Just went through their earnings call
Positives:
- Capacity utilisation improving gradually.
- Profit margin is inching back up.
- Mgmt commenting that there is uptick on orderbook.
- Improvement on raw material costs.
- Taming down on the energy front in terms of costs.
- Some easing out of supply chain costs
- Potential for India to sign FTA, which could unlock more opportunities.
- The inventory correction initiatives sort of coming to a closure, which should unlock more demand.
- There might not be much capex in the immediate future.
Cautions:
- Pricing power is generally a challenge in this industry.
- Debt and working capital is a bit too high. This will have negative impact with rising interest rate.
- A lot of tailwinds allude to FTA, China+One, Pakistan economic crisis etc. which could not materialise or might take much longer to pan out.
The pricing looks attractive at this level. But, this should be a long term play for at least until interest rates come down (2-4 years)
Disc: Invested
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