Yes from Screener.in

Sorry, that’s a typo from my side. To correct myself – In case of a MCO in place, all transactions occur on MCO while the role of IEX will be primarily not of price discovery but just collection of buy/sell bids.

I can comment on your a) and b) questions, may not be the answer. If MBED(Market Based Economic Dispatch) is implemented, in which case all power trading must happen via the power exchange. you can ignore all the reasons for moving towards exchanges like – “uncertainties on fuel supply side and pricing on one hand and push towards renewables and operations optimization”. In one fell swoop, this will move all power trading to happen via exchanges. And when this happens, there is one MCO who is the ‘sole exchange’ and several brokers like IEX, PXIL and HPX. With this surge in volumes, and way lesser uncertainty in terms of business regulations, there could be many more players who could be interested in entering the business.
About commanding higher multiples, exchanges always will command a higher multiple because there is a great room for innovation, they can come up with newer products, like derivatives for example which can add significantly to existing revenues. But here that would be the MCO and not IEX. IEX, as they say, is as of today NSE + Zerodha rolled into one but after MCO implementation it will become just like Zerodha and their success will be linked to things like how well they manage the commissions and UX(user Interface) rather than adding newer innovative products, and hence a lower multiple.
The reason I couldn’t form conviction to buy IEX is the number of uncertainties around it. Just take the MCO and MBED, you really cannot reliably build a bull or bear scenario without knowing if and when they will be implemented. Two many key variables in the equation.

Ramkrishna Forging in its investor presentation guiding for 20% growth for next 3 years. In the same presentation, they referring to their capacities being able to fetch the revenue of ~ 5,000 Cr. FY24 revenue seems to reach between 3,800-3,900 Cr.

Here is a summary based on the transcript of their Q2 FY24 earnings conference call:

• FY25 Guidance: The company is confident of achieving its FY25 guidance of revenue CAGR of 14% and EBITDA CAGR of 24% over FY22-FY25E.
• Market Leadership: The company intends to maintain its leadership position and increased profitability in its core glasslined equipment (GLE) business, which has a global market share of 40% to 50%.
• Diversification: The company is expanding its non-GLE and systems business by cross-selling opportunities and exploring new application areas in segments such as oil and gas, minerals and mining, lithium, etc.
• Innovation and M&A: The company remains focused on innovation and M&A to drive growth. It recently acquired MixPro, a mixing company based in Canada, to strengthen its global presence and product portfolio in the mixing business, which has a market size of $3 billion.
• Order Visibility: The company has an order backlog of INR 1,705 crores, which translates to about 6 months of order visibility in India and about 7 to 8 months in the international business. It also has a strong opportunity pipeline across all business platforms and expects some large projects to materialize in the coming quarters.

Kama holding

Earlier I ignored the SRF but now I think I have got few answers and also destocking seems to be bottoming out.

My answers

• Even after the patent is expired, innovator have process patent through SRF like companies which can keep the molecule margin high for 3-4 years more.
• The fluropolymer Capex is just near to 500 Cr and it has got delayed though they seem hopeful as per recent management meet. It is less than 20 percent of the capex. Then downside due to capex addition is limited.
• Size of the opportunity is looks high now as they seem to have entered the pharma custom synthesis which is huge.

Industry structure

Refrigent cagr – 7.9(fortune business) and 5% bloomberg

Flurochemicals – 5%

Fluropolymers – 5.2(fortune business)

Nearly 30 percent revenue is contract based whose margin are non fluctuating

Debt
Debt is Low and manageable

Growth
Huge capex majorly in custom synthesis and chemicals
Dividend opportunity will be high in Kama holdings
Product mix change towards high margin and stable margin products like agrochemicals custom synthesis and chemicals

Rerating

Chances of rerating is high as promoter needs to earn money and hence kama holdings discount will narrow

Margin expansion

Not there in short term as capacity is being commissioned(3 – 4 years)

Tailwinds

Capex and more than doubling of net block. (Long term)

Entry into floropolymers(Long)

Entry into pharma cms(long)

PI industries receivable has increased with good sales in Q2 FY24 and SRF has delayed the shipment. Q3 might be better as SRF has more stringent revenue recognition than PI industries(short)

After the inventory destocking stops, it margin might revert as its chemicals product are not too much dependent upon china. (Medium)

Moat

Patents in agrochemicals

Cow lost advantage in refrigerant

Negatives

Industry growth is single digit

Not sure when old agrochemicals molecule will expire(Process patent is there after the patent gets expire)

Not sure whether the process is PFOS free(yes it is as per the management meet notes)

Gujurat florochemicals have capitive mines but SRF does not have it, therefore may face margin pressure from Gujurat flourochemicals in flouropolymers. China has stopped procuring the fluorspar from their mines and hence it bring it on equal playing fields.

Upcoming Capex and past capex

Source Kotak