I have covered Adi Finechem at Rs 70. the stock moved above Rs 300 and now corrected to Rs 200. i think you should not bottom fish in Adi finechem at this point of time. There are concerns about the company like – why they sold the stake at less than CMP (when deal was announced); Tocopherol (key product) is downturn and there is still no signs of revival in that (no way of tracking the prices of this; have to rely on management’s commentary)

Since last two years company never missed concall.. Someone called up company and he got the answer that company does not have anything new to share on compliance and hence they are not having concall this time.

No mention of conference call from company. Looks like they are not used to regular quarterly con calls

@nityanandparab

I too find the story worth tracking at least as there are number of positives that exist in story. Few interesting points for me

• Virat has per pair realization upward of Rs.40/pair for few years while the largest players in the category (i.e. export of socks) Renfro India (an Indian subsidiary of Renfro which is the largest sock manufacturing company in world) has average realization in the range of Rs. 33-35/pair. Thus, company must be doing something right to command higher premium.
• Company with sales of 20 odd Crores in engaging Deloitte as their auditor. To me this is a big positive as it may indicate the management is very cognizant about its accounting/disclosure quality.
• Unlike many other players in the industry, company has maintained very decent margins (in the range of 15-20%) and very decent ROE. It’s cash generation has been in line with net profit consistently over few years indicating tight working capital management.
• It has recently launched Lord Walker brand mostly on online portals and in selective regions in Mahrashtra. Average price for pair of socks is around 150-180 per pair. I have ordered couple of pairs and the quality seems very good.

Few negatives
– Company’s topline has hardly grown in 3 years and volume have showed degrowth
– Company’s own brand’s pricing seems to be much higher than the other market players. Thus, it remains to be seen how this strategy works. Other dominant players in the domestic market are Bonjour & Mustang
– It is also to be noted that the industry dynamics in domestic socks market is very challenging due to existence of multiple small players giving the same offerings. Thus, the “brand pull” may just not work
– In Sep 15, the receivables has gone up sharply. though, the reason for same is not yet known, it may be because of the “increased working capital cycle” in domestic market. If that hypothesis is correct, the working capital requirement may increase and it may bring down the return ratios and put pressure on it’s balance sheet

Disclosure: Holding tracking position @ average price of 55

Look at growth in PAT + depreciation for actual underlying business growth. Lots of exceptional items in depreciation

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Disclosure: Invested recently after reading this thread