Hi @harsh.beria93, regarding Aptus Value Housing Finance, any change of views regarding their modus operandi? I have recent invested with a sizeable amount, and hence the question.
Posts in category Value Pickr
Red Tape Ltd. – The next fashion giant? (15-10-2023)
Stores have discounts too!
We Indians love discounts and I believe the segment of the society that red tape is targeting has a thing for discounts and negotiations don’t know why but there is always a sense of satisfaction after there is a price reduction but there is one drawback to this, overtime building an image of a discount brand which people will start mocking saying MRP toh naam ka hai asli daam toh ye hai.
Priyank’s Portfolio (15-10-2023)
Hi @Malolan_R, I am quite open to criticism so feel free to add.
Can you please elaborate on your understanding of my approach?
“good” here is relative so I will not comment on it. But, I do not think I have ever said that large caps do not give returns. I try to avoid stocks that are being chased/covered by every analyst as the chances of valuation re-rating are often low. This is higher for large caps as compared to small/mid caps.
Secondly, large caps are all about providing stability to the portfolio by protecting the downside.
My thought has always been – “If I have to protect the downside, I would rather hold it through a fund that doesn’t have large drawdowns while beating the large-cap index”
Once in a while, a large cap may offer good risk-to-reward, at which time, I do evaluate the opportunity.
Ex: Invested in TATA motors / L&T
Priyank’s Portfolio (15-10-2023)
Hi @suhagpatel
The business is quite cyclical and the margins are unlikely to be consistent. My understanding is that this cyclicality should reduce over the next few years. I haven’t been able to find time to document the thesis – broadly it revolves around the following points:
Expectations
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Capex: The company has been investing in massive capex / backward integration. I like how most of this comes through the cash generated/non-debt. Here’s what happened in FY22
Here’s what happened in FY23:
This ppt would give a better idea of where’s this capex is going. Is the management skilled enough to use this capacity? If things turn out as per my expectations, it could drive higher profitability.
I also find it interesting how the company has been trying to diversify different segments such as aluminum foils (~EV battery) – I believe they have a collaboration with Achenbach – but that’s a different story. [Source]
- Debt: High debt is something that always has made me avoid steel companies. However, Shyam doesn’t have much debt at present. Management doesn’t look like they’ll go crazy over here which makes me interested.
Valuation
I would have preferred to enter at a lower price. At these valuations, I’m okay (okay not excited):
- a) Ideally one may want to look at EV/EBITDA. However, for me, MCap to Sales has worked much better so I do prefer it.
- b) Company recently had a successful OFS at 411
(2 years since IPO – I did ask why would the company be valued at approx listing price?).
Management
Looking at the team, one might feel good about corporate governance. I have mixed opinions. However, the management broadly has been consistent with their words so I got intrigued. Here’s what the management claims/expects:
There are things I do not like about this investment:
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Investing in companies where timing is crucial, isn’t something that I prefer. I do not think i’ll hold this stock for the long term. Management commentary proved my understanding here. Let’s see how the plan goes.
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I still haven’t completely analyzed through their pre-IPO journey which is a serious risk on this investment.
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A lot of unanticipated things can go wrong in such business
This is all I could write due to time constraints. In my opinion, before analyzing this business, one may want to look at GPIL.
I hope I was able to give you a direction.
Disclaimer: Invested and biased. Not a buy/sell recommendation. I am often wrong and change my views. Further, I may buy/sell stocks without informing anyone.
Pragnesh’s portfolio (15-10-2023)
Racl -Future growth(from conall @2024-july+sept)
1…TVS
=Recently the new electric scooter launched by TVS a couple of days back which is an extensive scooter, RACL is the single sole supplier for their entire rear axel assembly and many other things.
2…Super bike
=One more major super bike is being launched maybe in September for which the entire transmission is being supplied by RACL.
3…Cars
=Until FY2020, the company was zero is passenger car vehicle and last year it was 6% and this year it will be more than 10%. RACL is into passenger cars like BMW 7 series, Porsche, Mercedes AMG, BMW X7, Aston Martin. The kind of precautions and stringent requirements are a lot in these segments.
4…Yokes
Developing Yokes for motorcycle. The rear wheel will be driven by the propellers instead of a routine chain
=Bagged order from an European Two Wheeler manufacturer for supplying finishd forgings Yoke’s. This is a new business line. In past, RACL has never supplied parts till Forging stage
=At present none of the Yokes are used in Motorcycles in India. These are very high end Yokes being used in European 2 wheelers
5…ZF
=SOP for two new ZF business for started in June 2023. ZF dedicated plant running at 95% Utilisation. Project volume has peaked 2 years before anticipated projections
6…Company likely to win one big project in a new segment. Details to be known by next Qtr
7…Capex
=New Shakti plant was inaugurated in March 2023. The plant has been commissioned and commercial production has started for few projects
=Capex projection for FY-24 to 27 at 250 cr
= The company has projected capital expenditure of ~Rs.61 crore for FY24 (refers to the period from April 01, 2023 to March 31, 2024) for the purpose of creating capacities for existing products alongside new customers and modernization/upgradation of existing plant and machinery.
=No investment is made by the company unless the company gets a nomination letter from the customer
8…Intend to keep growing the company at > 20 pc CAGR for the foreseeable future
9…Others
=Received best supplier award for 100% Delivery by Kubota India in for CY 22
=Gajraula Plant is TISAX & ISO 27000 certified. Probably one of the first few in India for a company of our size.
=Moving from lose component manufacturer to highly precisioned oriented manufacturer.
-The more complex the part is, the more margin RACL is able to command
52 week highs and all time highs strategy (15-10-2023)
Has nice VCP foot prints in the weekly sir
DroneAcharya Aerial Innovations – a new age business (15-10-2023)
Besides training, they are also focusing on data analytics associated with drone data, which seems more promising. Hopefully their H1 results would provide some clarity on their business outlook
Angel One: Metamorphosis into a Fintech? (Previously Angel Broking) (14-10-2023)
AngelOne Q2 Concall Highlights
Highest ever Revenue & PAT
Total Income up 41 % YoY at 1049 Cr v/s 746 Cr
PAT up 43 % YoY at 304.5 Cr v/s 221 Cr
Dividend to be paid 12.7/ share
Total client Base at 17.1 Mn, up 48 % YoY and 13.3 % QoQ
Gross Client Acquisition Highest at 2.1 Mn up 80% YoY and 60% QoQ
Share in Active NSE client at 14.6%
Market share gains for the company in all the segments
Client Funding Book at 1946 Cr v/s 1193 Cr QoQ
Saw a good recovery
Net worth at 2612 Cr
Cash Segment saw a good recovery in ATDO & No.of Orders
For F&O and Commodity segment there is secular growth every Quarter in the ATDO and No. of Orders
-New Business Verticals Update
1)Lending 2)AMC 3)Wealth Managment
The main focus of AngelOne is to expand the addressable market and product offerings.
It wants to scale up its existing broking business and diversify into a comprehensive fintech model.
It aims to leverage the benefit of its wide distribution, tech capabilities,and its existing user base.
Timeline of New Business Verticals:
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AMC – To commence from Q4/Early Q1 FY25
The final approval was filed in August,business and tech infrastructure are in progress
Finally, it will be approved by SEBI through an onsite inspection, taking two quarters for approval. -
Lending Vertical – Going live by Q4
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Wealth Management – More details will be shared in the next quarters; it’s currently in the concept stage
More Details on New Verticals
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Consumer Lending Products: AngelOne wants to become a distributor of consumer lending products (Unsecured Personal Loans) by partnering with NBFCs and Banks, with the balance sheet risk not being with AngelOne
It doesn’t aim to be just a vanilla distribution company but wants to utilize tech capabilities and AI/ML models using customer data to create customer profiles
It aims to assist with underwriting and collection processes, increasing commissions for AngelOne. There is tremendous potential in the retail credit business -
AMC: The AMC will be based on Passive Managed Funds, Angel to benefit from the extensive distribution network
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Wealth Management Solutions: AngelOne is also trying to enter the wealth management business, focusing on clients with a ticket size above 50 L/1 Cr or beyond.
They aim to use their technological capabilities to provide high-quality products and cater to HNI/Ultra HNI clients
Cross-selling to the existing customer base presents a significant opportunity without the need to spend on acquiring customers for verticals like distribution and lending businesses
Client Acquisition Ramp Up Due to:
1.Rolling out of New features
2.Product Improvement
3.Multiple Expiries
4.Buoyant Markets
New Features Introduced to Elevate the User Experience:
1.Launched TradeBuddy, vernacular educational videos.
2.BSE derivatives were launched for its users.
3.Sensibull was made free for all AngelOne users to compete with Zerodha
Some New Developments in the Pipeline:
Open Interest Analytics & Global Indices in the Super App.
More features to help clients with stock discovery
Unique SIPs Registered Trend in the last three quarters:
1st Quarter: 108,000
2nd Quarter: 431,000
Latest Quarter: 725,000
This trend helps in better client retention and engagement in the Super App
These users can be the future potential customers of various products
The top 5 digital brokers constitute 63% of the NSE total active base
This share remains at the highest level, and discount brokers continue to gain market share, with AngelOne leading
While the industry shrunk,AngelOne expanded its market share
Multi-Year Revenue Visibility from Clients Making This an Annuity-Based Model
Revenue has Stabilized from the 3rd Year.
Digital Transformation is Increasing Client Revenue.
There is strong revenue visibility of acquired cohorts for multiple years
The 4th-year revenue contribution has stabilized at 63% compared to 26% in the pre-digital era
Contribution Margin Expansion for Acquired Clients:
Year 1: 56%
Year 2: 92.6%
Year 3: 92%
Enhancement in the Lifetime Value:
- Acquired clients are profitable from Year 1
- From Year 2 onwards, contribution margin is 90%+.
- 3-Year Revenue/Cost of Acquisition is robust at 7.9x
Revenue/CoA will expand further as clients contribute revenue in subsequent years
Gross Client Acquisition at 2.1 million, the highest in the last quarters
90% of the Gross Clients are from Tier 2-3 cities
Rising Share of Revenue from Longer-acquired Clients:
2-3 Years: 7% to 22%
3-5 Years: 9% to 14%
Disc Biased and Invested
Jkil — jkumar infraprojects (14-10-2023)
J Kumar is another gem which is available at v cheap valuations.
It is a story of consistent performance over a decade despite all the negative news flow over the last 5 yeras or so. But is has withstood the trial by fire and has proven itself to be a gem.
Prashant Jain who left HDFC mutual after a tremendous 3 decade record started his 3 P India Equity Fund recently. He has entered JKIL in the last qrtr with 1.4% stake.
JKIL today stands at the cusp of massive earnings acceleration where as per my project PAT will cross 700cr in 3.5 yrs froml 275cr currently.
And it traded at 3200cr Mcap.
Its a bargain which will not be available for long.
And the market stalwarts like Prashant Jain, Porinju and Sunil Singhania know it and thats why have substantial stake in the company.
Did anyone hear about the 190km tunnel in Bangalore to ease traffic. Guess which cos. are the top players in underground tunneling work for roads n metros…L&T, JKumar Infra n Afcons…yes J Kumar is right up there in terms of technological prowess for complex engineering projects and is often one of the only 2 or 3 players competing for such projects…its usual competitor is L& T.
And thats why sometimes it beggars belief that it is still available at the price it is today.
Quick Heal Technologies (14-10-2023)
any triggers or just euphoria?