There is nothing in engineering L&T can not do from capability perspective. It is just that many things may not make commercial sense.

Shivalik Bimetal Controls –

Q3 FY 24 results and concall highlights –

Revenues – 112 vs 108 cr ( up 4.3 pc )
EBITDA – 24 vs 28 cr ( margins @ 22 vs 26 pc )
PAT – 16 vs 18 cr

Company has 03 manufacturing capacities – all three located at Solan ( HP )

Plant – 1 – makes Shunt resistors using Electron Beam Welding technique ( difficult to master ). Shunt resistors are used to measure and regulate the flow of current in an electrical circuit. Find application in – EVs, smart meters, energy storage, power storage modules. Peak sales potential of this plant @ 700 cr

Plant -2 – makes Bimetal strips. Metals are joined post heating, taking advantage of their different coefficients of expansion as they respond to heating. Post bonding finishing is also done in-house. These are critical components used in overload protection devices. Find applications in – Switchgears, Medical devices, electrical appliances etc. Peak sales potential of this plant @ 600 cr

Plant -3 – makes electrical contacts. Contact materials used in such components are alloys of precious metals joined on to copper or copper alloys. These are the critical connecting points when a switch is turned on/off. Find applications in – smart meters, switchgears, wires and accessories etc. Peak sales potential of this plant @ 300 cr

Segment wise revenues –

Shunts – 51 vs 57 cr ( 50 pc of this is from the EV segment applications, around 20 pc from smart meters applications , 10 pc from energy storage applications and rest from Misc applications )

Bimetals ( includes electrical contacts ) – 61 vs 50 cr ( 65 pc from switch gears and circuit breaker applications, 15 pc from electrical appliances, 10 pc into metering apps and rest from misc applications )

Avg value of Shunts per EV varies from as low as Rs 20-30 to as high as Rs 2000 per EV , basically depending on EV to EV

Expect North American mkts for Shunt Resistors to start picking up from second half of this CY as the over stocking / inventory problems are likely to be behind by then

Smart meters demand from GoI’s initiatives is definitely an exiting opportunity. Company sees good demand from these initiatives going fwd

Company is in the process of forming a JV with Metalor Technologies. Metalor is the global leader in Bimetals and Contacts business. Exact modalities of the JV are yet to be formalised. Due diligence in progress

New facility for making Silver contacts is under construction ( 10 Km from Solan – towards Shimla ). This plant should be functional in next 4-5 months. Peak revenue potential of this plant should be around 250 cr

Base growth for next FY should be > 10 pc. However, if the EV mkt in US revives, this growth can be as high as 30 pc. Actually, all the company’s product segments are growing @ rates > 20 pc except the Shunt resistors for EVs due to the over-stocking and slowdown in North American EV mkts

Company’s revenue per smart meter should be aprox Rs 60-70 ( including both shunts and contacts )

Promoter do not have plans for further stake sale in the company

Present EBITDA margins for the contact business are around 11 pc. With new plant going on stream, margins should improve. Aiming at 1-2 pc margin expansion

EBITDA margins in the Shunts business are double or more vs the contacts business

Disc: holding, biased, not SEBI registered

@ChaitanyaC

My investment journey has two distinct bull phases and one bear phase. First lasted from around 2009 to 2017. During this phase although the initial capital was not big, the returns were quite good and hence by end of 2017, corpus had grown to a decent amount. This was contributed to by some big winners like Ajanta, Kaveri, Mayur, Atul Auto, Canfin, PI Inds, Avanti feeds etc. And in many of these starting allocation was decent to begin with and that helped a lot.

Next was bear phase from 2018-2020 during which time portfolio at one point of time was down 40% from peak value and rest of the times meandered along without crossing peak value posted in Jan 2018. This was because of the overall bearish sentiments in small and midcaps. And I did not recognise that that time was not the right time to be in these kind of stocks. That was the phase where quality at any price worked like a charm. ( If you check Saurabh Mukherjea kind of portfolio, it might have done very well during that time. ) It was the time to buy quality companies at high PE and sell at higher PEs. And I had mental blocks about paying high unjustifiable PE and hence suffered.

That period of agony ended in the bull market that followed Covid crash. And since then things have been going well. Big winners with very aggressive allocations in stocks like Laurus, Usha, HBL, Time techno, PSU names etc have helped in this phase. Here too I was able to identify the PSU rally in its very early phase based on charts. I had gotten into a lot of PSU names early on , but never had the conviction to allocate big. And I exited quite early because I was never too convinced about the fundamentals of the PSU rally. But other stock picks like Usha, HBL, Time techno, JK bank etc took care of things.

The reason small and midcaps have outperformed big time is that they were neglected from 2018-2020 during routine markets. And during the Covid correction the bottom fell off for these small and micaps, thus making them highly attractively valued and highly underowned. This is usually a fertile ground for multibaggers. Now after such a massive rally in these segments of companies, most of the juice seems to have been squeezed. Pendulum gradually seems to be swinging towards overoptimism and over ownership. There still might be some more way to go, but low hanging fruits have already been plucked.

Regarding the conundrum about why someone is buying stuff at 2-3 times my buying price, I usually attribute this thing to market situation. In Gujarati, there is a saying ” Bhaav bhagwan chhe” ( Price is supreme) No use questioning the ticker tape. Sometimes we tend to complicate a simple procedure by too much reasoning.

Liquidity remains the backbone of any bull market. And we have ample liquidity in our markets thanks to good economic conditions and overall global liquidity overflow. Here too there is the principle of reflexivity working. Bull markets attract liquidity and liquidity keep propelling bull markets higher.

Coming to liquidity in individual stocks, many a times during early phase of bull markets, liquidity is very low. Once it catches market fancy, big volumes start getting generated. There are very few stocks that keep going up on low volumes all the time. Usually this is seen in manipulated stocks or stocks with smallish circuit filters. I tend to stay away from these names as far as possible.

@amangoklani I don’t have any idea about Vaidya Sane Ayurvedic labs.

Great news indeed.
There is a vast opportunity in coal gasification. utilising out Lignite and other coal reserves through gasification is the only way to become atma nirbhar Bharat. Syn Gas so produced is versatile in its use.

1. Syn gas it self can be used to produce power from thermal power plant
2. with CCUS can reduce carbon foot print by 80-90%
3. To produce Grey hydrogen & Blue hydrogen for a series if end uses in refineries , fertiliser plants, steel plants and other industries
4. Hydrogen so produced can fuel automobiles and no electrolyser required
5. Hydrogen so produced can be mixed with CNG methane both for automobiles and PNG
6. Coal gasification can serve as import substitute to Natural gas
7. currently India imports anthracite coal – lignite gasification would serve as import substitute.
8. From syn gas , a no of chemicals can be produced , methane , methanol , Ammonium nitrate, Ammonia , Urea , DAP.

Coal gasification from Lignite with CCUS poses some technological challenges and I thought only Thermax and BHEL have it. But it appears L &T has also quietly achieved this