A new order of 7 MW has been received, which I estimate should be worth around 30cr.

@avneesh @ajayt001 @StonePitbull @Nickp @ChaitanyaC @jitenp @vikas_sinha

Based on my interests into small caps news/threads, hoping to learn more.
Many news on small caps is more or less summarized at The below VP discussion comparing PPFAS flexi funds vs small cap funds. (which largely based on recent presentation by PPFAS funds)

PPFAS supports large caps and references an IIM-A study suggesting small caps didn’t outperform large caps from 1995-2019. Some argue PPFAS might criticize small caps due to not having a small cap fund, even though historically small cap funds have given around 20% returns over a decade.

However, historically, when a lot of money pours into small caps, they tend to go down heavily with a slight market correction. Small cap funds usually follow a pattern: 2-3 years of a rally and then 1-2 years of a gloomy period. This aligns with Howard Mark’s book on market cycles, indicating we’re currently at the peak/getting to the peak of a small cap funds rally.

My query is regarding small cap stocks for a retail investor(who is 93% small caps), how one can wade through these situations.

1.If we can not time the exact top, what could be time frame to run, Diwali-23 or July-24? what time frame do you feel is comfirtable before it gets gloomy?
2.What can be considered a cautious approach, if we are not sure about running away, e.g. can take off partial profit?
.

I was reviewing my small holding in Metro Brands.

Metro posted 14.68 % growth in sales in the June quarter, lower than past quarters but better than most other peers. For example, Relaxo grew 11 %, Bata 2 %, Campus 5 %. I think 14 – 15 % is what its natural long run organic growth rate should be, though market growth estimates appear to be much higher. Gross margins have remained close to 58 – 60 % range in recent times. Operating margins around 30 %. Excluding Cravatex, operating margin was almost 35 % in the latest quarter. This is where Metro’s efficient outsourcing model makes a difference. Peers like Campus, Relaxo and Bata have margins in the range of 15 to 20 % but not higher. Metro’s return ratios like ROE & ROCE also continue to look good, in the 25 % range. Balance Sheet remains debt free, other than lease liabilities. Promoter salary is reasonable, at around half a percent of sales. Dividend payouts are in the range of 25 to 30% of PAT.

In FY23, store addition was the highest, and the pace has continued in Q1 FY24 as well with 27 stores added for the 3 months. This will support sales growth going ahead. Average sales per store is now more than Rs.3 crore per store, its highest on record.

The main operating cost in retail businesses is inventories. Not only inventories can be high, one does not know what they are really worth. But Metro has controlled inventories well. I understand for most of the Third-Party brands, Metro pays for the products only when they are sold, inventories are not on Metro’s account. This is such a good thing, given Third Party brands constitute a quarter of the company’s sales. New BIS Norms coming into play from 1st Jan 2024 will increase inventories, the company has said. Need to see how much this goes to.

Last year, June sales were around 25 % of the full year sales. If the same ratio holds for this year as well, the company will post a full year sales of Rs.2400 core for FY24. This is excluding new additions such as Fila. Overall, Metro leaves little to complain other than valuation. The stock has always been expensive and has become even more so in the last one year.

So there is a lot riding on Fila, clearly. The Cravatex acquisition cost Rs.200 crore, consuming a large part of the Rs.300 crore raised through the IPO. The biggest brands in this space are Adidas, Reebok and Puma. As per reports, Adidas and Puma have been selling more than a Rs.1,000 crore per year each. Adidas makes around 17 % ROCE and Reebok 27 %. Metro has not announced its store opening plans for Fila yet, but when fully rolled out, Fila will clearly make a big impact on Metro’s numbers.

Metro is planning to position Fila in the Rs.4,000-plus segment, which is significantly premium than at present, with 300-400 stores for Fila alone in the long run. Besides this, Fila will also be available through 500-odd Metro & Mochi stores. The company will also sell Fila accessories and apparels, besides footwear, besides the Proline range. Fila rollout will also see a sharp spike in costs I think, both for branding & promotion as well as operating costs. Fila will be sold entirely on COCO model. And then there will be license fees, about which the company has not revealed anything so far. For the long term, the sports footwear category is growing at 25 % per annum, faster than all others. The full Fila impact will come in FY26, not before. Even the analyst estimates for FY25 do not justify current valuations.

(Source: Trendlyne)

I think market is pricing in a Rs.1,000 crore revenue from Fila in FY26 probably.

What is your view on Power (NTPC, Tata Power, Adani, CESC, NHPC, SJVN) and Power ancillary (Apar , Voltamp, ABB, BHEL, REC, PFC, TRIL, etc.) sector from a technical view point ?

I work in a Bank. The attrition rate in the branch banking side has always been high. The inter bank poaching is one aspect. The quality of the hiring is also poor, since this is an entry level with a major part of salary is linked to incentives the hiring teams also do not pick the right candidates,

May people hired realise their interest in other things, go for higher studies, go to selling in other industry, study in parallel and switch. Further the people who do well carry on a move to a better roles while the new talent comes in.

I agree there is a need for the Banks to think of this talent pool differently.