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Posts in category Value Pickr

India Pesticides Ltd (25-02-2024)

IPL witnessed good expansion in margins due to change in product mix. Volumes were lower by 30% given the industry scenario. Among peers, IPL reported one of the best nos. Concall notes below.

FY24Q3

  • Witnessed 30% lower volumes, blended pricing was same

  • Outsourced conversion of on raw material and paid job work charges of 4 cr. (part of other expenses resulting in higher GMs). Adjusted for this , gross profit margin was 50%. Believe 48-52% GMs are sustainable

  • Entered a 3-year contract with a Japanese company to supply an intermediate

  • Received Technical Equivalence (TEQ) certification by European Union (EU) for herbicide technical product

  • China is putting up very large plants for popular products

  • Expect 15-20% sales growth in FY25

  • Incorporated “Amona Specialities Private Limited” (asset light marketing company)

  • Have spent 60 cr. in 9MFY24 (budget of 110 cr. for Sandila + Hamirpur)

  • Raw material pricing has stabilized

Disclosure: Not invested (no transactions in last-30 days)

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Rishi Laser- A Precision Fabricator (25-02-2024)

Very insightful detailed and high quality Concal from management.
Their major customer is CATERPILLAR and client name includes ALSTOM

Rishi Laser Ltd Q3 FY24 Earnings Call | Rishi Laser Ltd FY24 Q3 Concall

Disclosure: Invested recently after listening to the Concal and is around 1% of my portfolio with long term view.

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Ganesh Benzoplast – Cash rich chemical storage/tank king (25-02-2024)

My only concern is why Malabar is first show enthusiasms and the. Started reducing their stake. And also not participated in QIP.

DISC.NOT INVESTED

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AGI Greenpac- on the cusp of growth? (25-02-2024)

We need to see in broader perspective, AGI is expanding capacity by 120 ton which is close to 13%. Delay in HNG or even scrapping of HNG will increase prices and margins will rise further. I still believe paying 2200 cr for defunct furnaces is not a good option, delay in HNG aquisition and HNG dying its own death is only beneficial to AGI. No merit in aquisition at this price now. Any decision will trigger stock upside. In case AGI further bids agressive and raise bid price than that is a clear trigger for an exit.

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Moneyboxx Finance – Good compounder for our money? (25-02-2024)

Sr No. Particulars Comments
1 Promoted By-
Mr Deepak aggarwal – Chartered Account – Has affiliation with Equity firms, NBFC and Debt funds – Ex – BOA, KPMG, Founder Avancer capital (PE Fund)
Mayur Modi – ex- HSB, JPMC Associate director in HSBC
2 Has Requested to allow BOD to increase Borrowing limit from 500 crores to 1500 crores > the current AUM is 400 crores
3 BOD –
Uma Shankar Paliwal – Rich Experience in Banking Ex- RBI and current Charimen/member in UV asset reconstruction and Fusion Microfinance and Dillip Buildcon
Ratna Dharashree Vishwanathan – Director in Dillip Buildcon and Fusion Microfinance
Other Memebers are mostly CA, IIM with good background
4 Most Underserved segment i.e. Lower ticket size segment → 50k – 300k in unsecured loan and 100k to 1 million in Secured loan Financial Inclusion target for Indian Economy more competition is below 40000 ticket size loan as more than 230 lenders active in this segment
5 34 – 35% almost new customers – taking credit for the first time New customers (taking loan first time)with low ticket are less likely to default on their loan
6 Have opened 61 Branches with in 4 years of starting of business
7 Target AUM of more than 6000 crores of AUM and 400+ branches If ROA are 1.5-2% the Bottom line can be 90-120 crores, IDFC first is targetting 2% can be higher around 3% also can do the math
8 Moat – the different approach they follow is Direct to customer – Talk with HDFC branch manager
9 Lowest NPA due to new to credit approach
10 Low attrition rate – 18% 4 years New team – Normal
11 Opex as a % of AUM is on spree of declining – See SOIC banks Video, operating leverage picks when Branch starts sweating Equitas Small finance Example
12 Net NPA of 0.3%
13 Leverage ratio of 4:1 approx will keep the same and keep raising the equity funds for the same for 6000 crores AUM the Equity will be 1200 crores hence almost same amount of mcap will be diluted
14 Lenders → DCB, AU, Uttkarsh. Tata capital
15 Highest Loan no. in Moneyboxx Vyapar Loan (Unsecured)
16 (i) focus on secured products, (ii) steady-state operations and increasing branch vintage, (iii) stable sources of funding, and (iv) rising share of repeat loans with higher loan ticket size.
17 DTC approach and also Robust underwritting process collection efficiany never went below 95% (95 in covid and normal level is 98%)
18 Workforce growing 134%
19 has entered into Co-lending agreement with Vivriti capital, MAS Financial services, Utkarsh small finance bank
20 Impacted the life of many customers See AR giving the source of income yielding 70-80k income from per catlle
21 Free VAT services – better underwritting – HDFC bank
22 Credit ratings – BBB- Icra Positive
23 Also has ESOP Outstaning
24 Has Outstanding NIMs of 15% –30% Yield is Normal HDFC branch manager
25 Profitability to improve once the Opex as a % of AUM goes down
26 Promoters are taking more than 3 crores p.a. as salary ? Signs of worry Second level thinking that Associate director/partner and a person handling his own sub 2000 crore funds in US will get almost 200-250k P.a. we can consider that he will atleast take his opportunity cost
27 Payment to auditors 600000 100000 is Audit fess and 500000 is Certification fees
28 Couldn’t Find auditor on Likedin
302000 options outstanding
It’s like investing in startup
29 Life – 2-3 Years in Unsecured and 4-7 years Secured Lending portfolio
30 Dairy Industry – 60% of Loan, Kirana stores 10%, furniture, eataries 2-3%
31 Some of the conservative bank as HDFC are also part of Co lending PF
32 Blended Yield of 30% << 24% Unsecured and 32% secured
33 Business corospondence with utkarsh << asset light model (cash light model)
34 13% secured and remaining unsecured average tenure is 4.5 years
35 Starting in Gujarat
36 it takes 6 months for branch to be profitable
37 37542 customers and 27-28% are repeat customers
38 build a book for a third party, like say Utkarsh SFB. So, although all the underwriting methods Moneyboxx apply in line with Utkarsh policy, but the funding is done by Utkarsh. So, say, for example, if we have a yield of 30% on a loan and Utkarsh charges 13%. So, the balance 17% which is the monthly differential interest rate which we get, is the major part of that fee income in this income, which I said the BC business, which we do. The
second part is obviously that whenever we do a loan, the loan is priced at 30% which means that 28% is a rate of interest, and say 2%, 2.5% is a processing fee. So, there is that component of processing fees, which
is included in the fee income.
39 Cost of credit – Borrow at 11-13% IRR going ahead if credit rating improves cost of credit could go down
40 Even in spite of rejecting 85% of the leads, we are still able to grow at a very healthy rate. Yes, we have
been using proprietary underwriting models, because of the fact that we have now an experience of 4 to
5 years plus 2 years of COVID has really kind of, I know, tested our model and we have kind of tweaked
that. So, there is a lot of proprietary information in terms of geographical and geography, the
segmentation, the behavior, customer behavior through different credit life cycles that has all got built in
into the model and it is getting refiner by the day. So, as we move forward, I think we do have a
competitive advantage in terms of understanding the segment better and execution is top notch.
41 Secured loan will be almost 45-50 in 2 years

Some of my notes on Moneyboxx Business is good, Promoters seem solid with good background, BOD composition is Top notch
Have not invested due to one reason that IMHO credit quality seems to be peaking out, when the things are too good to be true they usually are
I like the business but prevailing environment around industry is very optimistic that makes me a bit fearful
Have Not invested but certainly in my watchlist

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Macfos Limited- A niche E-commerce Company (25-02-2024)

Has anyone heard of a company called macfos pvt ltd, i don’t know what is the connection between these 2 companies but whoever is thinking about investing in this, please check this angle also because this pvt ltd company is in the same business.

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CCL Products (25-02-2024)

image

It’s interesting how their tax rate has been so low for the past three years. Can someone explain why this is happening? It seems like because they are paying less tax, their profit after tax is higher, which makes their earnings per share (EPS) appear better than the actual situation.

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Tracxn Technologies (25-02-2024)

I am not able to come to terms with their valuation, if i remove the one time tax benefit which they got in mar’23 then their normalized earnings come out to be around 7 cr (e) for FY’24 which at current price would mean a 200 PE multiple.

Any thoughts on the same?

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Green Hydrogen as a Fuel – Indian Companies leading the Green Revolution (25-02-2024)

No GH2 cannot be raw material for energy production. At least as per my limited understanding.

Fuel Cells and alternate transport fuel to EV and fossil fuel is primary reason. Also, it is to build an alternative resource for ammonia, and feedstock into Steel Cement and Other Chemical Industries.

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Phantom Digital Effects Limited (25-02-2024)

Adding my notes from the concall Q&A.

Guidelines for next 15-18 months. 90-95 cr revenue in FY24, 135-140 cr revenue in FY25. FY24 will have similar margins as in the past, but going forward it will increase due to international projects. They guided sustainable EBITDA margin 43-48% and PAT margin ~30% – will depend on the mix of domestic and international projects.

Projects. They talked about “some big international feature films” which they are not allowed to disclose, “big breakthrough in the near future”. Mostly movies and some television series from prominent production houses and reputed OTT platforms. They were approached by some studios as a service partner for animated movies. They are in the closing stages of another movie by Ayalaan’s director. Planning to venture into gaming, still finalizing their position alignment.

QIP money utilization. Staggered plan over next couple of years for key infra expansion, new offices, increase of headcount, acquisitions “somewhere down the line”, improving infra in existing offices in India, expanding marketing outside India.

Other expenses. Outsourcing certain key projects.

Receivables. Overall, receivables as of Dec’24 is 40cr for the last 9m, 60% of which has been collected since then.

UK operations. “Working on it”, actively seeking projects, developing contacts, working on developing AI research facilities.

Revenue split. 55% from international projects and 45% from domestic projects in the 9MFY24. In Q3FY24, there was a slight increase in international revenues but nothing significant. The company is expecting a surge in international revenues, contributing to a total of 60-70%. “We want to make a mark on the international stage”. Lot of Netflix projects are turning to PhantomFX.

Reason for spike in revenue. Re-opening of the American market, plus domestic projects like Leo and Ayalaan.

Ayalaan. Translations and OTT platforms still to be factored in. They collected 50-60% of receivables, rest will be collected before the end of FY24. Catapulted the image of the company. Created and functionalized automation tools mostly for project management and some for creative workflow, strong learning curve.

Co-production? For Ayalaan, they went into a deferred payment arrangement and it was a one-time thing. There were headwinds in the project and they wanted the project to be complete for their own showcase and marketing.

AI. Technology is evolving and they want to adapt. They are already implementing several tools and models in their pipeline.

Vision. There was a question, “Why are you spending money in the UK instead of doubling down on the North American market?” Mr. Bejoy said that he wants to be a global company, and not just an American company or Indian company. He wants to expand to the middle-east, Europe and USA simultaneously. In the future, he wants to be able to pick and choose the best quality projects across the globe instead of working on every project in one market.

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