, Manufacturing and Technology domains
Aquired VTS in Jul24
Smart Water Management
The company is focused on capitalizing on substantial funding opportunities provided by government initiatives such as National Infrastructure Pipeline (NIP), Jal Jeevan Mission, and Namami Gange program, with a proposed budget of approximately USD 15 Billion for water-related projects
Focused on tapping the growth avenues in smart water management and renewable energy sectors, as India’s aims to add over 340 GW of renewable capacity by 2030
Tapping Manufcaturing and EV mobility growth
Rapid expansion in EV ecosystem to support Manufacturing business growth
Company is all set to seize opportunities in the growing EV mobility market, with global ER&D spending in the automotive sector accounting for USD 125-160 billion which is growing at a CAGR of 10.6%.
Risks
Lumpy nature of Orders –Orders come in bulk and so are the payments.
The order book of CTL remain concentrated as top ten orders accounts for 75%, there-by exposing the company to concentration risk. Also, the customer base of CTL is concentrated as around 55% of Income is derived from top ten customers.
Margins Volatility is high. OPM is fluctuating a lot across years
High Number of payable days
Technicals on 15-Jun-24
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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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Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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.
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
Awardsand 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, ROE> 15
Pledge 0%
Short and long term liquidity under control
Q1FY24 have been weaker than expected while Q4FY24 has been good
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
Consistent order inflows
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
Bidding for the whole system – the complete radar system – for both DRDO and for future MoD requirements
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
Order book of Rs. 1,956 Crores as on March 31, 2024, which is executable in the next 12 to 36 months period
Orders booked during the quarter ended 31st March 2024 are worth Rs. 472 Crores
Order book of Rs. 2,299 Crores as on March 31, 2024, which includes Rs. 105 Crores pertaining to service orders
Orders booked during the year ended 31st March 2024 are worth Rs. 1,636 Crores
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
Recently, we have also entered into a collaboration agreement with Teledyne e2v HiRel in order to provide semiconductor services to support the aerospace, defence, and reliability electronics markets. This agreement will pave the way for numerous new possibilities for us in the futur
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: Thebusiness 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
Low Promoter holding
Cash flow from operations struggling
Technicals on 26-May-24
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 can be lot of things which 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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Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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 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
Strengthsand 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
12 World-class manufacturing facilities
3,000+ Workforce
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 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 Developmentsand 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
Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which 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.
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🟢EMS Limited is a multi-disciplinary EPC company, headquartered in Delhi that specializes in providing turnkey services in water and wastewater collection, treatment and disposal. EMS provides complete, single-source services from engineering and design to construction and installation of water, wastewater and domestic waste treatment facilities
🟢The company provides Sewage solutions, Water Supply Systems, Water and Waste Treatment Plants, Electrical Transmission and Distribution, Road and Allied works, operation and maintenance of Wastewater Scheme Projects (WWSPs) and Water Supply Scheme Projects (WSSPs) for government authorities/bodies.
🟢Healthy Order book of ~2100cr provides strong visibility of revenues over next few years. Company has repeat orders from various Government departments.
🟢EMS promoters have more than a decade of experience in executing water supply and sewage treatment projects
🟢Since incorporation, it has completed 67 projects in Bihar, Uttarakhand, Madhya Pradesh, Rajasthan, and Haryana. It has executed many projects awarded by government bodies such as Uttar Pradesh Jal Nigam (UPJN), Construction and Design Services (C&DS), Military Engineering Services (MES), and Indian Railway Construction Limited (IRCON). It has completed 4 O&M projects in last 4 years.
🟢Key clientele includes government bodies like Municipal corporation of Rajasthan (under AMRUT Scheme), Uttarakhand Urban Sector Development Agency and Bihar Urban Infrastructure Development Corporation (under National Mission for Clean Ganga ) and CPWD, Maharashtra
🟢EMS Limited has its own civil construction team and employs 57+ engineers, supported by third-party consultants and industry experts.
🟢Projects are mostly funded by World bank
🟢Development of Tier 2 Tier 3 towns, capital expenditure by Government gives good visibility for few years
🟢Promoter has sufficient skin in game with approx. 70% holdings, Sales are increasing and NPM is good
Risks
🔴Company works in a field of high capital intensive business and receivables will remain high
🔴Project execution risks within a budget are the ones which constantly hurts companies in these kind of businesses
🔴The company has not executed any HAM projects in the past but is executing one HAM project for the UP Jal Nigam. It has entered a joint venture with Ercole Marelli Impianti Tecnologici S.R.L. Italy.
🔴Revenue concentration from few clients/states poses a risk
Technical chart
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🟢Kabra Extrusion Technik Limited : It is India’s largest manufacturer of plastic extrusion machinery for more than 4 decades and recently ventured into manufacturing of Lithium-ion Battery Packs. The company is a part of the well-known Kolsite Group.
🟢In Extrusion Machinery Business it is India’s premier manufacturer & exporter of extrusion plants with presence in 100+ countries with +15,000 installations. also commands close to 40% market share in FY23
🟢Industry application in different sectors like -Packaging Industry, Infrastructure & Construction, Telecom and Plasticulture
🟢It has different products : Blown Film Lines, Pipe Extrusion Lines, Sheet Extrusion Lines, Compounding Lines and Auto Feeding Systems
🟢In new segment of Battrixx –Its an emerging leader and commands approx, 15% market share where
🟢Battrixx business is a battery related solutions for electric mobility and energy storage, Battery & related components constitutes ~35-45% of cost in an Electric Vehicle
🟢Products in Battrixx segment are Battery Packs across multiple chemistries, Battery Management Systems (BMS) and IoT Solutions
It is One of the few players with
The ability to handle multiple chemistries & types of cells
Chemistries – LFP, NMC, NCA, etc.
Types of Cells – Prismatic & Cylindrical
Expertise across Electrical & Electronics
Smart BMS
IoT & Telematics
Data Analytics Solutions
🟢Company is continuously investing in RnD and want to enter E-trucks, E-buses and ESS(energy storage systems)
🟢Company is first EV battery-pack manufacturer to be accredited with ARAI certification under AIS 156 Amendment III Phase 2 for its batteries, conceptualized and designed in-house strategically with Hero Electric’s R&D team
🟢Company had earlier won 3L battery packs and chargers order from Hero Electric Mobility for FY24
Key focus areas of our R&D
Company has technical tie up with Battenfeld-Cincinnati, Extron Mecanor and Penta for different domains
🟢Company has right tailwinds in longer run
🟢Company business is profitable though facing short term headwinds
🟢Promoter has sufficient skin in game with 60% holdings, FII holdings increasing in FY24
🟢Company credit rating has been upgraded last year CRISIL A+/Stable (Upgraded from ‘CRISIL A/Positive’)
Risks
🔴Company was able to successfully established new business but EV Battery sector run into headwinds with new rules. Company was first to be accredited with certification for new rules but still headwinds not went away fully. Company might take more time based on customers business
🔴Crude oil has indirect dependency as customers order go down for new machinery with increasing crude oil price. Hopefully now Crude is stable and Pipe volumes may come up seeing the real estate boom
🔴Low OPM, NPM margins as of now –may improve with both domains of business picking up
🔴Technically weak structure for stock price
Financials
Company OPM have gone down recently and may take time to stabilize and come up. We need to carefully watch this space. Expected OPM is around 12% in longer run so enough space for company to showcase good results in coming years
Technical chart
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