Sharda motors came up with very good q2 fy 24 results. Stock price gapped up above 1005 and went up to hit a high of 1158, before settling to close at 1100. Breakaway gap has been between 1005-1025.

Stock price had been consolidating between 590 and 950 during July 2021 to Sep 2023. It broke out above ATH of 955 and went on to high a fresh swing high of 1101 and then along with market correction went down and tested support of 30 WEMA (marked in dotted blue lines) and bounced back. On the back of good results it gapped up and hit another fresh swing high of 1158. Weekly close is with a big bullish high volume candle.

It is one of the examples of how to play all time high or multi year high breakouts. Whenever there is a retest post these kind of breakouts, they offer very good entry points.

disc: invested as disclosed before.

Hi Niveyshak Sir,

We update the Balance sheet data on a half-yearly basis. ( September and March). The Company has reduced its borrowings after it published its half-yearly Balance sheet. ( Sep 2023)

The Change in the borrowings will be reflected on the website when the company publishes its Annual Balance sheet in March.

Have studied another microcap Bearing roller company
and as per My understanding
the value chain is First Cage (Harsha Engineering) is manufactured,
Then the rolling element [Needle and Ball Rollers (SKP Bearings)] are been put into the Those Cages
then the cages is packed with Seals Made (Sealmatic India and Menon Bearings)
The same is jammed Between Inner and Outter Rings (Rolex Rings)

As per my conversation with Roller manufacturer CEO, This precision engineering tools are very Important as the same if causes error can result into even life damage and so OEM generally prefer not to switch the Suppliers unless there is something very wrong with the supplier.
Majority of the revenue comes from the existing client’s repeat order stating the Customer Stickiness

To onboard new clients in this Space every System and Quality Audit is required and this process can take anywhere between 6 months to 2 Years

So I guess the Moat of the company is That OEM once landed as client will remain with them for Years and in some cases Decades
And Switching time in industry is high which can be Advantage as well as Disadvantage
Disadvantage as in they wont be able to land the new client Smoothly and Fastly
Advantage – Customer won’t take so big of buffer time. so instead of Changing the supplier they’ll continue with current manufacturer

Disclaimer – Invested In SKP Bearings

Stand alone Cash flow from operation is negative Rs 48.6 Cr and at Consolidated level also out of Net Profit before Tax of Rs 232 CR for H1, Cash flow from operation is merely 5 Cr. …

I would stay away from such Company and more than happy to loose 1 multibagger like Best Agro.

Some business updates after Q2 2024 concall: Information is best of my knowledge, excuse for any inaccuracies

• New Vietnam production line got impacted due to machine breakdown, still assessing the exact revenue or volume loss, will be updating once survey is completed.
• In this quarter, 12 or 13% volume growth & 20% value growth.
• Will get to know the coffee prices trend by December 2023, as new crop supply comes out from Vietnam & India
• Capex for whole is likely to be around 650 Crore, out of that 260 crore is utilized in H1 and rest will be gaining pace in second half.
  • India Capex – 400 Crore – To be completed by March 2024
  • Vietnam Capex – 250 Crore – To be completed by H1 FY 2025.
• Overall for the Year – Capacity available till FY23 is running at 100% utilization & new capacity will be utilized close to 50%
• Thumb rule: Usually for any new capacity – we will utilize close to 30 – 35% in first year, 60-65% in second year & close to 85% in third year.
  • But for vietnam’s new lines, we have started utilizing 50% from first year.
• Peak debt is likely to be around 1800 Cr and all should be done by March 2025, after which repayment would gain pace. By H1 FY25 all capacity expansion capex should be completed & commercialized.
• Pure brand business is going to be around 200 Crore by end of this year, which will be less than 10% of overall topline of FY24. Looking to grow this business around 30 – 35%. For next couple of years looking to push more on the topline and not much on the EBITDA for branded business, which we will start realizing from third year.
• Margin guidance at group level to be around 18 – 20%, as there are segments that will be accretive & dilutive with new capacities & initiatives.
• Speciality segment is close to 2% of overall volumes. There is some exciting development or innovation is happening around it & there is lot of traction from clients
• On bottom line, because of interest & depreciation kicking in EPS growth is likely to be impacted & lower than Top line & EBITDA growth for 4-5 quarters – My Understanding
• On consolidated basis, Effective tax rate is going to be around 12%.