Atul Auto Joint Venture With Jio; Things To Keep Eye On Next Gen Automotive Tech | ET Now
Posts in category Value Pickr
Power Mech Projects – Not a typical Power Infra Company (29-06-2024)
How reliable is leadership? How has been previous experience in the market about company’s projected growth vs shown growth?
Ganesh Benzoplast – Cash rich chemical storage/tank king (29-06-2024)
Ganesh Benzoplast keeps surprising regularly, now they had the fraud issue and again increased LPG capex costs to 700-750 cr. They had started with LPG capex costs of 400-450 cr. in FY23Q3, increased it to 500 cr. in FY24Q1, 550-600 cr. in December 2023, 650-700 cr. in FY24Q3, and now 700-750 cr. This is the reverse of how Aegis operates. Concall notes below.
FY24Q4
-
Issue of unauthorized bank account and loans
-
Funds were routed into an account that company and its directors didn’t know about, believe that company has indemnification from this issue, wont have any financial repercussions
-
One of the 7-8 parties have waived its claim
-
Ramakant Pilani and his son resigned from the board, they hold ~1% in the company
-
Have changed payment approval systems in terms of the limits for how much are authorized
-
-
Throughput reduced from 1.66 mn MT to 1.4 mn MT, they changed product mix which contributed to revenue increase. Will continue to improve margins via product mix change
-
60-65% of products handled are hazardous (higher margin) and 30-35% are non-hazardous
-
LPG terminal will cost 700-750 cr. (increased from 650-700 cr. earlier)
-
Aegis competition in JNPT: Ganesh Benzo has lower cost land + Ganesh is the only one to have access to railway evacuation
-
Have faced land allotment issues in Mangalore
-
Annual maintenance capex is 12-15 cr. (will be higher at 20 cr. in FY25)
-
Other income of 15 cr. was from wharfage income (4-5% margin only)
-
Chemical
-
75% utilization which should ramp up to 95% in FY25 (10-15% growth expected)
-
Ramesh Punjabi has taken over this division (chemical engineer from IIT Mumbai with 30-years in the group)
-
Faced issues due to currency depreciation in Nigeria (~20% of their sales) + red sea issues
-
Disclosure: Not invested (no transactions in last-30 days)
Amara Raja Energy & Mobility Limited: Powering Ahead (29-06-2024)
Here are my notes from their recent concall on partnership with Gotion.
28.06.2024 on Gotion-InoBat batteries
-
Top 5 battery player in China (top 10 globally), top 3 in LFP chemistry. They are doing well in cylindrical batteries
-
NMC: cylindrical form factor (for 2W); LFP will have multiple form factors (currently 3W are running on LFP; 75-80% of overall market will be LFP)
-
Will use Gotion technology and supply chain. Believe that Gotion range of batteries will be enough for the Indian market
-
16 GWh lithium ion capacity still the same. Initial capacity will be 4-6 GWh and will cater to automative market
-
Hoping to get lower capex/GWh with this arrangement
-
Mix of upfront technology fees + royalty (non-exclusive arrangement)
-
Capex costs: 600-650/GWh
-
Assuming $70-75/GWh cell prices for 11-12% ROCE. Current prices of $65 is not sustainable
Disclosure: same as before
Saikat Portfolio (29-06-2024)
In February, I sold PayTM at a 50% loss after the RBI imposed restrictions on Paytm Payments Bank Ltd (PPBL). I took advantage of market dips to accumulate Wockhardt Pharmaceuticals. In March, both SNOWMAN and NFL hit stop-losses due to setbacks in the small-cap indices. Following the 2024 elections, I initiated a small position in Natco Pharma. Throughout various market dips, I added small quantities to my positions in DMART, HBLPOWER, WPIL, NYKAA, DELHIVERY, KRSNAA, ITC, SIRCA, MANAPPURAM, and USHAMART. Overall, the portfolio is up by 15.35% in the past 6 months – my mutual fund/ETF basket (20% allocation) yielded a 19.5% net return, while my direct equity basket (80% allocation) achieved a 14.3% net return.
| Symbol | Allocation (%) | Average Cost (₹) | Net Change (%) |
|---|---|---|---|
| A. Value | |||
| WOCKPHARMA | 12.15 | 470.27 | 46.21 |
| IRFC | 9.95 | 23.09 | 652.75 |
| PHANTOMFX | 8.87 | 527.88 | -28.17 |
| DMART | 7.36 | 3662.32 | 28.95 |
| HBLPOWER | 6.51 | 107.58 | 365.45 |
| TVSMOTOR | 6.15 | 672.38 | 251.65 |
| WPIL | 5.56 | 3234.26 | 32.35 |
| NYKAA | 5.51 | 169.78 | 4.01 |
| DELHIVERY | 4.79 | 427.51 | -6.29 |
| KRSNAA | 4.58 | 548.83 | 10.74 |
| INFY | 4.28 | 1380.91 | 13.61 |
| ITC | 3.54 | 311.58 | 36.45 |
| KPITTECH | 3.19 | 1147.02 | 42.72 |
| SIRCA | 2.50 | 339.92 | -5.54 |
| B. Technical | |||
| MANAPPURAM | 7.30 | 156.33 | 33.31 |
| USHAMART | 4.29 | 355.39 | 9.27 |
| SFL | 1.79 | 1214.11 | -24.77 |
| NATCOPHARM | 1.67 | 1202.43 | -2.84 |
Outlook
The poor performance of my equity basket compared to my mutual funds is largely due to losses in PayTM and Phantom. While the decision to exit PayTM was straightforward, I am having a hard time to let go of Phantom because I have confidence in their business model and their growth potential. I anticipate increase in their US orders starting in Q2 or Q3 of FY25. However, the market is discounting the stock due to concerns about AI threats and outstanding receivables. The current valuations are very attractive, and I am torn between averaging down or exiting. When uncertain, my default approach is to do nothing.
Captain Polyplast (29-06-2024)
CMP – ₹52
Captain Polyplast Ltd was incorporated in the year 1997. The Company is engaged in manufacturing and selling quality Micro Irrigation Systems and allied products having its manufacturing facilities at Shapar (Veraval), Rajkot. Further, the company also undertakes installation of micro irrigation systems, providing of agronomical services to farmers and carrying out business activities on DCA cum CS basis of Indian Oil Corporation Ltd. (IOCL) of Polymer Business.
The company has a strong marketing and distribution network with presence in 16 states of India with more than 750 dealers. Its an ISO 9001:2015 certified company having registered position as a reputed brand in domestic and international market. The company offers advanced irrigation technologies in India which includes drip irrigation system, irrigation lateral, compression fittings, valves, irrigation filters, pressure gauge, Venturi Injector, sprinkler irrigation system, sprinkler fittings, mini sprinkler irrigation system, Green House, Solar System, fertilizer and polymer.
The company imports irrigation components from International Market. The irrigation system which include drip irrigation systems are mainly produced from advanced Germans and Israel machines. The testing laboratory complements company’s manufacturing facilities to ensure the best quality products. It focuses on good quality irrigation systems and agronomical service made “CAPTAIN” a reputed brand in domestic and export market. The company is planning to operate on a larger scale and achieve the portion of market demand for its products.
Key points regarding Captain Polyplast:
Valuation
- Captain Polyplast’s stock is trading at a high price-to-earnings (PE) ratio of 17.02x, suggesting it may be overvalued compared to its peers.
- However, the company’s price-to-book (PB) ratio of 3.12x indicates the stock is trading at a discount to its book value.
Financial Performance
- Captain Polyplast delivered a strong return on equity (ROE) of 18.62% in the year ending March 2024, outperforming its 5-year average of 13.7%.
- The company’s annual revenue growth of 30.87% in FY2024 also exceeded its 3-year CAGR of 18.25%.
- However, the stock has underperformed the Nifty Smallcap 100 index over the past 3 years, generating a return of 38.32% compared to 80.38% for the index.
The key growth drivers for Captain Polyplast are:
Expanding Domestic and Export Markets
- Captain Polyplast has a strong distribution network across 16 states in India, covering around 90% of the micro-irrigation market.
- The company is also focused on expanding its export presence in markets like Africa, Latin America, and the Middle East.
New Product Development
- Captain Polyplast offers a complete range of micro-irrigation solutions, including drip irrigation systems, sprinklers, and allied products.
- The company is continuously working on developing new products and solutions to cater to the evolving needs of the market.
Government Initiatives
- The Indian government’s Pradhan Mantri Krishi Sinchayee Yojana (PM-KISY) scheme has proposed significant investments in micro-irrigation, which is expected to drive growth for players like Captain Polyplast.
Operational Efficiency
- Captain Polyplast has manufacturing facilities in Gujarat and Andhra Pradesh, allowing it to cater to the domestic market efficiently.
- The company has reported strong financial performance, with a 3-year revenue CAGR of 18.25% and an ROE of 18.62% in FY2024.
Favorable Industry Trends
- The micro-irrigation industry in India is expected to grow due to factors like water scarcity, the need for efficient irrigation, and government support for adoption.
- Increasing awareness about the benefits of micro-irrigation, such as water and energy savings, is also driving demand.
The key risks associated with investing in Captain Polyplast stock:
High Debt Levels
- Captain Polyplast has a high debt-to-equity ratio of 110.1%, indicating high financial leverage.
- This exposes the company to interest rate risks and could impact its financial flexibility.
Valuation Concerns
- The stock appears overvalued based on its high price-to-earnings ratio of 21.31x compared to its peers.
- This suggests the stock may be trading at a premium to its intrinsic value.
Lack of Dividend Payouts
- Despite reporting consistent profits, Captain Polyplast has not paid any dividends to shareholders.
- This may disappoint investors seeking regular income from their investments.
Execution Risks
- The search results do not provide detailed information on the company’s growth strategies and execution capabilities.
- Failure to effectively implement its expansion plans could impact future performance.
Industry Competition
- The plastic products industry is highly competitive, with the presence of both domestic and global players.
- Captain Polyplast may face pricing pressures and market share erosion from its competitors.
Regulatory Risks
- As a manufacturer of plastic products, Captain Polyplast is subject to various environmental regulations and standards.
- Any changes in these regulations could increase the company’s compliance costs and affect its profitability.
Promoter Pledges
- The promoter pledges have decreased by 2.33% in the latest quarter.
- As of March 31, 2024, the total promoter pledges stood at 16.69% of the promoter holdings.
Keen to have your thoughts on this stock.
Personal Holding – NIL
Great articles to read on the web (29-06-2024)
Some logical, rational and convincing reasoning here:
How Much More Potential Do Indian Markets Have? – Interview with Ridham Desai at Life High
Green Hydrogen as a Fuel – Indian Companies leading the Green Revolution (29-06-2024)
Agree , finally what matters to you and me is the financial performance and stock appreciation , dividend etc which time only would tell us.
But there is nothing wrong in having a target and aiming to achieve it by different ways – Green hydrogen , CBG , Carbon capture , Ethanol which are at least not on paper – they have already initiated projects which are at verious stages of implementation .Afforestation is only one of the initiatives If this enables the company to get cheaper loan , let it be – then again it is good for investors like you and me
Discl : I remain invested from lower level. i may be biased.Not a buy sell recommendation. please do your own assessment before buy sell