Only concern is the valuation. Markets can react sharply even if results go down slightly. Syngene bad a good result but fell sharply because management guidance changed from high teen to low teens.

Recent developments in China’s export restrictions on key components for electric vehicle (EV) batteries have raised concerns in the global automotive industry. However, these changes can bring forth opportunities for certain Indian graphite companies.

Specifically, 3 Indian companies – Goa Carbon, HEG Limited, and Graphite India Limited are likely to be impacted as shown above. We will explore how these new export curbs can positively impact the business and stock prices of these companies.

Investment in Mining Projects: To ensure a stable supply of battery inputs, carmakers have been increasingly investing directly in mining projects. This trend benefits Indian graphite companies by offering potential partnerships and collaboration opportunities with these global automotive giants. Such partnerships can lead to substantial revenue and profit growth for these Indian companies, which would, in turn, drive their stock prices higher.

Reduced Competition and Increased Demand: As China tightens export controls on natural graphite products used in EV battery manufacturing, the primary source and producer of these components, the global supply chain may experience disruptions. This situation creates an excellent opportunity for Indian graphite companies to step in and meet the rising demand. Companies like Goa Carbon, HEG Limited, and Graphite India Limited, which are already established players in the graphite industry, can benefit from reduced competition in the global market.

Enhanced Relevance in the EV Ecosystem: With China’s export restrictions potentially affecting EV manufacturers worldwide, the need for a diversified supply chain becomes crucial. Indian graphite companies can position themselves as reliable alternatives for global EV battery manufacturers. As a result, these Indian companies can gain greater relevance in the EV ecosystem, leading to increased business opportunities and partnerships.

Strengthening of Domestic and International Presence: The increased demand for graphite components, including electrodes and carbon products, provides a chance for these Indian companies to strengthen their domestic and international presence. By expanding their production capabilities and focusing on quality and innovation, they can attract both domestic and international clients, further boosting their business prospects.

Conclusions:
While China’s export restrictions on key EV battery components may present challenges to the global automotive industry, they also open doors of opportunity for Indian graphite companies. Goa Carbon, HEG Limited, and Graphite India Limited stand to benefit from reduced competition, increased demand, and potential collaborations with international car manufacturers. These developments are likely to have a positive impact on the businesses and stock prices of these Indian companies, making them attractive options for investors looking to capitalize on the evolving dynamics of the EV battery industry.

References:
China imposes fresh export curbs on key EV battery component
Miners race to realise graphite projects as China controls exports

Disclaimer: The article is not a recommendation or advice as to whether any investment is suitable for a particular investor.

Just adding to the notes

-They mentioned willingness to grow in other location for diversifying their revenues (no dependence on one plant)l & current land is enough for next 3-4 years of growth).

-Competitors mentioned include:- Sundram Fasteners, Hitech Gears, Sona Blw.

-Really respect the work both Sona Blw and Sansera are doing in the industry. When I asked them which competitors do they respect.

-Plan to do 60 crore capex per annum going forward (what they stated in the concall).

-Some of the employees were there in the company since 1990s.

-The plant built for ZF housed 7 products which exclusively RACL is doing. 100% supplies. The difference between Japanese and German work culture is:- that Japanese will come to the plant and sit together to rectify mistakes. In one of the past instances a batch of products was rejected due to finger print and also have been rejected due to wrong boxes!

German customers- straight away reject and deduct the amount.

-Observation from visiting other set ups:- plant & machines were noiseless and machinery was mainly from Europe and China.

-Trying to get into differential gears. Lost out on one contract to a large domestic competitor.

-Plans to get into industrial gears. Already supplying:- stated one example how entire Paris can go through a black out as their gears are used in electric circuit of the customer they have supplied to.

-Biggest challenge they face is that of manpower. Training the employees and making them understand the Quality culture is a challenge. Japanese monitor the plant using some software (don’t remember the exact name). They keep checking Quality of each and every product. As all products have a QR code on them.

Promoters strategy was extremely clear when Gursharan sir said this:-

We are a company that is purely focused on niche segments. This is what gives us the gross profit margins. We are not and never will be a mass market company.

Disclaimer:- strictly not a recommendation to buy or sell. Just sharing what I learned on top of notes shared by @First_Principles

Please can someone elaborate on what basis should we plan our exit in this stock, how to keep a track of it and plan your exit as it is cyclical.
Thank you.

Had an insightful meeting in Delhi with Career Launcher management last week.

1. CUET exam : more the states where central govt comes in power, more the adoption of CUET entrance exam. Currently a 11cr biz, can scale to 100 cr + in coming years. Opening centres in smaller towns with teaching in the regional language can be a big moat. CUET is not tested only in English.
2. Demerger of Martech being evaluated even now as was asked on last investor call. Management understands the ROCE benefits by focusing only on edtech.
3. Student mobility: by offering the test prep + admission counselling services into colleges worldwide, CL can achieve geographic expansion as well as cover whole spectrum of counselling, visa etc. This cross sell opportunity can be big in the future.
4. Buyback ends on Nov 28th.
5. With a net cash balance sheet of 100 cr + cash in a 420 cr mcap co, promoter is continuing to evaluate opportunities to use this cash