Results were not reported for last year H1. Last year results are for the full year 2022-23, which was 72 crores of sales. Let’s assume that last year H1 sales were half of 72 crore which comes out to be 36 crores.

Now the situation looks like this:

Sales increased from 36 to 48 crores(33% growth)
In the cash flow statement inventory increased by 3 crores and trade receivables by 7 crores. The cash position in balance sheet is so thin that it appears that the business is facing cash flow problems.

However company is in high growth phase and also doin capex accordingly. They are guiding for 35-40% growth and the numbers are also supporting this guidance. In such cases it’s quite normal to face increase in inventories and receivables which is in line with the sales growth.

Company has raised fresh capital of 16 crores in IPO. The other current asset column in balance sheet shows an amount of 10 crores. There are no details available. It can be some cash equivalent or marketable security which will enhance their cash position. We need to find out.

In such a small company in early phases of growth the important factor is scalability, which the company appears to be on track. Rest of the numbers can improve going forward.

Disclosure: invested.

Turnarounds are hard!

Volumes are up, yields are down, both big time. This is worrying for me. The elusive margin uptick remains distant. They continue to guide for 3000cr topline worh 10%-12% Ebitda by FY26. But with new problems surfacing every quarter, it makes me want tonwuqation the capability of the management to make projections in the first place.

Invested and disappointed. I may exit partially or comoletely soon. Will look to add back once the improvement starts reflecting in the numbers, which may be nex quarter or next year. The price will probably be higher then, but thats ok. I dont want to hold on to business underperformance.

Some snippits from the concall:

Gati KWE

• Volumes up 18%
• GMs down from 28% to 23%
• Ebitda up 4% from 370cr to 385cr

H1 FY23
Tonnage up 11%
Revenue from Ops up 2%, Ebitda down 21%

Reasons for drop in yield:

1. Mix – 65% large, 35% MSME and retail – drop in retail with introduction of E-docket, should stabilize
2. Drop in prices for intra state (intra zone) to gain more business. For large customer, yield differential between inter to intra state is 20%. Cost reduction will happen subsequently
3. Increased over 1000 direct pin codes

These have led to higher volumes. Now need to optimize costs and improve yields.

SRF’s line will comine online in 3 years, Sale may take another 6 months to an year. By that time XPRO’s two lines will be online and contributing to revenue. They aim to target export for EV & Solar as per the last concall. If they are able to capture export market in next 3 years then things might play out good for XPRO.

Irrespective of what happens 3 to 4 years out. Next 3 years look really good for Xpro as two lines will come online in FY25 & FY26 respectively and will start contributing to revenue.

Can an individual apply for both RA and RIA?
or is there any regulation on this?

My Q2FY24 Earnings call notes:
(can have some discrepencies due to audio quality issues)

• Overall outlook is positive compared to last quarter. Customer engagement has increased. Might see some constraints in next two quarters due to macro enconomic factors but next financial year should be good.

• During pandemic, over stocking happened because of supply chain constraints as what we produce is a critical component. Currently we are seeing inventory correction, which is a healthy sign. Ather macro factors have minimal impact.

• Anticipating next FY, should be making at least 20 million smart meters YOY. Sizeable market share is achievable because of make in india push. Smart meters business is 10% of overall revenue. Expects this business to grow by 2X near year.

• Shunts revenue split: 40% automotive, 40% smart meters, 20% energy storage applicaitons. Within 40% smart meters: Don’t have exact number but roughly 15-20% is domestic.

• Drop in gross margins due to product mix changes, more of bimetals instead of shunts. Coming quarters will be similar. Next financial year, hopeful of things reversing. Earlier 50-50 split b/w shunts & bimetals. Will take few quarters to get back to where we were.

• Shunts revenue going down as orders drying up in short term because of macro economics, geo-political trends, inflation but confident of turnaround. Silver lining is order slowdown is because of degrowth in market. No single customer issue. Not losing out business to any other competitor.

• Current time has given us opportunity to work on process improvements, couldn’t do it before as we were running on higher capacity utilisation. Process improvements include focus on automation, detection systems, in-process inspections, expirement with technologies, detect potential faults / variations in production before end product is completed. Automation systems provide real-time data, provide batch-to-batch data, helps in analysing & determining how incoming variables impact overall quality of product. End of line online inspection. Aim is to reduce rejection, rework. cut down on manufacuting lead time. ~2% gross margin improvement target due to process improvements.

• Bimetals growing 20-25%. Capacity utilzation of bimetals: 33-34%.

• Most of the growth will come from exports.

• Other income consists of forex gain. 90% of it. 10% from small jobs we are doing for vendors.

• Expects 10-40% future growth. Huge variation in expected growth. There are certain factors beyong our control if they dont improve (which we are hopeful of improving) we will still grow by 10-12%.
  In case exports normalise, we will see growth beyond 30-35%.

• Continous projects & new product developments going on irresecptive of macro factors & slow down.

• Confident that we will maintain growth despite of slowdown in shunts division. Overall performance should be better than what we did last year. We increased capacity in bimetals division because we could forsee demand from exisitng customers & new opportutinities. Some are in development, some have materialised into business.

• Expect shunts division degrowth has bottomed out. Should remain at this level for some time and then pick up. Shunts division operating at 40% capacity utilisation.