Redtape Q2 numbers are below market expectations but are impacted by the shifting of the festive season by about 20 days, pushing a part of the sales to Q3. The mgt could done better by clarifying this. Diwali last year was on around Oct 22-24.

Q3 numbers should hopefully make up.

GREENPLY INDUSTRIES – Monthly Chart: (CMP 186; Currently trading at Nov2014 levels)

• A smaller slant breakout can be seen, volumes have risen in weekly chart, with increasing deliveries.
• A Multi year channel being respected
• RSI heading towards a breakout
• Previous Slant breakout in 2012 led to a bull run in the stock.
• Similarity in setups from 2007-12 and currently from 2018 Jan top to 2023

Safe to assume bullish bias ahead, with bigger slant breakout leading to large up moves.

Latest numbers show two years of negative cash flows from ops. 60 and 90 crores negative in march 22 and march 23 respectively. These are mostly on account of a spurt in receivables and inventory. Of-course these are expected to rise when sales go up. Now my problem is this – from march 2022 and march 2023 sales falls about 100 crores but receivables still keeps rising. If I am not selling the same amount should’nt my inventory and receivables get moderated? I’m seeing inventory has come down but receivables does the opposite. Why? Are they having some disputed collections issues? Can someone throw some light on this?
Thanks.

In my personal opinion, the Management had a cautious tone in the recent Concall w/ some positives and negatives going forward.
Some notes from the Q2’FY2024 Concall by Management:-
Positives
Product Mix Change:-

This is reflected in improved margins this quarter and will help in product diversification going forward.

New Customer Acquisition for HALS:-

This volume should be reflected in the upcoming quarters for Clean Science

Potential Mean Reversion Play:-

Strategic Capex(30Cr) with Large Revenue(100Cr):-

Negatives
Destocking Pressure to continue:-

This should continue for a couple of quarters

Demand Environment continues to be weak:-

Under performance of Performance Chemical Segment:-

Summary:-

• The valuations of the company continue to be a bit elevated.
• It is a debt free organization with all the planned CAPEX to be funded from internal accruals.
• The overhang of management bringing the stake <75% is done and FII have increased the stake over last 2 quarters in the company.
• Demand environment and destocking situation will potentially result in some headwinds in coming couple of quarters.