Though results are fantastic, i would like to caution that this bump in CDMO may be due to the large order they won few months back. They didn’t divulge any details but there’s a talk that’s it’s pfizer paxlovid (COVID oral drug) . If they are stocking up the drug then it might have caused the bump. Like COVID stocking of ARV drugs this might be another one off. This is my view.
Disclosure : holding since August 2020.

Q1FY23 Result- Management Comments
a. Commodity prices softening. This will help in bottom line expansion but revenue will also get softened as they will need to pass the benefits to their customers
b. Management looked cautious on guiding the growth and 17000Cr Revenue looks stretchable
c. 6500-700Cr revenue from mobile division in FY23
d. Management guiding 35-40 percent growth
e. Washing machine segment EBIDTA margins can expand to 9% in coming quarters
f. Tieup with Google for android code on TVs will help in ODM segment for TVs
g. Acquisition of a company which has product line of bluetooth and wireless control for LED segment. This functionality can be extended to other segments like fans also
h. 310-320Cr Capex planned for FY23
i. Export of LEDs started to UAE

So the company won’t need money for working capital requirements ? Lots of companies have big investments and yet take debt just like lots of people take home loans even if they have savings to buy outright. I also do not see merit of taking home loans if some has the money but that does not make them crooks .

Rev growth of 35% in sandhar is a bit aggresive imo(who knows?), even if we take into consideration the upcoming expansion a 20% growth is a base rate that can easily be hit. A no brainer with second order consequences already playing out(RM prices cooling off), but stocks price hasnt yet.

Krsnaa too suffered with industry wide capital outflow but the least susceptible to concerns(B2C, + covid revs almost nil).

Both cases of mispricing with margin of safety imo. Lets see how they play out!

Disc – krsnaa and sandhar make up almost 50% of pf; biased.

For cyclicals like steel, auto ancillary companies pb ratio, mcap/sales work very nice. just open screener and see the last 10 years pb ratio and price to sales ratio for sail, tata steel, jsw steel, Fiem industry, lumax industry etc.

Then lets say u have found a company which is trading within it’s historical valuation range. or the price is consolidating. But u know that the company is doing something for which the roe, roce will increase in future. maybe it’s developing a higher margin product, or selling off some assets which will make the balance sheet light then u know it’s a rerating candidate. multibaggers are found in such a way. Deepak Nitrite is such an example which did capex for sepciality chemicals which resulted in higher roe roce and earnings in 2020 and the stock got rerated from 10-11 pe to 30 pe along with earnings growth. Price shot up from 400 to 2800. One more example is Prataap snacks the company’s margins are down because of palm oil price rise. and so did the price along with the EV/EBITDA. Now at a 1400 cr revenue the company has an ebitda margin of 4 for fy22. Now with reducing palm oil price and the cost cutting measures taken by the company the margins will rise to around 9-10 as it did in past and the EBITDA will rise disproportionately.Even if sales doesn’t increase the ebitda will rise from some 50 to 135 just because of margin rise. then the company is growing in mid teen rate. With the schools opening demand is also coming back. so Depressed valuation (ev/ebitda, mcap/sales)+margin expansion+ sales. So it’s a deeply undervalued stock. Even if you do some dcf the bear case price will come around 1100 and the stock is now at 730. So it’s god damn cheap that u cam tell within 5 min.