Company gave some guidance in their concall:
If they are able to make it happen it would be commendable.
Posts in category Value Pickr
Midhun’s Investment journey and Space to organize investment ideas (20-11-2024)
Looks good portfolio Midhun…
Can we know your rational behind taking position in Cyient DLM despite it’s very high valuations.
Regards.
Great articles to read on the web (20-11-2024)
This looks interesting.
If Small Caps and Unlisted Small companies are growing at 25% or so, they must be also contributing more in Tax Collections i.e. Income Tax, GST. May be, it might be a good idea to look for more details in this area. That would certainly throw more light on this.
At the same time, we should able to see many small caps becoming mid caps since those are growing much faster. Though only 150 companies are classified as Midcaps, we can check whether more small caps are crossing 20,000 Cr market cap in the past few years and if this trend can continue.
Overall, this also says a lot that, lot of small founders must be recruiting employees for their small organizations than large organizations and this trend might be visible in EPFO additions as well.
These are just initial thoughts from my side.
“Polyplex Corporation “ Are Good Days Ahead? (20-11-2024)
Thank you for that video, eye opener!
IDFC First Bank Limited (20-11-2024)
Now that we have the quantum of exposure i will revisit the conversation
Is my assumption correct that if Fusion microfinance survives due to its rights issue than it has to payback the loans to SBI and idfc first.
Post successful rights issue the risk should move away from P&L of the lenders atleast and what happens with fusion stays with fusion.
Than we can say it is low risk.
Otherwise what are the other cases.
Can they ask banks to take a haircut.
If so
how much more NPA can idfc can have, maybe like 100 crores max for 343 crore loan.
100/150 crore provisioning i guess should be ok ( I am taking the liberty to consider that last quarter provisioning got nullified by the 600 cash added in books).
Power grid – a superior alternative to Invits (20-11-2024)
“Power Grid: Weak Earnings and Lofty Valuations Overshadow Promising Project Wins”
Weak Earnings Performance
- Flat Profit Growth: Earnings stagnated with PAT at Rs37.9 billion in 2QFY25, reflecting weak core performance despite support from higher other income and telecom revenues.
- Core Revenue Underperformance: Core transmission revenue grew by only 3% YoY, hindered by weak asset capitalization over the last year.
- JV Losses and Weak Incentives: Increased JV losses (Rs1 billion, largely from EESL) and declining incentive income (-50% YoY) indicate structural profitability challenges.
Capitalization Weakness Despite Encouraging Capex
- Underwhelming Capitalization: 2QFY25 capitalization was weak at Rs16.8 billion (-29% YoY), lagging significantly behind the FY2025 guidance of Rs180 billion.
- Mismatch Between Capex and Capitalization: Although capex spending was strong (Rs54 billion in 2QFY25, Rs100 billion in 1HFY25), it is not translating effectively into earnings growth or asset utilization.
Overdependence on Future Project Wins
- Aggressive Capex Guidance Raises Concerns: Management’s elevated capex guidance of Rs250-300 billion in FY2026E and Rs350-400 billion in FY2027E could strain financials if execution and capitalization remain weak.
- Reliance on TBCB Projects: Significant dependence on tariff-based competitive bidding (TBCB) projects (Rs36.7 billion contribution in 2QFY25) makes earnings more uncertain due to competitive pressures and regulatory risks.
Rich Valuations for Limited Growth Prospects
- High Valuations: Current valuation metrics of 18.6X P/E (as on 20.11.2024) and 3.18X P/B appear stretched, especially given the modest 8.7% earnings CAGR projected over the next three years.
- Low Dividend Yield Relative to Risk: A dividend yield of 3.8% in FY2025E does not adequately compensate for the single-digit growth and execution risks.
Persistent Operational Challenges
- Foreign Exchange Exposure: Higher other expenses, likely from currency fluctuations, add volatility to earnings.
- Lackluster Return Metrics: A modest growth in the gross block (2% YoY) combined with underwhelming capitalization reduces the attractiveness of return on assets.
In conclusion, while Power Grid has demonstrated strong project wins and future capex plans, the disappointing earnings performance, weak capitalization, and rich valuations suggest limited upside potential.
Source: Kotak Daily
(11.11.2024)
Zaggle_A platform to address pain points for enterprises (20-11-2024)
Zaggle has announced its entry into a Supplier Framework Agreement with Strada India Pvt. Ltd. (Strada). Key highlights of the arrangement include:
- Scope:
- Zaggle will provide its SaaS platform, payment solutions, and card products to Strada’s corporate clients.
- Nature & Duration:
- The agreement is domestic in nature but may extend to international operations.
- It will remain effective until terminated.
- Relevance:
- This partnership aligns with Zaggle’s strategy to enhance its offerings in the corporate sector.
Great articles to read on the web (20-11-2024)
Book: “Behold the Leviathan: The Unusual Rise of Modern India” by Mr. Saurabh Mukherjea and Nandita Raj.
Though I have not read the book and do not intend to, the following points are based on a YouTube transcript:
Behold the Leviathan – The Unsual Rise of Modern India
Points:
- Nominal GDP is growing at around 10%, while corporate earnings are shrinking.
- This disconnect is attributed to the fact that much of India’s economic vibrancy isn’t captured by the top 1,000 listed companies.
- A significant portion of the growth is concentrated in approximately 70,000 smaller, unlisted companies, which are outperforming the larger, listed firms.
- Around 60,000 companies in India, with profits of ₹1 crore or more, have been growing their profits at an average rate of 15% per year, with this accelerating to nearly 25% in the post-COVID era.
- This robust profit growth, particularly among unlisted companies, indicates a vast pool of potential investment opportunities.
This appears to be a complete U-turn from Saurabh Mukherjea’s earlier view that only 15 companies generate strong cash flows.
Recently, he also purchased 7–8 small-cap stocks, suggesting he now believes mega-caps are growing slower than small-caps.
My intention is not to criticize Saurabh Mukherjea—nor should anyone do so. The purpose is to understand whether this reflects a genuine shift or is merely a passing trend.
Questions:
- Are SMEs, small caps, and unlisted small companies truly growing faster than large caps?
- If yes, what are the reasons behind this growth?
- Is this a short-term phenomenon or a sign of structural changes?
- The earlier narrative emphasized “the big getting bigger.” Is this changing, or is this just a phase, after which large caps will regain their dominance?
This is a work in progress on my side; I may update the group if I come across any notable insights.
EMS Limited – Tapping in the growth in the water management space (20-11-2024)
India faces severe water scarcity, ranking 13th globally for “extreme water stress.”
By 2030, 50% of water needs will remain unmet, highlighting a huge infrastructure gap.
The water and wastewater market is projected to grow at an 11.6% CAGR through FY29.
Capex spends are driving municipal and industrial wastewater treatment projects.
Flagship schemes like Jal Jeevan Mission, Namami Gange, and AMRUT 2.0 are driving investments in water and sanitation infrastructure.
