@visuarchie Sir, please share the latest Google sheet of small cap 250, it will be very helpful
Thankyou,
VAMSHI

GHCL Q1 FY25 Analysis: Key takeaways!!

Business Outlook:

• GHCL delivered operationally strong performance in Q1 FY25 with volume growth and improved cost efficiencies, despite moderation in soda ash pricing globally.
• Management expects 5-6% volume growth in soda ash and 20-25% growth in sodium bicarbonate for FY25.
• Demand outlook remains positive for India, with 2-3% growth seen in Q1. Solar glass investments expected to drive demand from FY26.

Strategic Initiatives:

• Focus on cost optimization and productivity improvement across operations
• Expanding sodium bicarbonate capacity
• Developing 500,000 MT greenfield soda ash plant
• Received 6,449 hectare land allotment for salt production to support existing and new capacities
• Progressing on vacuum salt and bromine projects for diversification

Trends and Themes:

• Global soda ash demand remains mixed, with strong growth in China but slowdown in Europe/US
• India soda ash consumption growing but imports declining due to supply chain issues
• Shift towards solar glass and green energy driving future demand

Industry Tailwinds:

• Growing domestic demand for soda ash in India
• Government initiatives promoting solar glass manufacturing
• Increasing applications in lithium batteries, green hydrogen

Industry Headwinds:

• Global overcapacity and pricing pressure
• Demand slowdown in certain end-use segments like auto
• Supply chain disruptions impacting trade flows

Analyst Concerns and Management Response:

Concern: Sustainability of margins given global pricing pressure
Response: Cost initiatives and operational efficiencies to support margins; pricing believed to have bottomed out

Concern: Timeline and funding for large capex plans
Response: Strong balance sheet with ~INR 1000 crore cash; capex to be spread over 5-6 years

Competitive Landscape:

• GHCL well-positioned as cost leader in Indian market
• Global players like Solvay facing cost pressures in Europe
• New capacities coming up in US and China creating oversupply concerns

Guidance and Outlook:

• 5-6% soda ash volume growth expected for FY25
• Sodium bicarbonate to grow 20-25%
• Cautiously optimistic on demand recovery and pricing stabilization

Capital Allocation Strategy:

• INR 7000-8000 crore capex planned over next 5-6 years
• Major investments in greenfield soda ash plant, bromine, salt fields
• Maintaining 1:1 debt-equity discipline

Opportunities & Risks:

Opportunities:

• Growing domestic demand from solar glass, batteries
• Backward integration into salt for cost advantage
• Diversification into bromine

Risks:

• Global overcapacity impacting pricing
• Execution risks in large greenfield project
• Volatility in energy costs

Regulatory Environment:

• Reinstatement of import duty on solar glass to boost domestic manufacturing
• Environmental clearances required for new projects

Customer Sentiment:

• Strong inquiries from solar glass manufacturers
• Auto sector seeing some slowdown
• Overall positive demand outlook from domestic customers

Top 3 Takeaways:

1. Cost optimization initiatives driving margin resilience amid pricing pressures
2. Significant capex plans to expand capacities and diversify product portfolio
3. Positive long-term demand outlook from solar glass and green energy applications

@ Tarun: Thanks for starting this!! Incidentally was searching for some material on SGIL since last few days and nothing seemed available online. Some questions that come to mind-

1. Does the casting business have any moat- meaning should we consider this as commodity business or sepcialised? Wanted to understand pricing power of company.
2. Nothing much is available about the management. Are Shirgaonkars actively involved in management of company?
   Disc: Not invested!

Update for entry on 12th August 2024 (look back dates: 11/08/2023 and 09/02/2024)

50EMA (23203) > 200EMA (20221); hence, we can continue without any change.

Based on ranking:

1. BASF
2. WOCKPHARMA
3. TECHNOE
4. PURVA
5. STAR
6. TVSHLTD
7. KPIGREEN
8. CHOICEIN
9. ZENTEC
10. SHARDAMOTR
11. DHANUKA
12. NAVA
13. GRAVITA
14. SUDARSCHEM
15. ANANTRAJ
16. NETWEB
17. WABAG
18. TIMETECHNO
19. GRWRHITECH
20. RTNPOWER
21. SHILPAMED
22. NEULANDLAB
23. KIRLOSENG
24. GREENPLY
25. JYOTICNC

Based on A → Z for easy tracking:

• ANANTRAJ
• BASF
• CHOICEIN
• DHANUKA*
• GRAVITA*
• GREENPLY*
• GRWRHITECH*
• JYOTICNC
• KIRLOSENG
• KPIGREEN
• NAVA
• NETWEB
• NEULANDLAB
• PURVA
• RTNPOWER
• SHARDAMOTR
• SHILPAMED*
• STAR
• SUDARSCHEM
• TECHNOE
• TIMETECHNO
• TVSHLTD
• WABAG
• WOCKPHARMA
• ZENTEC

Exits:
KESORAMIND, KIRLOSBROS, TIDEWATER and VOLTAMP make an exit.
IFCI remains within the top 30 and hence remains.

Entries:
DHANUKA, GRAVITA, GRWRHITECH, SHILPAMED make an entry.
GREENPLY cannot enter as there is no vacancy.

@Mudit.Kushalvardhan Trust you are back with full vigour after your meditation.

1. We are clearly momentum investors. Even though we rebalance on a weekly basis, our look back periods are 1 year and 6 months. There are several scrips that are part of the pf for over 4 months now. CHOICEIN has been in the pf since Jan 2024. We are not short term traders.

2. The number of stocks in the pf are influenced greatly by the universe and the rebalancing frequency. A typical large cap pf can manage with just 10 stocks, but as we start going down the market capitalisation, number of stocks have to increase to manage volatility. Several points that we need to ponder.

• A typical number of the top decile is normally recommended.
• Rebalance frequency – with large caps you can go with monthly RBs, while for lower market caps, it is better off with weekly.
• Worst Rank Held (WRH). This is an important part of the pf maintenance. You can choose double the number of stocks as you worst rank held. The number of pf churns will be largely governed by this. Example: If your number of stocks in the pf is 20, you can choose to have 20 as WRH, you will have large number of churns. If you choose to have 40 (2x the number of constituents in pf), you will have low churn, but might miss out on some of the winners.

So, in summary, my views on your specific queries,

• we are not following anyone rules; we are setting our rules. These are totally flexible and suited for the universe and the RB frequency.
• we can invest in any number that we think is appropriate. This is more related to market cap.
• I have not reduced the number of stocks in lower market cap categories. In fact, I have actually increased in my journey. Smallcap – I went from 15 to 20 and Microcap – I went from 20 to 25. We are already considering volatility in our pf selection by using this parameter called momentum ratio. This will make sure we don’t capture stocks that have sudden high spurts.
• Yes, every additional stock will help to reduce your risk.

I would suggest you do not reduce the number of stocks in your pf. If anything, I would ask you to increase.