Per correspondence with co over email after Q2 nos, they have attributed margin expansion to some additional factor other than local sourcing which is key as well. These were – Price increase in some products , higher share of higher margin products in mix. Though they were non committal on sustainability but have done one noth better in Q3. My sense is that market is in disbelief and would.like to wait n watch, though it clearly appears as structural up move in margin profile.
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Key part that stood out in their comments was parent support as making india strategic element in APAC( currently india serves SAARC as well)
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Parant has given full freedom on sourcing while commitment of R&D support is given as well. One can check RPT and royalty works out fair with these kind of support.
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While Dlink directly hasnt applied PLI, their local subcontractors have it and thus both parties stand to gain which is also a structural underlying boost to margins.
Dlink india stands to gain with Taiwan china escalations as well and may serve as global supplier at some point – they didnt agree nor denied it.
All in all asset light debt free MNC play with more totally undemanding valuations.
QoQ while bottomline is improving substantially, topline hasn’t moved much – this stays key to watch out for. Suspect some seasonality here.
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