Before posting update on portfolio. Please elaborate on stage investing and relative strength. Also what was the thesis to change your style of investing. Because I am also in similar dilemma

Arjas Steel P&L

Concall was very good. As usual, MD was answering all questions… a totally hands on leader.
Inspite of challenging year due to decline in cane production, the company has done very well. As i had mentioned in earlier post, sales has got pushed to next quarter due to domestic sugar quotas being lesser.

Very simple way to look at this the increase in stocks over last year – that will be the incremental sales in H1 FY 2024 over previous year. If the company was allowed to sell the sugar it produced, profit would have been 100cr in Q4 (and not 40cr) – 20crs more than Q4 FY 23. – calculations given below:

So sales in H1 will be higher by 500 cr -ie. it will be INR 1,621 crs compared to 1,121 cr previous year. Since realisation of sugar in April (and going forward) is Rs 39.5 per kg upwards compared to Rs. 38.8 in Q4, margins will be higher. So we can expect INR 100 crs in operating margins (500cr * 20%) – which is Rs. 60 cr higher than the Rs. 40 cr decline in margins in Q4.
Simply put if the company was allowed to sell the sugar it produced, profit would have been 100cr in Q4 (and not 40cr) – 20crs more than Q4 FY 23.

Since the sugarcane output is expected to increase in FY 25, financials will be much better going forward. The company has incurred all the capex required – now only needs to increase cane supply.

Grain based ethanol and further increase in recovery next year will be additional profit boosters…

If one waits for a year, the stock can give very good returns – compared to its peers and also to the market overall.

Hi Sandeep… Nice strategy… Which main technical parameters you usually see while entering a stock and while exiting a stock…