Hi. Can anyone here guide on whether Nilkamal is a bad/decent or excellent capital allocator? What were some of the decisions which they took in past which made you conclude so?

Also whats wrong with the stock. Its at 52w low vs 52w high on Nifty. Obviously there is some issue. Liquidity is one of them and i can’t think of other. Can anyone guide on this too.

Hi, Glad you read through.
See it’s hard to identify all the players as a lot is happening outside the listed space right? but one listed player that I came across is Transformers and Rectifiers India Ltd.. To invest it is only wise to dig deeper so I would suggest you go through this and a couple of interviews to start with –

For Industry size, competition, risks, opportunities, etc…

For a glimpse into the vision part you were talking about –

4 years old but partially relevant even today.

Megatherm Corporate Profile

I know question is asked to Thread creator still would like to clarify

1. Basilic and Digikore both can give good returns, who will give more depends on deal wins. Size of Digikore is small and it seems float is too cornered, good result can zoom prices and vice versa. In Basilic there will be less volatility and Kacholia sir entering Basilic it is renowned among investors. Moreover , Basilic have guided for 60-70% growth whereas Digikore is looking to double the revenue in next FY
2. Presstonic have good order book and can be a good bet. Recent correction have moderated valuations from higher side
3. For recent listed IPOs if one needs more clarity than can wait for H2FY24 results to see the growth of pre-ipo was paper growth or real one.

Yes you are correct. Cannot expect higher valuation unless their fundamentals are exceptional (highly unlikely in a commodity lending industry).

Yes credit costs were abnormally low for the entire industry in FY24. If credit costs remain within 1.5% in FY25 then we can expect 1250 to 1500 cr of PAT. If higher credit costs materialize then PAT could degrow. Usually they have better credit costs than industry in normal times due to better CEs.

They guided to reduced collections team expenses as well, but didn’t materialize in FY24. Outsourced collections team is still strong.

They are also in CAPEX mode with new branch additions so OPEX will weigh on PAT. Alas, to the market only growth numbers matter, this is an opportunity for LT investors, recognizing opportunity in LT when market focuses on ST.

Current fall from 60 is just market’s anxiety towards loan waivers which reoccurs every election cycle. Once elections are over, the market will dust off the risk (which has nil probability of materializing anyway). Entire MF sector has seen such fall. Ujjivan may have had additional fall due to some arbitrageurs exiting as the arbitrage was down to low single digits.

Some uncertainty due to CEO change requirement also remains, they should focus on announcing an internal (my opinion) candidate soon (mid-year). That should give some relief to the market’s anxiety. In the meantime as BVPS keeps rising, there should be support to the price.