Tag: Stocks

Stocks · SWOT

Jupiter Wagons

Its real ALPHA1 Comment

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

Jupiter Wagons

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Business

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

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

Products, Segments

Railway Wagons

Commercial Vehicles incluising Electric Light Commercial Vehicle business (eLCV)

CMS Crossing

Brake Systems & Brake Disc

Containers including Flex Containers, Marine containers , BESS containers

Strengths and Certifications

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

Clients

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

Joint Ventures

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

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

Consistent Tax records

ROCE and ROE is reasonably above 20%

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

Recent Developments and Key Triggers

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

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

Valuations

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

Risks

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

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

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

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

Technicals on 11-May-24

Conclusion

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

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

Also Read : Savita Oil

ALSO READ : SS7 (Diwali to Diwali)

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

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

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

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

Stocks · SWOT

Savita Oil : Oiling is important

Its real ALPHA1 Comment

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

Savita Oil

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

Business

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

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

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

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

Company has 80 % domestic sales vs 20% exports

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

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

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

Products, Segments and Strengths

Two major segments : Petroleum Oils and Lubricating Oils

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

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

3.Formulated & Specialty Products

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

Lubricating oils : Automotive and Industrial oils

Automotive oils

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

Industrial oils

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

Strengths

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

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

Focus on innovation

Focus on sustainable products development

Management has almost 3 decades of experience.

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

Clients

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


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

Consistent Tax records

Cash conversion cycle and working capital cycle is good.

Cash flows seems good

ROCE is reasonably above 20%

Shareholding pattern

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

ALSO READ : SS7 (Diwali to Diwali)

Recent Developments

Key triggers

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

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

Product Innovation

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

Company has created a subsidiary and moving towards plastic recycling

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

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

Oct23 – successfully commissioned new Synthetic Ester manufacturing plant

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

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

Environment friendly products

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

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

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

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

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


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

Capex 

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

Valuations

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

Risks

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

Any policy changes can impact the company hard

Technicals on 28Apr24

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

Conclusion

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

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

Also Read : ICEMAKE Refrigeration : Time to Chill

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

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

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

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

Stocks · SWOT

Inox India

Its real ALPHA2 Comments

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

Inox India

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

Business

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

Products, Segments and Strengths :

Income in different segments and Export : Domestic Contribution

Orders in different segments and Export : Domestic Contribution

Serving Industrial Gas, LNG and Cryo Scientific Division

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

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

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

Company has

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

Clients and Certifications

Professional Management team

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

ROCE and ROE are at reasonably good levels

Debt to Equity is almost Nil

Promoter has skin in game.

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

Cash conversion cycle needs to be monitored.

Working capital days are good

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

Recent Developments

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

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

Capex

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

Focus on LNG and Hydrogen

Agreements

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

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

Patents

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

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

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

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

Valuations

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

Risks

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

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

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

Exposure to intense competition in international markets: 

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

Technical Chart on 14Apr24

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

Conclusion

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

Also Read : ICEMAKE Refrigeration : Time to Chill

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

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

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

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

Finance · Goals · Habits · Investing · Learning · Stocks · Success · Wealth creation

ALPHA LEARNERS – Mentorship program Apr-24

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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.

Positional Stocks · Stock Markets · Stocks

Positional Stocks 17-Mar-24

Its real ALPHALeave a comment

Market took away updated SL and we did not lose anything on the positions. Following process saved us

No positions as of now. From January to March we have gradually reduced from 8 to 6 to 4 to 3 positions and did not add new ones. It really helped in this fall from Positional portfolio perspective

Stocks · SWOT

Transportation Solutions

Its real ALPHA4 Comments

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

AVG logistics

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

Business

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

Products, Segments and Strengths

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

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

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

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

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

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

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

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

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

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

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

Clients

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

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

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

Similarly ROCE and ROE are decent.

Debt to Equity is high and needs to be closely monitored

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

Shareholding pattern

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

ALSO READ : SS7 (Diwali to Diwali)

Recent Developments in last 1.5 years

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

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

QSR clients :Started servicing QSR clients

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

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

JV : Joint Ventured with Sunil Transport for liquid logistics.

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

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

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

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

Company has also raised funds at 371 Rs/Share through

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

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

Valuations

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

Risks

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

New warehouse opening and its utilization

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

High capital working requirements remain a risk.

High competitive industry

Technicals on 11Feb24

Stock has been consolidating between 400-460

Technical chart on 16 Mar24

Conclusion

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

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

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

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

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

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

Stocks · SWOT

Capex is the key

Its real ALPHA3 Comments

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

Kilburn Engineering

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

Business

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

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

Products, Segments and Strengths

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

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

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

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

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

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

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

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

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

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

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

Order received in Q3FY24 94cr. Executed 73cr

Continuous order inflow in Q4FY24 as well

Order Enquiries –> Approx 100cr

Clients

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

Professional Management team

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

Similarly ROCE and ROE are at reasonably good levels

Debt to Equity is under control

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

Cash conversion cycle needs to be monitored.

Working capital days are good and have been improving

Shareholding pattern

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

ALSO READ : SS7 (Diwali to Diwali)

Recent Developments

Promoter buying from open market

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

Last buy around 320

Acquisition of ME energy 

This acquisition will help the company to grow faster

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

Capex

Expecting small capex of 15-20 cr till Dec25

Valuations

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

Risks

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

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

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

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

High capital working requirements remain a risk.

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

Technicals on 10Feb24

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

Technicals on 31-Mar-24

Survived well in last one month market correction

Conclusion

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

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

Also Read : ICEMAKE Refrigeration : Time to Chill

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

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

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

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

Stock Markets · Stocks

SS-7

Its real ALPHA7 Comments

EMS limited

CMP 569, Market cap ~3150cr

ROCE ~32%, ROE ~24%, D/E ~0.07 PE ~29 (based on screener)

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

🟢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

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.

Stock Markets · Stocks

SS-6

Its real ALPHA8 Comments

Kabra Extrusion Tecknik

CMP 417, Market cap ~1450cr

ROCE ~15%, ROE ~10%, D/E ~0.19 PE ~41 (based on screener)

Also Read Pick1, Pick2, Pick3, Pick4, Pick5

🟢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

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

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

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

Stocks · SWOT

Chemical and Pharma Player : AMI organics

Its real ALPHA5 Comments

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

Ami Organics

SS9

CMP 1116, Market cap ~4100cr

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

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

Business

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

Products, Segments and Strengths

Company operates in two segments

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

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

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

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

Clients

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

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

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

Strong focus on R&D

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

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

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

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

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

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

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

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

Shareholding pattern

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

ALSO READ : Company at Y2K moment

Recent Developments

Advance Pharmaceutical Intermediates

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

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

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

Specialty Chemicals

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

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

Capex ongoing

Pharma intermediates capacity to expand to 4x

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

Acquisitions

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

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

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

Transformation of acquired entities like Gujarat Organics

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

Details about Baba Fine chemicals

Valuations

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

Risks

Susceptibility to raw material cost could affect Company profitability.

Inherent regulatory risk (USFDA compliance)

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

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

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

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

Fermion contract getting cancelled midway

No major breakthrough in BFC business or electrolyte business

Technicals on 13Jan24

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

Technicals on 3-Mar-24

Conclusion

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

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

Also Read : ICEMAKE Refrigeration : Time to Chill

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

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

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

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

Stock Markets · Stocks

Fortnightly Thesis

Its real ALPHALeave a comment
Disruption

SS-5

Its real ALPHA10 Comments

India has been going through a transformative change through Aatmnirbharta

Lot of sectors have big tailwinds including

  • Railways (New Trains, New Tracks, New Wagons, Metro rail expansion to new cities etc.)
  • Defense (Reducing imports, Replacing old ammunition, New Fighter planes, Ships )
  • Automobiles (Building India as exports hub, increasing population with rising income profile)
  • Space ( Chandrayaan, Aditya L1 launches, Starlink agreements with ISRO, small satellites launches increase etc)
  • Marine and Shipping Industry (Building submarines, Ships, Ports infra, Sagarmala projects etc)
  • Industrial Expansion in many industries with capex being announced every week here and there
  • Oil and Gas industries And Heavy Earth moving Equipment’s
  • Power transmission and distribution

Considering all above, ALPHA AFFAIRS see

FORGING as MEGA TREND

And from that Mega trend, we focused earlier on RK forge, covered here and here

Today we are focusing on one emerging player in same industry but has bigger vision in new sunrise industries as well. We have also covered with small details on Baluforge earlier

Balu Forge

CMP 285, Market cap ~2900cr

ROCE ~27%, ROE ~22%, D/E ~0.16 PE ~44 (based on screener)

Also Read Pick1, Pick2, Pick3, Pick4

🟢It is engaged in the manufacturing of finished and semi-finished crankshafts and forged components and has a strong clientele comprising of 25+ OEM’s. Company has Fully Integrated Forging & Machining Unit with a large product portfolio offering to customers ranging from 1 Kg to 500 Kgs. The Forging Unit comprises Both Closed Die Forging Hammers & Presses

🟢Balu Forge has a distribution network in over 80+ countries and operates in domestic and export markets

🟢Balu Forge is already an approved vendor to a majority of the 41 Ordnance Factories part of the Ordnance Factory Board in India.

🟢Acquired Mercedes Benz Truck, Mannheim, Precision Machining Plant in 2021.

🟢Company has 3 subsidiaries. 2 in UAE and One in India.

Kelmarsh Technologies FZ LLC in 2021 (100%). Headquartered in the UAE with operations spread across 3 countries in Africa. Focused on manufacturing and innovation of agricultural equipment predominately tractors and tractor ancillary components

Safa Otomotiv FZ LLC (100%). Focusing on the machining and assembly of products in order to increase localization in the MENA region as well as meeting the product requirements for Agriculture and Oil & Gas industry

Balu Advanced Technologies & Systems Private Limited

Naya Energy Works Pvt Ltd (100%). Naya Energy is engaged in manufacturing of products for New Energy Sector

Company claims to work on Hydrogen Fuelling Stations & pilot project is presently underway to establish the first Hydrogen Fuelling Stations for fuel cell vehicles

Also company is in the process of patenting our domestically developed Refining Technology, NayaRefine. Currently One Module deployed can roughly produce 3-3.5 Tons of pure lead every day.

Company is working on a range of Charging Stations Conforming to Bharat EV AC Charger (BEVC-AC001) & Bharat EV DC Charger (BEVC-DC001) norms

Company also claims to work on ESS (energy storage solutions in form of hydrogen)

🟢Entered into leave and lease agreement with Hilton Metal Forging Ltd enabling Balu to backward integrate from precision machining player to Forging and Machining player

🟢Existing capacity to produce 18,000 tonnes Forged Components per annum which will be expanded to ~32,000 tonnes in the coming quarters. Annual capacity to manufacture 3,60,000 crankshafts. Wheel Production capacity of 6,000 wheels per year with a diverse application suitable for railway wagons, passenger coaches & locomotives in various gauges. Company want to Expand the wheel production capacity to 48,000 wheels per year

🟢On the capex front, Company plan for enhancing machining capacity by ~14,000 tonnes at newly acquired 13 acre land in Belgaum, Karnataka is progressing well. The operations from this facility are expected to commence from Q4 FY24, that will enable us to produce heavier and more complex crankshafts having better realizations and margins. After expansion, company will be operating on 22cr (previously 9 acres)

🟢The new facility will not only act as a Manufacturing Centre but will also be setup as a Technology & Innovation Campus with a strong focus on Integrated Defence Research & Production, Cylindrical Cell Production for Electric Vehicles, Components Suitable for New Energy Vehicle Drivetrains & Powertrains, Spent Battery Recycling to name a few but not limited to the same. There will be a dedicated R&D center spread over 4000 m² with a strong focus on the following key areas:

  • Advanced Materials & Composites (Development of New Materials)
  • Fuel Cell Development
  • Cylindrical Cell & Module Development (LFP & NMC)
  • Metal Air Battery Development (Zinc Air)
  • New Energy Powertrain & Drivetrain solutions (New Vehicle Components)
  • Advanced & Additive Manufacturing
  • Energy Storage Solutions
  • Alternate Bio fuels
  • Spent Battery Recycling
  • Advance Defence systems & solutions

Key focus areas of our R&D

Exploring the use of new materials, such as lightweight alloys or advanced composites, to enhance the product offering.
Investigating cutting-edge manufacturing methods, such as additive manufacturing (3D printing) or advanced Machining, to achieve higher precision and tighter tolerances.
Analyzing and optimizing product designs using computer simulations and finite element analysis to maximize performance and minimize stress concentrations.
Building a robust platform for the product expansion into the Railway & Defence Industry by way rapid prototyping & increase the speed of New product development
Successful Prototyping of some key components for the New Energy Mobility sphere to ensure the long-term vision of building strong capabilities in Fuel Agnostic solutions.
Investigating new heat treatment methods to enhance the strength and fatigue resistance of our products.

🟢Diverse array of products including Crankshafts, Railway Wheel, Under carriage, Transmission and clutches, Hydraulic motors etc

🟢Company is witnessing a lot of green-shoots in the defense and railway industry. This presents a significant growth opportunity for BFIL, as we continue to expand our footprints in these sectors

🟢Company is spending 2-4% in R&D and have 45 employees in that division, Overall employee strength is more than 700. Company is also Backed by certifications like IATF 16949 accredited by Tuv Nord Cert GMBH

🟢Revenue is expected to conservatively grow by ~25.0% in FY24 over FY23, led by growth opportunities in the various industries like defence, railways, and others

🟢EBITDA margins are expected to be in the corridor of 22.0%-23.0% in the upcoming quarter on the back of increasing scale of operations and efficiencies

🟢Promoter has skin in game with roughly 54% allocation. FII Have entered. Some DII money is also getting poured in this one. Management has good 3 decades of experience in the industry and now 3rd generation also into same business leveraging the domain strength acquired over years

🟢Fund raising and Preferential allotment Promoter infused 26cr at 115 Rs/share in 2023 and then 92cr (almost double of fixed assets 48cr) at 183 Rs/Share. Ashish Kacholia & Sage one also participated in Pref. at Rs.115. On 48crs of Fixed assets , Company has raised~300crs for expansion. Recently new fund also entered at 183 Rs/Share. All the selling hangover by a fund over last 2 years has been absorbed and stock is back to new highs

🟢Order wins in last 12 months. Significant order win from a tractor manufacturer based out of the Middle East of supplying 10,000 sets of sub-assemblies & there is scope to increase the same to over 50,000 annually

Risks

🔴 Volatility in the price of major raw material- steel and aluminum is a major risk, the operating margin remain susceptible to these volatilities

🔴Large working capital days cycle. The company provides a credit period of 150-180 days to its customers due to business requirements and maintains an inventory of 60-80 days due to diversified product portfolio

🔴Most of the talks under Naya energy division or Balu Advanced systems is just been talk. We need to see when and what product comes out of these new divisions. Many other companies progressing fast on Recycling, Defense and EV/Hydrogen space. We have not seen much on this part regarding their advances in these domains which significantly upgrade their Revenue or profit from these divisions. These may become sunk cost if management is not focused

Financials

Sales have grown 3x and Profits 8x in last 3 years approximately, OPM margins have improved, over 3 years company financials have improved

Technical chart

Good Daily and Weekly Breakout with volumes in 1st Week of Jan24

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Disruption

Diwali to Diwali -4

Its real ALPHA10 Comments

MSTC

CMP 568, Market cap ~4000cr

ROCE ~37%, ROE ~33%, ROE 3Yr 30 %, D/E ~0.16 PE ~17.4 (based on screener)

Company is paying Dividends but not consistent, Changing Business Profile

Also Read Pick1, Pick2, Pick3

🟢Company conducts electronic auctions (“e-auctions”) primarily on behalf of the government of India and related parties like government-owned companies. MSTC is a Mini Ratna Category-I PSU of GoI, based in Kolkata.

🟢MSTC has 50:50 joint venture with the Mahindra group called Mahindra MSTC Recycling Private Limited (MMRPL). This company is an authorised RVSF (“Registered Vehicle Scrapping Facility”) for vehicles reaching end of their life. These old vehicles are purchased for de-polluting, dismantling and converting the metallic parts in an environmental friendly manner. In December 2022, the Government of India issued a directive regarding its Scrappage Policy, a government-funded initiative which seeks to phase out old passenger and commercial vehicles, thereby reducing urban air pollution, increasing passenger and road safety, and stimulating vehicle sales. This means that all government owned vehicles will be auctioned off on MSTC’s e-commerce platform when they reach end of life. This opportunity is close to 15Lakh vehicles

🟢MSTC is casting more focus on the untapped e-commerce business from the private sector and in this stride MSTC has signed big ticket agreement with Reliance Industries, Indus Tower, Tata Power, L&T, Jindal Group, Vedanta 

🟢Company has negative cash conversion cycle and that helps company to grow without any need of capital

🟢Diversity in auctions management is a kind of moat. Company have done auction of properties, Gold, Metal scrap, Steel, coal mines, Aircarft, UDAN scheme etc etc etc

🟢Promoter has skin in game with roughly 64% allocation. FII started entering. Some DII money is also getting poured in this one

🟢Sale of natural resources such as iron ore mines, coal, minerals, sand blocks, and resources extracted by government-owned companies like iron ore and natural gas. This principle also extends to the ongoing sale of scrap, surplus stores, old plant and machinery, e-waste, and obsolete items belonging to different branches of both the state and central government across India.

🟢Recently Govt has announced that multiple block of minerals mines will be auctioned. Bidding of these auctions will be around 50K crore. MSTC will be getting % of these auctions (mostly less than 1%). Most of these auctions if done through MSTC, then most of the revenue will also flow to bottom line

Risks

🔴Company business is dependent on many government entities auction like coal, metal etc. So business can be lumpy to certain extent

🔴Launch of any new portal or shifting of auction business to individual companies of Govt or reduction of margins can potentially derail thesis

🔴Significant increase risk of investing in PSU as Govt can interfere on many things

🔴Any breakdown of portal or any bug in portal can lead to revenue loss and further loss of business

🔴Company has litigations earlier and need to be closely tracked on this front as well

Technical chart

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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.

Disruption

Diwali to Diwali -3

Its real ALPHA13 Comments

▪ At present, India loses around 30% of its power generated due to transmission, distribution, billing generation and collection inefficiencies

▪ Theft is the one of the main causes of the high losses. Theft occurs in several ways, viz: by tapping power lines and tempering / by-passing meter etc

▪ Meters play a vital role in reduction of AT&C Losses – Replacement of defective meters by tamper proof electronic meters / smart meters – AMI / Smart metering to the consumer for reduction of commercial losses and billing and collection ease

▪ Smart meter has the following capabilities: – Smart Meters and AMI Meters have communication capability – It can register real time or near real time consumption of electricity or export both. – Read the meter both locally or remotely – Remote connection or disconnection of electricity – Remote communication facilities through GSM / GPRS / RF etc

Here comes the company which tackles the problem head on and manufacture smart meters

Genus Power

CMP 223

Stock PE 71, ROCE, ROE <10%, Debt to equity < 0.3 (based on screener)

Also Read Pick1, Pick2

➡️It is engaged in manufacturing and providing Metering and Metering Solutions and undertaking ‘Engineering, Construction, and Contracts’ on a turnkey basis

➡️In 1996 it pioneered unique tamper-proof single & three-phase electronic energy meters in India.

➡️1st company in India to obtain various certifications like DLMS certification for Energy Meters, BIS certification for Smart Meters, etc.

➡️Current Order book is massive 19K crore –many order they have won recently

➡️Many State Electricity Boards (SEBs) have initiated the process of inviting bids for the deployment of smart meters under RDSS scheme

➡️In May 2023, the company has signed a commitment letter with United States International Development Finance Corporation (“DFC”) to obtain a Loan up to USD 49.5 million to scale up the deployment of electric smart meters.

➡️Company expects a substantial recovery in revenue from Q3FY24 onwards on back of our robust orderbook and consistent order inflow, further bolstered by the normalisation of the supply chain

➡️GIC Affiliate and Genus Power Infrastructures Limited to set up a Platform to fund Smart Metering projects

o Company signed definitive agreements with Gem View Investment Pte Ltd, an affiliate of GIC, Singapore (“GIC”) for setting up of a Platform for undertaking Advanced Metering Infrastructure Service Provider (“AMISP”) concessions

o Genus Power would be the exclusive supplier to the Platform for smart meters and associated services

➡️Largest player in India’s electricity meter industry ~27% market share in Meter Industry

~70% market share in Smart Meters

➡️Annual Production capacity of 10 mn+ meters

➡️Empanelled with 40+ different utilities across the country

➡️Only Indian company to receive BIS certification for Smart Gas Meters

➡️CMMI level 3 Company Accredited with – ISI, KEMA, SGS, STS, ZIGBEE, UL, DLMS etc., which is amongst the highest in Indian Metering Solutions Industry

➡️Big and reputed clientele

➡️In-House NABL Accredited Electronic Energy Meter Testing Laboratories

GOVERNMENT INVESTMENT

The government is planning to invest up to $21 billion till 2025 in smart grid technologies

The smart cities initiative is targeting 100+ cities in India, out of which 20 have been declared

More than 14 smart grid pilots have been launched in cities across India, to push smart solutions in Power Generation & Distribution Industry

Risks

➡️Fairly valued to bit overvalued until Earnings kick in

➡️Increase in employee cost and other expenses, as expanding workforce and enhancing systems in preparation for the execution of the substantial orderbook

➡️Significant increase in financing costs as a result of the company’s obligation to provide new bank guarantees to secure the massive order inflow

➡️Delay in execution of existing orders received by a quarter or two

➡️New order tenders getting delayed

➡️Change in policies

➡️Increase in RM costs

Genus Power

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

Stocks

DIWALI To DIWALI PICKS – 2

Its real ALPHA12 Comments

FCL –Fineotex Chemicals

CMP 358, Market cap ~4000cr

ROCE ~36%, ROE ~28%, ROE 3Yr 25.5 %, D/E ~0

Consistent Dividend Payout, Consistent increase in revenues, Profits over a decade

Also Read : PICK1

Business, Revenues and SHP

➡️FINEOTEX group is one of the leading manufacturers of chemicals for textiles, construction, water treatment, fertilizer, leather, and paint industry. Fineotex manufactures and provides products for Pretreatment processes, Dyeing processes, Printing processes, and Finishing processes for textile processing to customers across the globe

➡️Company focus is on two categories –Textile chemicals and Clean & Hygiene chemicals

➡️Revenue 77% domestic, 23% International

➡️Bluesign, ZDHC, Star Export House Accreditations + several ISO certifications

➡️Fineotex Chemical Limited has earned the prestigious ECO PASSPORT by OEKO-TEX® certification, the highest rating in the globally renowned audit that measures standards of sustainability

➡️Received Dun and Bradstreet ESG Badge, it showcases the impact of ESG listing and ranking on organizations, and recognize their contribution towards sustainability

➡️Presence in more than 70 countries with 100 + dealers with 470+ product categories

➡️Consistent promoter holding, Good DII participation, Big Shark Ashish Kacholia holding 2.83% stake ( built his stake in last one year)

➡️Company has strong experienced leadership team and has reputed clientele

Strengths and Triggers

🟢Capex, expansion Done in last few years–Total capacity 104000MT, Ambernath plant is fungible and has the capabilities to manufacture products for both textile chemical and cleaning and hygiene segment.

🟢The facility is equipped with modern infrastructure and amenities, enabling sustainable chemical production with advanced automation, storage, and logistics handling

🟢Emerging/Expected Favorable tailwinds with UK FTA deal under discussion, Can open doors for Indian Textile segment and the company is proxy to textile sector

🟢Working capital days, Inventory days have come down significantly

🟢Malaysia plant has Easy access to high quality raw materials in the region. Malaysian plant provides raw materials to the Indian facilities. Cost benefits due to Free Trade Agreements (FTAs) with important regional markets like Vietnam, China and India

🟢Recent collaborations to expand product profile and geographical reach —

Eurodye-CTC, Belgium, to commercialize specialty chemicals for the Indian market

HealthGuard, Australia to become the exclusive global marketing and sales channel partner with joint operations from Malaysia

Setting up a state of art Research & Development center in collaboration with Sasmira Institute, one of India’s premier textile institutes

🟢Developed technical expertise to enter attractive new markets –like -Cleaning and Hygiene Chemicals Drilling Speciality Chemicals Other Speciality Chemicals

🟢Non-textile segments will drive volume and value growth going forward

🟢Team of 34 professionals for providing technical solutions to customers

🟢Technical barriers to entry and high levels of development and product customisation

🟢ICRA rating upgraded -Long Term Rating: A+ -Short Term Rating: A1+

🟢Successful acquisition and realisation of synergies with Biotex

RISKS

🔴Further Delay or non progress in UK FTA deal

🔴Textile exports remaining down or Reemergence with force by Bangladesh Textile companies

🔴Threat of imports of chemicals/dumping by China

Disclaimer — Not a buy/sell recommendation.

Purely for studying the stock idea with risks and strengths

Your Profit, Your Loss based on your conviction

Disclaimer

Happy Diwali greetings to all of you