I hope this illustration makes sense. If not, then well I cannot explain. This is just an illustration and I am not talking about RBM in particular or their exact guidance.

Hello @hitesh2710 sir,

I wanted to get your thoughts on something. So far, all the indices (large, mid, and small caps) have been corrected by a similar margin (10-12%). Normally, small caps, being inherently riskier, should experience a steeper decline, but that doesn’t seem to be happening this time.

People are suggesting that this might be because FIIs predominantly own large caps, not SMIDs.

1. Do you think something fundamental has shifted, justifying a premium for small caps?
2. Or is it possible that DIIs might rotate back to large caps now that they’ve become attractively priced after the correction?

Is there any angle I’m missing in understanding this trend? Looking forward to your perspective.

One Company that I have been tracking since sometime is Techera Engineering Limited
TechEra Engineering (India) Limited operates within the aerospace and defence industries, specializing in the design, development, and supply of precision-engineered products and solutions. The company’s operations cater to both the defence and commercial sectors, highlighting its versatile capabilities and adaptability to diverse customer needs. Established in October 2018, TechEra has rapidly grown to become a key player in its niche market.

Business Segments

• Aerospace and Defence Tooling and Components : This segment forms the core of TechEra’s business, focusing on the manufacture of high-precision tools and components essential for the production, maintenance, and overhaul of aircraft. Products within this segment include assembly tooling’s, jigs, fixtures, MRO tooling’s, ground support equipment, and precision-machined components. The sources highlight TechEra’s use of advanced manufacturing technologies such as 5-axis machining and 3D modelling for design visualization, enabling them to deliver products adhering to the stringent quality and precision standards of the aerospace and defence industries. Examples of specific products offered in this segment are mentioned throughout the sources.
• Automation System Solutions : TechEra Engineering’s Automation Division, while a minor business segment, plays a significant role in advancing industrial and manufacturing processes across various sectors. This segment is dedicated to designing, building, integrating, and commissioning automation systems tailored to client needs. Leveraging Industry 4.0 technologies, including IoT and AR/VR, the Automation Division provides solutions such as assembly lines, conveyor systems, special-purpose machines, material handling equipment, and robotic applications. Although a minor segment, it exemplifies TechEra’s commitment to innovation and expanding its reach beyond its core aerospace and defence focus.

Customer Base

TechEra Engineering primarily serves customers within the aerospace and defence industries, working with both original equipment manufacturers (OEMs) and Tier 1 aerospace companies. Notably, the sources reveal a heavy reliance on a limited number of clients, with the top 10 customers accounting for 94.09% of TechEra’s revenue as of December 31, 2023. This dependence on a small customer group presents a potential risk factor for the company’s future growth and stability. The sources do not provide the names of any specific customers.

So this, the basic Introduction for the company a one pager kind of thing so that anyone reading it fresh can understand.

I got a chance to meet the management so I will share few of the insights that I got but before that I want to state that this my taking regarding the company and It is subjective differs from person to person…

1. The promoter Mr. Nimesh & Mr. Meet are extremely passionate about the business they are doing and passion is what that is driving them also, in the past they had been running a business by the name Techcellncy Engineering India Pvt Ltd which was also involved in manufacturing of toolings for aerospace industry which they closed around 2017/2018 and then they started Techera Engineering Limited.
2. The Product business of the company requires major investment in working capital for scalability and also they mostly into structural part of the aircraft with an moderate exposure to precision work but here, scalability is something that i feel is a bit of a concern due to need of high working capital investment because the raw material and inventory they require is imported which is not readily available.
3. The tooling segment of the business I initially thought it to be a consumption oriented business where you sell the product and then you keep on selling the tools but it is not the product life is fairly large and they claim that they made a product as such that no complains is received by them from there customer which is good when looked from the quality perspective but what about scalability & sales growth… the tooling business is such that they cannot maintain inventory at a scale because every part is unique to a particular aircraft and it differs from aircraft to aircraft.
4. The TATA & Boeing deal which lead me to Techera as I was of the opinion that they would be huge beneficiary of the deal as TATA is already there client and along with it they have experience to manufacture Commercial Aircraft Vertical Fins, fan cowl assembly tooling, center fuselage assembly etc… but it is not the case as they do not supply to them and they export it because the realization which they get from TATA is relatively less as compared to which they get from export market.
5. The C-295 programme that is running which is a huge opportunity for the tooling business and automation system solutions but the market share of the company is only till 50-70 crores out of the total opportunity and to expand they need another programme to be launch and they should also win tenders there.
6. The Promoter according to me is passionate as I noticed like he wears his work & brand but he wants to do many things at once like he wants to expand product business also, tooling business also, automation business also, do R&D and launch new products also…
7. The company has problem with cash because they need capital to invest in working capital and do capex (in future not now) but they don’t have that much as the cashflows are negative, working capital cycle is elongated & he has already diluted so much of equity & i don’t feel that they would be willing to dilute it further and since cashflows are not there he won’t be thinking of taking a debt as how he will service the interest cost so in terms of business economics he is at a critical juncture because how he will raise funds for it will matter a lot & I feel that scalability of the business is a bit concerning and will have to be seen in execution of the management

So, this are my understanding of the company and management which I shared but I again want to highlight this is my take on the management and I can be wrong as well as no one will ever know the management completely in the first meet and just like investing it is a process…

But, till now I’ll be keeping Techera in my watchlist and dig into it when there will be trigger…

Again I’ll repeat my language might have been strong but I’ll try to tone it down going forward had no intention to call management fraud if that was the message relayed I am sorry.

Now you said illogical math can you exactly point out which part was illogical ?

Mistake in my calculation of warrant profit? Or amount paid upfront. Or company profits. If you want I can give links to each one of the data sources.

But as I said in my original post if you read it at all. I might be wrong with my calculations too so if you want to call it illogical please provide your numbers on this or correct mine.

As pointed out by other members as well timing was too perfect of warrants issue so numbers are based on that. Again sharing snippet from article from Dr. Vijay Malik incase you missed it in article

If promoter wants stock should buy from market plain and simple like any other shareholder!!

Also here is another snippet from article which quotes sebi

Clearly warrants are higher probability call options. If you see the names Tata Power and Pantaloon are also there.

So putting in 5 cr for potential profit of 50 cr in within 18 months when I know my company is gonna do really well fundamentally. I would not miss it.

I’ll just repeat for one last time it’s just my opinion don’t like it move on. Your money your view.

Fundamentals are not the only thing management is also big key maybe thats the difference between Tesla and Rivian.

Hope Sky gold makes new highs cheers.