Arman Finance: Back to back stellar results.
Q1 Pat was at 15.71 crores vs 3.57 crores YoY
QoQ (ex of securitzation income in Q4) Pat has grown from 10.48 crores to 15.71 crores.
Impact of ticket size changes in Mfin industry+Yield caps being removed is yet to be seen.
Annualised ROE for Q1 is at 28%
Stock hits an all time high/52 week high today
Moreover, they have announced a fund raise. Probably only Microfinance NBFC which is doing so.
Second idea:-
Bharat Wires- Usha Martins peer.
Company did a Deepak Nitrite esque capex in 2015-2017 funded by debt. When they expanded their steel wire ropes capacity from 6000 MTPA to 72,000 MTPA. Unlike Deepak, due to operational delays/delays in commissioning Capex the company went through severe financial challenges.
In 2021, they had to undergo Corporate Debt Restructuring.
Debt Restructuring details:
o Sustainable debt considered at INR 2,250 Mn
§ INR 250 Mn paid upfront
§ INR 1,450 Mn would continue as term loan to be repaid in 11.5 years from FY21 to FY32
§ Balance INR 550 Mn would continue as fund based working capital
o Balance INR 3,826 Mn of outstanding debt converted in Compulsory Convertible Preference Shares (CCPS)
90% of the business comes from exports and 10% from Domestic customers.
Recently Company came out with a strong Q1 where Capacity utilisation inched up from 40% to 50% (indicating substantial capacity headroom)
Credit Rating talks about- OPM’s sustaining between 14-15%
Effectively if capacity utilisation starts increasing. There could be substantial growth in the PAT given end user industries are experiencing tailwinds at the moment.
Guesstimate:- at 80% utilisation and 100% utilisation
Quarterly revenue increases to 214 crores at 80% utilisation and to 260 crores at 100% utilisation (which might not be possible given 6000mtpa of capacity is non integrated and old unlike the new plant which is fully integrated)
Run rate at 80% utilisation=856 crores per annum
Co can do 80-90 crores of pat at that run rate
Given its a technical+funda analysis thread. Both the businesses have given a breakout with high volumes.
Disclosure:- invested in Arman, Usha and Bharat Wires. Not a reco by any means of imagination.
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