There is always an issue of quality of disclosure. I refuse to believe that highly experienced management of Voltamp with long track record of excellent execution will face certain supply chain issues that others are not even acknowledging.

Let’s look at TRIL and Schilchar more closely.

TRIL reported good numbers because of low base effect. Company and stock did nothing for many years till Q2 of last year. Then suddenly there were 3-4 good quarters which makes their quarterly results look super duper. Stock prices and valuations went sky-high in no time. TRIL trades at 10 times sales (voltamp trades at 6 times).

Shilchar shows slightly better execution pedigree (which is to not say much) than TRIL but I can’t figure out for life of me the sudden 2X jump in their operating margin in last 1 year. You can’t have such big divergence between margins between one player and the rest of the sector. And if it’s there it’s not sustainable.

Valuation wise, the less said the better, Shilchair, trading at 15x sales, thanks to and lots of speculation seen in the stock.

In general I am wary of the companies, in tailwind sectors, that suddenly start showing good numbers after several years of average or non performance. Mostly it takes either great luck or magic for such turnaround.

I have seen many cases of book cooking or corporate governance coming to light, crashing stock prices. Look no further than Brightcom which was reporting excellent figures during a time when digital marketing industry was in a duress. Not saying TRIL and Schlchair are up to something but it’s always good to ask questions.

I am referring to HDFC Life Insurance schemes being low innovation. They however do offer good IRR as compared with its peers for Pension Schemes.

It remains to be seen how much of the promise materializes. One does not take a politician’s words at face value. Besides there will be backlash from EU and other climate conscious countries who are friends with America against Trump’s “Drill baby Drill” (Oil) policies.

Q2FY25 Earnings Conference Call Summary:

Strong Order Wins:

ADSL secured over Rs. 675 crore in new orders and contract renewals during the quarter.

Order across diverse sectors including

• Safe city and smart city initiatives order
• A leading life insurance company in India
• The world’s foremost specialty packaging company
• Global leader in the energy sector
• Public sector enterprise under the Ministry of Power
• India’s Central Bank
• Regulatory Authority in Maharashtra
• Prominent aluminum refinery in Odisha
• The largest bank in the UAE
• Global leader in silicon carbide and gallium nitride technology in the US

Financial Performance

• ADSL reported strong financial results for the quarter, with growth in both revenue and profitability.
• The company’s EBITDA margin was over 11% for the quarter.
• However, there was a slight dip in the margin year-on-year, primarily due to non-recurring expenses, such as an extra provision for ECL and expenses related to the company’s 40th-anniversary celebration.
• ADSL’s cash balance as of September 30, 2024, increased to Rs. 170 crore, up from Rs. 99 crore in September 2023
• The company is improving operational efficiency by reducing debtor days, which have improved from 87 to 72 days year-over-year

Guidance

• ADSL reiterated its guidance of achieving Rs. 1,000 crore in annual revenue in the next six to seven quarters.
• To achieve its goal of reaching a 15% EBITDA margin in the near future

Future Growth Opportunities

Cybersecurity Business

• ADSL sees strong growth opportunities in the cybersecurity space.
• The company is investing in its cybersecurity capabilities and is seeing increasing demand from customers.

Data Center Business

• ADSL is also focused on growing its data center business.
• ADSL is actively pursuing data center opportunities, leveraging its experience building and managing data centers for its smart city projects and pursuing contracts with enterprise customers for data center management and cloud migration services.
• The company is seeing opportunities in both the government and private sectors.
• ADSL is also working to get empaneled with the Ministry of Electronics and Information Technology (MeitY) for data center projects.
• There is big push from government’s on data localization

Key Takeaways

• The earnings call highlighted ADSL’s strong performance and positive outlook.
• ADSL is implementing strategies to improve margins, including focusing on more profitable service offerings, such as app support and AI, and improving operational efficiencies, such as reducing debtor days.
• The company is well-positioned to capitalize on growth opportunities in the cybersecurity and data center markets.

Disclosure: I am having exposure to this counter from long time(20 Rs level). My views can be biased.

Happy Investing,
Karthik

Management has informed that there are pressures in sourcing CRGO sheets while the other management such as Shilchar informed that there is no issue sourcing CRGO material. TARIL has not expressed any difficulty in sourcing the material. Voltamp has seen the depressed results in the just ended qtr while TARIL and Shilchar have given bumper results. Voltamp is getting corrected while the other are in upward trend.

Discl: Invested in all the three while pruned some qty in Voltamp and increased exposure in the other two.