Ador Fontech Ltd, choice of eminent luminaries
Ador Fontech Ltd is a micro-cap stock with a market capitalisation of only Rs. 175 crore.
Yet, the surprising aspect is that it has attracted the crème-de-la-crème of stock pickers and its shareholding list reads like a who’s-who.
Sumeet Nagar’s Malabar India Fund leads from the front with a massive holding of 8,50,000 shares comprising 4.86% of the equity capital.
His another fund named ‘Malabar Value Fund’ holds a chunk of 4,40,990 shares comprising 2.52% of the equity.
We are familiar with Sumeet Nagar’s stock picking prowess.
We saw a few days ago how he brilliantly timed his entry into, and exit from, Avanti Feeds, and pocketed a massive 1000% gain in the process.
Shyam Sekhar comes second with a holding of 3,04,476 shares, comprising of 1.74% of the equity.
Anil Kumar Goel comes third with a holding of 2,65,607 shares, comprising 1.52% of the equity capital.
Megh Manseta held 1,65,000 shares as of 31st March 2018. His present holding is not known.
Megh Manseta keeps a low profile. However, he came into our radar because he effortlessly compounded his wealth at an astonishing rate of 30% CAGR and became a multi-millionaire.
He has also revealed top secrets of how he managed this amazing feat (see How Megh Manseta Compounded His Wealth At 30% CAGR And Became A Multi-Millionaire).
What is so special about Ador Fontech?
To understand the nuts and bolts of Ador Fontech, we have to turn to Nigel D’Souza of Mid-cap Mania fame.
— CNBC-TV18 (@CNBCTV18Live) November 20, 2017
According to Nigel, Ador is engaged in “life enhancement of vital machinery components”.
This essentially means repair and refurbishment of worn out components through welding etc.
One of the virtues of Ador Fontech is the high dividend payout.
Even as of date, the dividend yield is a hefty 3% which obviously means that there is full protection from downside.
The Company is also debt-free and flush with cash.
There is also a corporate video which provides valuable information about the Company’s activities.
It appears that the Company also manufactures sophisticated machines such as the “CNC Plasma cutting machine”.
|ADOR FONTECH LTD – KEY FUNDAMENTALS|
|MARKET CAP||(Rs CR)||175|
|EPS – TTM||(Rs)||[*S]||5.13|
|LATEST DIVIDEND DATE||25 JUL 2018|
|BOOK VALUE / SHARE||(Rs)||[*S]||59.46|
[*C] Consolidated [*S] Standalone
|ADOR FONTECH LTD – FINANCIAL RESULTS|
|PARTICULARS (Rs CR)||MAR 2018||MAR 2017||% CHG|
(Source: Business Standard)
Surge in capex cycle will transform Ador Fontech’s fortunes
According to the Annual Report, there is insatiable demand for welding services since time immemorial and this will continue into the foreseeable future.
This is explained in the following words:
“There is a window of opportunity in terms of repair welding services. The key underlying factor is the extent of repairable wear and corrosion in the product and the extent of risk that can be taken up to ensure that components remain secured during the refurbishment process. All said and done, the demand for welding consumables and equipment are always to stay, right from the time of metallic age, till civilisation may transition to any other structural change in the usage of materials and the probability of such is remote, in the near future.”
At present, the situation appears to be gloomy because the capex cycle has not picked up.
— Nigel D'Souza (@Nigel__DSouza) November 20, 2017
However, it is explicit that once the capex cycle picks up, Ador Fontech will benefit from operating leverage and surge like a rocket and shower multibagger gains upon its lucky investors!