D-Link appears to be an exciting opportunity with Q3 numbers, that were indeed top notch, with continued margin expansion at the operating level, now at an impressive 13%. It was about 10% in Q2, which itself was a big improvement from its long term average of about 7%. I gather from reliable sources that this is largely due to more local purchases from their Indian vendors & lessor imports from Taiwan as also mentioned by @Gandhi_Jayesh in the above post.
I also gather that the Co. has improved its efficiencies by opening ware houses at multiple locations across the country. Earlier it was centralized at one place. It has also been developing multiple vendors across the country for its supplies. This has resulted in improved profitability with lower transportation costs, far lessor turn around time & quicker deliveries. This further helps in inventory mgt. at the distributor level.
I understand that improvement in operating margins on higher sales are sustainable, n perhaps the new normal. We will have to wait n see if this is indeed the case because if it is, then the stock is ripe for re-rating from its current low multiple. D-Link is a debt free Co. with a high RoCE in the proximity of about 37% for the current year 22-23.
The current market cap is only about 855 crs.
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