Some Additional points from concall
As per the management there are four types of steel strapping Regular, medium, high and ultra high tensile steel strapping.
The new production line that the company is making, is for all three types + ultra high tensile steel strapping. As old production line can only make regular, medium and high tensile steel strapping but not ultra high.
As per the management, industry is shifting toward ultra high tensile steel strap. As they are venturing into new product. The only question is, does this will improve their margins in the future?
They also mentioned, in steel strap they already have 10% market share according to their estimates. They are also guiding for 30% of market share in steel strap.
A minor correction on excellent analysis done by @hunter is that they are guiding for 50% above revenue coming from packaging not the market share.
Krishca does not have pricing power, so the entire growth will be lead by volume growth when it comes to steel strapping. But the packaging contracts has better and stable margin when compared to steel strapping. This can cushion some of the fluctuation in margin because of steel prices.
For the future I think three things needed to be tracked –
- Capturing more market share in steel strapping space.
- Focusing more on export for both steel strapping and packaging contracts.
- Packaging contracts contributing more than 50% in revenue.
If these three points can play out well. Krishca is looking like an excellent investment opportunity in my opinion.
*Disclaimer already invested
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