Atirek portfolio

Bought Garware Hi-Tech Films and Aditya Birla Capital in my portfolio.
Bought Strides Pharma for Onesource in the mother portfolio.

Garware Hi-Tech Films Thesis
Added Garware at 3820 and made it 2 percent of my portfolio currently mainly after the AGM.

Three main business(65 contribution)
Solar control films auto – 40
Solar control films archi – 10
Ppf – 15

Industry and moats

Mostly all have similar margins

Solar film industry is growing at 5.8% and there is constrained supply due to patents in solar films with only two companies.

Garware seems to backward integrated and forward integrated and hence have huge control over product. (But how?)

Debt is zero.

PE expansion

Maybe due to consumer business and high growth

Revenue increase

Guidance of 2500 in FY26

More share of value added product

Capex of ppf plant to go live in fy26

Operating leverage

Yes

Tailwinds

1. Margin expansion to 22 to 25 due to product mix change in solar films – short term

2. Kerala high court ruling on scf opens 500 cr market size in india – short

3. Debt repayment – 22 to 25 – short(ignore)

4. Move from commodity chemicals to value added product.They have already reached 80 percent value added mix. (Ignore as mostly yoy there is 3 percent points change)

5. Capex of ppf to go live in fy26 – medium

6. Scf on buildings – untapped and medium

Negatives

1. Dependent upon the crude price which impacts it 1 quarter later. Eg 14-15% margin in Q3FY23 and Q4FY23
2. The average PE of this company has been 15. Hence paying the PE of 35 can back fire if growth drops.
3. As per company scf market is usa has become saturated. Near to 40% revenue is from USA region wise. Near to 40% revenue is from scf.

Vstop
Positive

Stage analysis
Stage 2

Moat
Patents in scf. Need to research more on validity of parent and what the patent is about.

ROE looks depressed due to revaluation of its assets. Otherwise roe is in mid teen and roce is over 20. Roe will increase with increase in margins