The scaffolding division is presenting a good opportunity
Existing Indian player like MFE BLS and even the international players local sales like LAHER PERI ULMA shows that there is competition in the business but each player has a niche product.
As far Technocraft is concerned there MACH one is a very good product and they are present in all the areas of scaffolding and formwork.
But if we observe we will notice that scaffolding is a capital intensive in nature which is reflected in high inventory we’re they have to maintain SKD kits at dealer end.
Now they have tie up with COATSMAN India for scaffolding and even there rental income scope has increased
They have also tie up with CAD2000 MLS in this area.
They did nearly 200 cr exports to AAIT USA there subsidiary previous year in scaffolding and some exports to Europe and Latin America and Africa. Now company is doing some major work in India in scaffolding in some major infra projects.
Whether the anticipated recession will play some dampening has to been seen.
As for drum closures with Europe and usa facing problems there competition like Tri-SURE whether it will be affected which will give some advantage or whether steel drums manufacturers will be affected has to been seen. But with a market share of 35/40 percent and projected market of around 3000 cr in 2030 there is improvement chances, which is mentioned in the CRISIL ratings of sep 2022. Now they have entered into plastic closure business which is also seeing some traction.
The engineering services business is not major but a reaonsable growth can be expected from the electronic design section of technosoft inc
The textile division has shown a turnaround but a wait and watch there garments is DANUBE fashion has ladies children and mens knitted garments.
Very honest decent but conservative promoter IIT GRADUTES and second line is in place with there sons taking charge has over 1300 permanent employees. Never diluted there equity nor pledged.
Even the balance sheet on a whole if see the investment is 420 cr ash 101 cr which will offset there DEBT. But even in the debt short term debt is around 440 cr which is majority in packing credit.
Three yr OCF is above 500 cr even after increase in the working capital.
We have an EBIT of around 360 cr for the working capital of 1400 cr (with investments) without investments and textile into account it will be 270 cr for 900 cr working capital.
But the market has identified the company under steel sector and hence low PE whether it will be categorised as a multiproduct company and get a 15 PE is left to the market dynamics
But with the present price correction it is avalaibe at less than 8 PE and around 5 evebita looks like an interesting bet.
DISCL bought holding qty with long term intentions
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