ITC overtakes Britannia in Foods Business
Posts tagged Value Pickr
Aditya Birla Sunlife AMC (ABSL AMC)- An Underrated AMC (30-06-2024)
Right now, yes. ABCL is cheaper now than ABSL AMC but last year the latter was cheaper. Since entire insurance companies are going through a derating, it reflects in ABCL’s cheap valuation. But there is a reason for insurance business being derated. One can consider even HDFC life and SBI life if bullish on this sector and not necessarily ABCL.
Multi-Disciplinary Reading – Book Reviews (30-06-2024)
We have to see if they are trully following their own principles cited in the book. They are suggesting to become permanent owners, but how many companies they have sold recently? Some of their companies not doing that well, still they are sticking with them, for the sake of sticking? Business environment changes fast, new businesses emerge, new sectors emerge, new opportunities emerge, so does it make sense to be so rigid to select 20 companies and stay invested with them for next 40 years, just for the sake of Consistency and permanent ownership? Are we here to make money or get some award for loyalty? Even most promoters don’t do that?
Also we need to be mindful that most of their money is earned in 2008 crisis and 2020 covid crisis. They handle endowment funds of big institutes. But can we retail wait for such once in decadel opportunities like covid and GFC? How many such opportunities come in our life for funds deployment? So what will we do during other years? Sit on cash? Can we practically emulate their strategy? I doubt , even they follow their own strategy? Writing a book about morality and principles is one thing, practically following it, is another thing altogether.
Power Mech Projects – Not a typical Power Infra Company (29-06-2024)
How reliable is leadership? How has been previous experience in the market about company’s projected growth vs shown growth?
Ganesh Benzoplast – Cash rich chemical storage/tank king (29-06-2024)
Ganesh Benzoplast keeps surprising regularly, now they had the fraud issue and again increased LPG capex costs to 700-750 cr. They had started with LPG capex costs of 400-450 cr. in FY23Q3, increased it to 500 cr. in FY24Q1, 550-600 cr. in December 2023, 650-700 cr. in FY24Q3, and now 700-750 cr. This is the reverse of how Aegis operates. Concall notes below.
FY24Q4
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Issue of unauthorized bank account and loans
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Funds were routed into an account that company and its directors didn’t know about, believe that company has indemnification from this issue, wont have any financial repercussions
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One of the 7-8 parties have waived its claim
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Ramakant Pilani and his son resigned from the board, they hold ~1% in the company
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Have changed payment approval systems in terms of the limits for how much are authorized
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Throughput reduced from 1.66 mn MT to 1.4 mn MT, they changed product mix which contributed to revenue increase. Will continue to improve margins via product mix change
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60-65% of products handled are hazardous (higher margin) and 30-35% are non-hazardous
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LPG terminal will cost 700-750 cr. (increased from 650-700 cr. earlier)
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Aegis competition in JNPT: Ganesh Benzo has lower cost land + Ganesh is the only one to have access to railway evacuation
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Have faced land allotment issues in Mangalore
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Annual maintenance capex is 12-15 cr. (will be higher at 20 cr. in FY25)
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Other income of 15 cr. was from wharfage income (4-5% margin only)
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Chemical
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75% utilization which should ramp up to 95% in FY25 (10-15% growth expected)
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Ramesh Punjabi has taken over this division (chemical engineer from IIT Mumbai with 30-years in the group)
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Faced issues due to currency depreciation in Nigeria (~20% of their sales) + red sea issues
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Disclosure: Not invested (no transactions in last-30 days)
Amara Raja Energy & Mobility Limited: Powering Ahead (29-06-2024)
Here are my notes from their recent concall on partnership with Gotion.
28.06.2024 on Gotion-InoBat batteries
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Top 5 battery player in China (top 10 globally), top 3 in LFP chemistry. They are doing well in cylindrical batteries
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NMC: cylindrical form factor (for 2W); LFP will have multiple form factors (currently 3W are running on LFP; 75-80% of overall market will be LFP)
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Will use Gotion technology and supply chain. Believe that Gotion range of batteries will be enough for the Indian market
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16 GWh lithium ion capacity still the same. Initial capacity will be 4-6 GWh and will cater to automative market
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Hoping to get lower capex/GWh with this arrangement
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Mix of upfront technology fees + royalty (non-exclusive arrangement)
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Capex costs: 600-650/GWh
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Assuming $70-75/GWh cell prices for 11-12% ROCE. Current prices of $65 is not sustainable
Disclosure: same as before
Saikat Portfolio (29-06-2024)
In February, I sold PayTM at a 50% loss after the RBI imposed restrictions on Paytm Payments Bank Ltd (PPBL). I took advantage of market dips to accumulate Wockhardt Pharmaceuticals. In March, both SNOWMAN and NFL hit stop-losses due to setbacks in the small-cap indices. Following the 2024 elections, I initiated a small position in Natco Pharma. Throughout various market dips, I added small quantities to my positions in DMART, HBLPOWER, WPIL, NYKAA, DELHIVERY, KRSNAA, ITC, SIRCA, MANAPPURAM, and USHAMART. Overall, the portfolio is up by 15.35% in the past 6 months – my mutual fund/ETF basket (20% allocation) yielded a 19.5% net return, while my direct equity basket (80% allocation) achieved a 14.3% net return.
Symbol | Allocation (%) | Average Cost (₹) | Net Change (%) |
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A. Value | |||
WOCKPHARMA | 12.15 | 470.27 | 46.21 |
IRFC | 9.95 | 23.09 | 652.75 |
PHANTOMFX | 8.87 | 527.88 | -28.17 |
DMART | 7.36 | 3662.32 | 28.95 |
HBLPOWER | 6.51 | 107.58 | 365.45 |
TVSMOTOR | 6.15 | 672.38 | 251.65 |
WPIL | 5.56 | 3234.26 | 32.35 |
NYKAA | 5.51 | 169.78 | 4.01 |
DELHIVERY | 4.79 | 427.51 | -6.29 |
KRSNAA | 4.58 | 548.83 | 10.74 |
INFY | 4.28 | 1380.91 | 13.61 |
ITC | 3.54 | 311.58 | 36.45 |
KPITTECH | 3.19 | 1147.02 | 42.72 |
SIRCA | 2.50 | 339.92 | -5.54 |
B. Technical | |||
MANAPPURAM | 7.30 | 156.33 | 33.31 |
USHAMART | 4.29 | 355.39 | 9.27 |
SFL | 1.79 | 1214.11 | -24.77 |
NATCOPHARM | 1.67 | 1202.43 | -2.84 |
Outlook
The poor performance of my equity basket compared to my mutual funds is largely due to losses in PayTM and Phantom. While the decision to exit PayTM was straightforward, I am having a hard time to let go of Phantom because I have confidence in their business model and their growth potential. I anticipate increase in their US orders starting in Q2 or Q3 of FY25. However, the market is discounting the stock due to concerns about AI threats and outstanding receivables. The current valuations are very attractive, and I am torn between averaging down or exiting. When uncertain, my default approach is to do nothing.