Mining existing client.

D: Invested

Challenges to name a few:

1. Company intends to grow in US market (which is the main reason for going to SME IPO), However not easy to crack US market

   • Timezone difference makes it challenging for active engagement
   • Any possible extenstion of it like in-person engagement would be extremely impossible (assuming the cost involved, turn around time for F2F etc), So it must be restricted to engagements which they are sure of 100% remote consultation with experts.
   • Very mature market with very well established players and space is very crowded. Difficult to standout in the crowd.

2. Extremely tied with economic activity (meaning cyclical), now the going is good – so enjoying. But during economic stagnation and/or recession, this business has to sit out for better days.

3. No exclusivity either with experts or the client. Hence there is really no moat – except the data (skill set of expert and requirement for client) acquisition and mapping between expert and clients.

4. Not sure, how they would be able to manage the inflation – i.e cost to experts and internal escalation of the cost – as it is very competitive market with no moat. So we should expect all the returns to normalize to around 15~20% in longer run – from current 40% (ROE and ROCE)

5. Though the company has tried to expand to multiple pillars of growth for now – only Expert Calls seems to be contributing majorly for both the topline and bottomline.

6. Any long duration engagement may mean that client can circumvent the company and have direct relation with the expert. Hence this would mean company focusing on short term duration project – which may also mean – not longer term visibility into revenue stream.

7. Top few clients gobble up major portion of revenue stream for the company – which may indicate inability of a deeper and wider penetration by the company.

Biggest issue with Lux still continues to be corporate governance. Any company where you find instances of insider trading, IT raids, family feuds is always a risky proposition regardless of whether those issues are behind them or valuations are low.

I had written an in-depth report on Beta Drugs a few days ago. As per research company remains strong fundamentally with immense growth opportunity.
Beta Drugs – Utkarsh Batra.pdf (1.7 MB)

Do take a look at it.

can anyone help me with the calcuations?
what is the processing cost per ton for pellets from iron ore?
what is the landed cost of iron ore per ton?
how much iron ore is required to produce one ton of pellets?
how much percentage of pellets is 66% Fe currently in sales mix? what will be the percentage post expansions?
what can we expect sustainable ebitda at 5.7 mn pellet capacity?
what is the current mix between pellets and other products in revenues?
Disc- Invested