Looks an interesting company. Strangely never heard of it and neither of bajaj electricals EPC business prior to demerger…Voltas also has EPC business and we hear a lot about it…maybe I didnt follow bajaj electricals well…

Some thoughts and would be good to know your views…

1. For Voltas, EPC part has always been a struggling business. When entire power spectrum in market making new highs, not sure why the EPC part of these businesses not doing good.
2. How should one value the EPC business…which is closest competetor for Bajel or even the EPC part of Voltas?
3. Is EPC part of Voltas same as Bajel?
4. Bajaj electricals has mcap of around 11k crores and Bajel at present as around 2K crores…in this context is 2k crore cheap or expensive? How to see value here…
5. In one of your points I saw this is 15 years old business of bajaj electricals…Now should we take it as positive or negative…positive being it has a history & experience to look at and negative that even after 15 years the order book is only around 1500 crore? Is this really negative or not? Maybe with demerger the focus on this business increase…not sure…
6. Was checking on new MD…he has all his experience in oil & gas companies rather than electricals, power or infra…not sure if right fit…I maybe wrong…

Thanks for always introducing new interesting companies to look at

I was searching a thread for this company but could not find it so creating one.

I am from a logistics background and I find this company interesting. They have a solid management with OEM promoters so they intricately know automotive logistics which forms the main vertical of thier business. They recently had IPO with an intention to reduce debt. They have done just that.

They are now trading at price less than sales and price to free cash flow of approx 20. Their Net profit is skewed due to high depreciation. What I still could not completely figure out is what is included in thier fixed asset and how this depreciation is reported out.

Their capital assets include very less land and about 1000+ cr in Building. They also show about 1000+ cr in lease liabilities under borrowings. This is inclusive of the future lease commitment for their operations/ office.

Considering their land/ buildings are a long term assets with minimal cash out, and company usually have contractual protection for their lease liabilities, this company seems to be trading at a good discount. Let me know if anyone tracks this stock/ have inputs.

I do have a small position on this stock and looking to add to my investment.

I understand PhantomFx won’t do the distribution themselves, they would have probably sold their distribution rights. Whoever bought that or managing it hasn’t really tried to reach max audience, directly or indirectly it reflects on the distribution earnings Phantom would have made. We will have to wait for the concall.
P.S: They have released it in both Tamil and Telgu as of now.

Don’t think PhantomFX will get involved itself in distribution as it has no competency at all in that space. Its the other producers or large distributors who will take a call… Also, from what i know it is getting released in the super busy Pongal/Sankranthi season with lot of competition from other movies. So, while they continue to release the movie during Pongal in Tamilnadu, they have opted to postpone their release in other languages- in Telugu, they have postponed the theatrical release to the subsequent weeks. Not sure about Kannada though.

Taking forward the point mentioned by @Simrat, figures for Covid and a few quarters post Covid were distorted but it is safe to assume that four quarters of normalized numbers are now available. So, we can take current TTM numbers as a base and do reverse DCF. Kakinada production is expected to start by June 24, and it may take around 3 years to achieve full capacity utilization. So, one can do a 5-year reverse DCF and see what expectations are built into the current price. Using current TTM earnings of Rs.1331 crore, a discount rate of 13 % and a 5-year terminal multiple of 25 (median P/E pre-covid from 2010 to 2020), we get expectations of 38 % CAGR built into the current price. Pre-covid, long term average sales growth was around 20 % and PAT growth around 15 % CAGR, so stock looks over valued unless future growth is going to be significantly faster than the past.

One word of caution: With DCF, almost every stock appears overpriced all the time.

Even with P/E, you get the same conclusions. Analyst estimates based on research reports available in public domain show expected EPS of around Rs.84 for FY25, i.e. a P/E of 47 on current price. At 15 % EPS growth (past average), we get 25 P/E only in FY29.