Right 2-3months back bottoming out of spreads did happen. FY2027 should be the time DNL can fire on all cylinders given the amount of capex going live.

Just like the promoter, Market might look to price in the inevitable probability much sooner.

Market Capitalisation – 878 Crore
P/E – 31.7

Incorporated in 1988, ADC India Communications Ltd manufactures and trades Telecommunications & IT Networking products

Key Points:

Business Overview:

ADCICL offers connectivity solutions to suit individual enterprise and telecom service provider requirements. It provides copper and fiber physical connectivity in telecommunications and data networking solutions including structured cabling.

Business Segments:
a) Telecommunication:
Manufacturing and trading of Telecom products
b) IT – Networking: (Major contributor to revenue)
Manufacturing and trading of IT-Networking products

Products & Services:

a) Enterprise Network Solution:
ADC’s Structured Cabling System
is an end-to-end, integrated portfolio
of high-performance copper and fibre
cable, connectivity and cable management solutions.

b) Carrier Network Solution:
ADC offers end-to-end network infrastructure solutions for central office (CO), Data centre, outside plant (OSP) and wireless deployments.

c) Broadcast & Entertainment Solution:
Company provides fiber and copper connectivity solutions for video, audio, and data networks and leads the broadcast industry in fiber-based 3G and HD network solutions.

d) Wireless Products:
Company provides in-building and outdoor wireless systems which enable mobile coverage in places where service providers and enterprises have difficulty delivering wireless voice and data services.

Revenue Breakup – FY23:

Sale of Finished Goods ~5%,
Sale of Traded Goods ~95%

Product Wise Sales Split – FY23: Cables ~60%, Connector and patch cords ~24%, Telecom products/connectors, accessories ~3%, Patch cords ~1%, Other Products ~12%

Geographical Revenue Split – FY23:
Exports ~1%, Domestic ~99%

Client Concentration Risk:
In FY23, top 2 customers contributed 84%+ of their revenues

Other Financial highlights:

1. Healthy Roce at 45.2%
2. Healthy working capital cycle of 40 days (average for past several years)
3. Cashflow positive for past several years
4. Healthy cash balance in the books amounting to Rs.44.77 Cr
5. Zero Debt for past 10 years
6. Promoter holding at 72.02 % ( No change in the same for past several years)
7. Statutory Auditor – S R B C & Co LLP
8. Sales Growth Last 3 and 5 Years are – 44% & 15.86% CAGR.

which portion of their portfolio is into AI / ML, what they have mentioned is pretty standard stuff which all IT companies claim to do. Agree with the query, what is the differentiation factor. Just by putting AI / ML on websites is not enough. Even the largest IT companies in the world are yet to get a good product / service on AI which can be rolled out to industry.

All great points, mate.

One question: Why is ROE comparable and ROA not? ROA as I understand simply means how much returns are you generating every year on your assets, akin to ROCE in non financial cos.

Also, my two cents: Lower P/B in the case of financial cos may not necessarily suggest a lower valuation, rather it points to poor quality asset management because of which market has not given the right multiple to the financial cos. All well managed banks have P/Bs > 2x, where as PSU banks are hovering at P/B < 1

Cheers!