Hello, has their resolution plan been sorted out?
Posts in category Value Pickr
CAMS – Indirect Bet on Financialization? (24-11-2023)
Here, I try to dissect the latest conference call by separating it into 4 parts.
- Improve Business Understanding
- Forward-Looking Statements by the Management
- Possible Positives
- Possible Negatives
This is not a recommendation to buy/sell. Purely for educational and informative purposes. Views and opinions are personal.
1. Improving Business Understanding
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E-Insurance is a new venue for the company. Earlier, eIA was relevant for the life insurance industry, but now it is seeing renewed interest from non-life insurers also. The company has tied up with the top 5 of the 50 insurers in India.
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CAMS KRA is the fastest growing segment for the company which provides e-KYC solutions to brokerages and MFs. It has seen 100% growth in the last year (from a low base).
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The margin for the MF business is the highest at around 44.5%. In the future, KRA and AIF businesses should also approach these levels of margins. Payments Business is currently at 30% but it can reach 40% with a limited amount of scaling.
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There is a huge Total Addressable Market for the Account Aggregator Business. Services include – Verification, Digital Lending, KYC, NFO Onboarding, 3rd Party Verification of bank accounts.
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It is the paper transactions which are generating revenue for the company. NOT Digital Transactions.
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The Out-of-Pocket Expenses borne by the company while servicing clients are added to compensated for by the client himself and hence added to the Revenue of the Company.
2. Forward-Looking Statements by the Management
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~20% Revenue Growth in the next 12-18 months. MF Business should be slightly less than 20% and non-MF Business should be slightly more than 20%.
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Margins are expected to hold at 44% or slightly improve from here. Payments and Insurance business can be at 40% margins in the next 3-4 quarters.
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Operating Expenses (with Out-of-Pocket [OP] Expenses) / Revenue with OP Expenses) = ~12%
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Operating Expenses less OP Expenses / Revenue less OP Expenses = ~7.5%
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Fixed Expenses have peaked and will not see further increases (apart from inflation-driven). The only increase expected will be in salary expenses (~34% of Revenue). There is no big lumpy expense in the immediate future.
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A very large transformation has been done for a large private sector bank using Fintuple. The announcement is expected in December.
3. Possible Positives
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All Public Sector banks have come on board the Account Aggregator Platform. Huge TAM due to Fintechs.
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Net Monthly SIP Collection at the CAMS level has grown 2.5x to 10,000 Croresin in the last 3 years.
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There is no price resetting event in the next 4-5 quarters and the price depletion is now over.
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The company is expected to benefit from Operating Leverage with a greater portion of incremental revenue flowing to Net Profit.
4. Possible Negatives
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Digital Transactions such as SIPs, Triggers, etc do not create any incremental revenue for the company and there is no incremental cost either. In the future addition may have to be done in terms of server capacity (not in the immediate future).
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There has been a huge price depletion in the Account Aggregator business to the extent of 80% i.e. company can charge only 2rs where it used to charge 10rs.
AGI Greenpac- on the cusp of growth? (24-11-2023)
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AGI Greenpac- on the cusp of growth? (24-11-2023)
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Arvind SmartSpaces: Will it make smartspace for Retail Investors? (24-11-2023)
They usually deliver within 36-48 months, This 1900 crore will be recognised in next 3 years,at an EBIDTA of 20%, its ~400 crore in next 3 years, at a MCAP of 1600 crore, and Debt to equity of negative 0.3, Backing of Arvind group and HDFC as a 8-9% share holder. The operating MD was alloted 7-8% holding via warrants last year @110 last year and stock took off from there.
The way I see, If I can find a real estate company, where I trust the Management and also which has good DE ratio and I am sure it will not go kaput, I am comfortable investing.
This seems to be safe bet in terms of Price compounding at 25-30% CAGR for next 3-5 years.
Hitesh portfolio (24-11-2023)
Do you Track ‘Techknowgreen Solutions Limited’?
If Yes, how the company poised for growth, according to you?
AA – Abhishek’s Attic (place to store stuff to clear my head)! (24-11-2023)
It is not possible to know as far as I know from the data providers available today. That is one reason why I shifted to using a market cap and liquidity filter rather than using any pre-determined index like NSE500.
This also has challenges if tested over a long term. Mcap today of 5000crs is not the same as a 5000cr mcap in 2005 due to inflation. So, there is no ideal solution to this.
Another important point for me is backtesting is an indicator of the results possible by a system. I don’t take it at full face value simply because there could be many data errors which I may not even be aware of.
Arvind SmartSpaces: Will it make smartspace for Retail Investors? (24-11-2023)
it is true and correct. They have an unrecognised revenue of 1900Crs
Amara Raja Energy & Mobility Limited: Powering Ahead (24-11-2023)
“Over the next five years, India’s vehicle population is expected to experience exponential growth, with a projected count of approximately 252 million two-wheelers and over 96 million four-wheelers in India by 2028”
• AMARA RAJA market share – 30-35%
• OEM market share- 30%
• Telecom – 80+ %
• UPS – 40%
• 60% of the value of the battery is main raw material lead
• 85% of lead comes from recycled process
• Lead procurement – local ( As of NOW)
• 12- 14% export
• Amara Raja Batteries’ board has approved setting up a greenfield lead acid recycling plant with an estimated capacity of 1 lakh tonnes p.a at a total outlay of Rs 280 crores to be spent over the next 18 months. This will help the company comply with recycling standards whilst adopting advance technology in the most environmentally friendly manner
lead recycling plant in Cheyyar,Tamil Nadu,
• First phase of recycling plant with capacity of 1 lakh tonnes is expected to start by Q1 FY25. This would increase the inhouse recycled lead procurement for the company
• This plant will cater to 30% of their lead requirements
• Applications – catering to e-mobility and energy storage applications in India. Such as EV, UPS ( Industries and data centers), Telecom
• Automotive (volume of batteries)
- 19.2 Mn capacity – 4 wheeler
- 30 mn capacity in 2 whheler
• Industiral 2.3 Bn-A-H
• strive to increase the lead procurement Company intends to spend 300-400 cr. for lead acid expansion in FY24 and FY25 respectively
Current scenario.
• Total raw material cost – 568.87 Cr
• Lead recycling FY 23- 69.53% FY 22 63.49% 10 % increase
• Batteries application
• Automotive 32%
• Industrial- 45%
• Total recycled waste- 27,823 MT FY 23
Future Plan of Action
• Development of NextGen Enhanced Flooded batteries for automotive application.
• Development of AUX product range for vehicle electric versions Development of market specific BCI product range Development of AGM product range for start stop application.
• Development of market specific product range of UPS Batteries with Advanced Plate Making Technology Development of robust battery for commercial vehicle applications.
• Study and Concept Evaluation of Advanced Plate making technology for Telecom Application.
• Evaluation of Chemistry Agnostic Solutions for Automotive and Industrial Applications Lead Optimization through Value Engineering Evaluation of different flame-retardant material grades to meet the global regulations/ directives
• New pasting additives to enhance the performance of 4W batteries Improve pasting process to enhance plate electrolyte availability Development of eco-friendly materials for bushing adhesive
• Throughput improvement of 2W negative plates curing process Evaluation & implementation of improved formation process for DIN batteries to reduce formation energy Advanced formation process validation for Flooded automotive batteries
• Develop and implement processes and controls to meet market specific requirements
• Develop & validate acid homogenization process for flooded batteries Screening of Lithium-Cell Technologies of different potential technology partners
• Development of 2170 NMC cylindrical cells with different compositions
• Develop 2/3 series LFP cylindrical cells.
Conclusion
• Amara raja seems to shift its complete focus towards raw material procurement for lead as 80% of it lead requirement has been fulfilled by recycled batteries which has became evident with its recent invsestment in lead recycling plant which expected to cover its 30% requirement of raw material and will benefit the company for longer run. Amara Raja aims for $3 billion revenue in lead acid batteries within 5-7 years
• Amara Raja aims for $3 billion revenue in lead acid batteries within 5-7 years
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• Also company has been focused to increase its new energy business electric mobility and energy storage for which the energy requirement is mostly from li – ion battery based material. mostly based on batteries recycling.
• signed a Memorandum of Understanding (MoU) with the Government of Telangana to establish research and manufacturing facilities for lithium-ion cells and battery packs. The ‘Amara Raja Giga Corridor’ project, with an investment of approximately INR 9,500 crore in capital expenditure and new technology, aims to produce Lithium Cells and Battery Packs with capacities of up to 16GWh and 5GWh, respectively
• For this company has been investing heavily on its R&D centers. And trying to innovate new technologies in LI-ion battery segment which will cater future generation of transportation , may be its logistics or EV sector, two wheeler and 3, 4 wheeler. Targeting to increase its market share in India.
• In November 2022, established Amara Raja Advanced Cell Technologies (ARACT) to focus exclusively on expanding our lithium pack assembly operations as well as to channel our significant investment towards domestic lithium cell manufacturing. Phase 1 will consist of an R&D centre, a pack assembly facility, our commercial pilot line for cells, and 2 GWh of cell manufacturing. All of the required partners have been onboarded and approval processes are underway at the respective government bodies
Wonderla Holidays (24-11-2023)
Great efforts to strengthen both the December and March quarters.
