Axis Greater China Equity FoF Direct Growth’s own expense ratio: 0.57%

The fund invests primarily in Schroder International Selection Fund Greater China X Accumulation whose expense ratio is 1.26%

IMO FoFs could do with a slightly lesser expense ratio as they are simply investing the money into another fund rather than doing their own research to buy stocks individually.

Q2 FY23 – Concall Update

Changes

• Price Hike in this quarter
• they are adding addition 3 MW capacity of Solar plant in the existing land due to help of suppliers with no long term commitments

Financials

• This quarter is the lower revenue generating quarter due to monsoon session
• The effect of Pet coke price increase has been seen in this quarter and this is also due to FIFO accounting as the prices have declined in Pet coke next quarter will be good

Cyclicality of the cement business

• H1 is lower revenue quarter and H2 generates more revenues and Q4 is the highest revenue generating one in the industry

Geographical Advantage

• they are only customer for ~20 suppliers of lime stone which is the reason for lowest limestone prices

Guidance

• By July capacity will start running – which is lower than the usual time takes for expunction and by 2026 the capacity will reach 100% efficiency
• They are expecting to achieve EBITDA margins of around INR900 to INR1,000 per ton, taking into account the expected savings and efficiency improvements compared to 800 to 900 per ton
• Starting from March, the company will be making aggressive investments in marketing. This involves expanding its reach to more retail points, increasing the number of sales executives, bringing in new marketing personnel, implementing a fresh marketing strategy, and reaching out to institutional and government buyers for bulk orders.
• As the prices have hiked to increase capacity they may consider discounts to customers for more brand visibility
• They are aiming to become Tier-2 cement company
• optimistic on demand side in the existing geographies to absorbed the supply and they feel 1mill ton is vary insignificant in the industry
• As the capacity will increased they can bid for more projects which now they cannot tap and approach bigger customers, institutional buyers, and then give better payment terms

Strictly, No Recommendation
Open for discussion!!

Disclosure: Tracking position, for educational purposes & can be biased

As per the latest credit rating report by Ind Ratings some negatives which are worth taking note of

**Limited Scope of Expansion: SPRL is already a market leader in its operating segments and products, indicating limited scope for growth in its existing revenue streams. Ind-Ra believes that SPRL’s ability to develop new revenue streams, either through new products or new geographies, will be important to strengthen its business profile.

The agency believes that an increase in the penetration of EVs could affect the company’s credit profile. To mitigate this risk, SPRL is trying to foray into EV components and is looking at inorganic route for the same.

SPRL’s plants are operating at about 80% capacity.

The above points and further exit of their long time technology collbrator namely, KS Kolbenschmidt GmbH,Germany, provides strong detterent of not investing in SPRL atleast for next few quaters.

How about stop adding to the existing positions and build new positions with the new broker, if the existing positions are not big and maintaining own records is a hassle.

How many transactions do you do each day, and if these are investments, are the lag and downtime really affecting your investing?

I use Zerodha.

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