Depends on CV sales momentum and the uptake of CNG by fleet operators. Diesel prices may have been hiked by now but the approaching elections will likely override our stated free pricing mechanism.
Posts in category Value Pickr
Simrat Portfolio (26-09-2023)
Yes valuations matter if your horizon is 1-3 year, as you elongate your time horizons, share price should be more dependent on earnings growth.
Saregama was already 5-6x from 2020 buying price, but I started cutting its weight when I could not align myself on its capital allocation and overall industry dynamics. I have written about it in some posts on its thread.
In general, higher allocation is not a problem, but problem is deciphering how much each stock should be allocated. Generally, one should allocate higher when downside is limited. For example, ITC was high allocation in many portfolios in 2020, 2021 start.
In general my allocation depend on these things –
- How much I am willing to lose on this stock? So if in a given year I am fine losing 10% of my portfolio at max, so maybe I can afford losing 1% each on 10 positions in a year. So now if I think that downside to some stock is 30%, I will bet 3-4%. P.S: This is an example taken from famous investor – Rajashekhar Iyer
- This is also supplemented by my understanding of business, grey areas or blind spots, track record and my perception of management.
Shivalik Bimetal Controls Ltd (SBCL) (26-09-2023)
Shivalik Bimetal AGM 2023 26 Sep
(2nd Order details added – compiled on flight – will refine tomorrow and add 3rd order details from Notes. Please excuse typos)
2023-24 OUTLOOK
Will be little slow. Post the semiconductor shortage, everyone stocked up like crazy extrapolating. This was seen at Customer end, Distributor end, and even at our end.
This is not specific to our industry, but a phenomena seen across industries. Ours has NOT been that severe. New Orders have started coming in, and destocking will end soon, normalised levels could start by Jan 2024
2025-26 outlook is more exciting!
EATON CORP AWARD
out of 12000 vendors globally, shortlisted 10.
6 were given Higher Excellence Awards
SBCL only Indian vendor among the 6
Has led to higher visibility globally, but more importantly within Eaton Corp entities – many didn’t even know SBCL makes shunts
EBW BMS Shunts
60% of all Automotive
Competitive Positioning is almost unchallengeable (my words)
Lot of changes are coming. We can see where it is moving (e.g. 1% error at shunt level specs will move to 0.05% error tolerance OEM specs for shunts). It’s NOT measurable by the OEMs but they want proof to be shown by vendors like Shivalik that they are able to move there. Done.!!
Quality of test jigs, strip bimetal/EBW quality (acknowledged by Vishay as better than theirs), 100 % process automation for 15 pre-EBW, 15 post-EBW processes, when coupled with 100% test sampling data – goes a long way in reaching there. Zero PPM defects is the new goal!!
Lot of competition will drop out. Already instances of competitors becoming customers for newer products happening. Especially heartening is a German instance !!
At all Auto OEMs Shivalik Shunts and Strips are now approved with their Tier1s(Bosch, Hella, Continental, others) directly or via embedded Tier2s like Vishay. Some Tier1 relationships are at advanced stages (after 5-6 years of engagement). New Competition will take at least as many years. Many are at initial stages of engagement. BYD engagement has moved from Development customer to Commercial!
MARGINS SUSTAINABILITY
Business model allows complete pass-through now
a) manufacturing margins are always protected
b) metal price index volatility is calculated separately – and is also passed on to customer
c) however Tier1s negotiate hard on productivity/scale benefits – which is a challenge we have to face – so far it’s been win win
d) 2-3% additional margins available for customers where SBCL also provides value engineering services – takes original design and suggests improvements
e) some customers ask us to source RM – only from say Hitachi (don’t care what price) that works better for SBCL
f) metal price varies from 6-7% of shunt costs to 50% for some of the heavy/ bulky products
OTHER EV (non BMS Shunts)
Much more competitive space
a) Off the shelf – more SKUs to be maintained
b) Customisation Shunts – all process optimisations are finished; more in control now
REALISATIONS
Fy23 Shunts volumes grew by only 3%, but top line moved by 23%, so realisations have moved up by 20%? Led by ??
- Product Mix changes
CURRENT SENSING MODULES Dev Status
Lot of changes happening in requirements/designs. This is still under evaluation. Strong possibility of joining hands with a Customer
5G UPDATE
Europe 5G rollouts had stopped. Now they have restarted. India – some Telco roll out design includes us, some don’t
RIL 5G rollout SBCL will play a role
SLOWDOWN – blessing in disguise
Good use of slowdown times this year
Valuable time and space for v important stuff that keeps us ahead in the game
a) Process Automation
taken to another level. Batch level random sampling is now replaced by 100% sampling data. So huge granular data available to analyse Error for Performance variations and identification of root cause for particular batch/sample (minute wise variations) is thus hugely more granular (unlike earlier random sample data where guesswork and trials sufficed)
b) New Innovation
3 layer adjacent Magnetic-Non-Magnetic-Magnetic Metal Strip for stabilising Camera in Smartphones. Moved to bulk trials. Exciting development certainly, but will take 5-6 years for Commercial (Japanese customer)
RAINS/FLOODS
Solan is on rocky terrain (not soft). Roads were vulnerable due to design issues, wrong road cutting issues. Even during the worst flooding/landslides situation road transportation did NOT see a single day of disruption. This NH5 is an important Defence Road – has to be kept clear at all times.
VISIBILITY
-3x Sales in 2-3 years targets – 50% is visible today
LEAD TIMES
Competitors 52 weeks, SBCL <20 weeks for complex products, normal 4-8 weeks – stays unchanged. Even before EBW process there are 14-15 processes (all competencies in-house for SBCL as opposed to many outsourced for competitors.and 14-15 post-EBW processes
SBCL commands even shorter lead times from its supply chain vendors
Why/How SBCL will stay ahead of Competition.
(TBD)
Steel Strips Wheels Limited – Attractive Valuations (26-09-2023)
How many days(20/50/200) MA usually considered for the analysis
Steel Strips Wheels Limited – Attractive Valuations (26-09-2023)
(post deleted by author)
BCL Industries – Ethanol Pick (Capacity 3.5x in Next 2 Yrs) (26-09-2023)
margins if sustained are better in distillary segment, though need to be seen in context of all the decision taken by govt in recent time frame.
Overall company has highlighted that net net – the bottomline and topline impact won’t be huge as share in bottomline is very small.
Shivalik Bimetal Controls Ltd (SBCL) (26-09-2023)
I work in Automotive. During work from home we need systems to be triggered remotely.
e.g Ignition Key or any other power key . We use USB based Relays which cost Rs
500-2000.
Cheaper one last less. demand for Relays are Increasing. Most of them are imported from China or US. Manufacturing of Relays in India being setup.
will find and put up more data and application areas in this field later.
Hindustan Foods (26-09-2023)
Disagree a little here.
Let’s say a company as 100rs of cash.
If it can invest that money and generate 20rs (roce of 20 percent) or more on its investment. Then it’s good that the co invest that money (capex etc.)
If it can merely generate 5-10 rs on it, instead it should distribute the cash as dividend.
If you still think a company should generate FCF generation is always needed, feel free to do so
Megamind portfolio (26-09-2023)
Are you Saurabh Mukherjea 
?