Angel broking slowly losing market share to new brokers like bfsl and mstock. Their mtf interest rates are below 9% where as angel’s is 18%. The management should bring down it at parwith other brokers if they want to survive. Clients will move vey fastly if they find a better plan from other broker.
Posts in category Value Pickr
See the bright Sun: Aditya Vision (10-09-2022)
Nothing in life is sure, except perhaps death (both for investors & their companies). In general they have been fairly conservative in guidance. Not expanding margins is actually a strategy to deepen moats in retailer. Question is not on margins but whether they can get higher economic benefit from OEMs at higher scale (imo this is a given). If they decide to pass that benefit to customers, then they create ‘scaled economies shared’ (Scale Economies Shared) which actually creates a very powerful virtuous cycle loop.
I expect PAT margins to be maintained with higher scale & operating leverage. Actually margin is only 1 aspect of the picture. You get a 80% ROCE 100% ROE business at 30 time earnings growing at 25 i think its time to close your eyes & buy (efficient retailers always are priced highly not cheaply; covid-20 was an anomaly for AVL and investors did not know their story back then; those valuations are unlikely to reoccur)
Hardly so. they have hardly 1% market share in a market growing at 12-15%. Discretionary spending is about to take off. Penetration levels in Bihar & East india are quite poor. I wouldnt be surprised if they keep doubling revenues for a decade followed by a decade of 15% growth. This quality of growth deserves a higher PE multiple imo (of course AVL will have to prove their mettle outside bihar, which they have already set out to do).
i think investing needs one to follow on ground feedback. On ground feedback is that the set of people & population they address is not even entertained by amazon & flipkart. Investor’s house helps, drivers and so forth buy from AVL. They get great service (Amazon and flipkart both suck when it comes to servicing white goods), they get same day delivery (Only amazon comes close only in metros), they get EMIs (will amazon offer an EMI to our driver or house help? Please think.
This amazon & flipkart point is like saying “Dmart wont exist , trent wont exist because everyone will always order everything on amazon”. Perhaps. But there is no indication of this happening in next 3 years. Investing is always with a rolling 3 year period. Beyond that, i dont have any visibility. When the
facts change, id be more than happy to change my thesis
It wouldnt, AVL will rerate even from here. That is how efficient retailers are treated. 30 time earning must be seen in conjunction with how the sector has been treated. They have already started expanding in jharkhand (read the annual report). Chhattisgarh, UP, WB expansions in next year.
See the bright Sun: Aditya Vision (09-09-2022)
Thanks @sahil_vi for your notes, very informative.
Viewing this purely from a risk-reward perspective - Lets say they easily achieve their guidance of doubling revenues in three years, and maybe even beat it. They have categorically said that they expect gross margins to be in the 13-15% range, so no margin expansion coming for sure. In fact if anything, there is a risk of gross margins contracting a bit if they are closer to 13% than 15%.
So we’re potentially looking at 25% top line growth with 25% or less bottom line growth if they execute well. The company now trades at 1.5 times sales for a 15% gross margin business. Can it rerate further from here? Maybe it can, but I wouldn’t bet my bottom dollar on it because I don’t think there is a long and clean a runway to scale in this kind of business, and that too in new states, given the fact that there are deep pocketed national players waiting in the wings and the business has no real moat. Plus the comfort of buying white goods through Amazon, Flipkart etc is only is only going to increase. Maybe Bihar is today where Mumbai and Delhi were a decade ago with respect to e-commerce adoption for white goods. I expect the gap tp bridge a lot faster than a decade.
In my view, they are likely to hit an air pocket at some point in time, an analogy that @Worldlywiseinvestors shared on twitter recently, where they will likely scale to a point and then hit an air pocket. If the market thinks this way as well, it will not ascribe a significantly higher multiple to the business. I wouldn’t take on so much execution risk for a maximum reward inline with earnings growth. The risks outweigh the reward IMHO.
Another worry is that a couple of the promotors have sold close to 4% of total float last month during the run up too. This after they’ve been aggressively buying all through the last two years. Would have been great if someone would have asked them why they sold all these shares.
Affordable Robotic & Automation Ltd – Niche business (09-09-2022)
This could be a possibility.
However, I have noted some more additional observations.
-
No professional email or phone number for sales enquiry. Looks bit unprofessional.
I was expecting something like sales@arapl.co.in -
In their latest concall, they mentioned they have been working on car parking automation since 2014, but they had nothing to show in terms of actual footage or images showing their product in action. Even on their website product section, car parking takes you to a very rusty video, which won’t just cut for a potential sales pitch.
-
Management seems to be using latest jargons to entice customers or innocent retail investors with terms like AI/ML, Robotics as a service, 15 Min delivery, which they know are very much in demand as well as hype.
-
I searched for their employees on Linkedin and couldn’t find any engineer from Computer Science background. Majority of them are Mechanical engineers and other managerial roles, and Mechanical guys are mainly design or PLC engineers. Robotics is a field of computer science, which involves maths and low level programming for control. If one wants to see how should a robotics company looks like on their website or linkedin, checkout GreyOrange, it’s an Indian company based out in Gurgaon.
In short, by looking at their website, social media presence on linkedin, their employee education qualifications, it doesn’t appear that this company would go anywhere.
Please have a hard look at it again and consider your options.
Disc: This is my personal opinion, i may be wrong. Not Invested
NMDC-Value or Cyclical? (09-09-2022)
As per Aug factsheet, PPFAS mutual fund has invested in NMDC.
Hitesh portfolio (09-09-2022)
Hi Hitesh bhai,
Would like to know your thoughts on commodity/ cyclical sectors such as cement, steel, iron ore, aluminium, etc. from a 2-3 year perspective. Valuations for a lot of these companies look attractive, would like to know if you have any opinion on companies such as Sandur Manganese, NMDC, SAIL, Hindalco, etc.
Cosmo ferrites – bet on growing electronics and EV theme (09-09-2022)
some good reads on the topic
Disc : Invested
Indo Borax and Chemicals (09-09-2022)
Promoter sells shares in open market.
Mudit’s Portfolio (Passively Active) (09-09-2022)
https://www.youtube.com/embed/kj-izrkyKJk
A nice and simple Interview of Gurmeet Chadha