Aksh Optifibre fundamental analysis

(Devaki Nandan Tripathy) #329

Aksh is a very interesting stock to follow.

First, it is one of the few stocks that’s not bound by technical analysis. It regularly breaks both support and resistances and performs counter-intuitively. So, traditional technical entry and exit methods does not work here.

Second, Aksh is highly volatile and the movements occur irrespective of any news or lack thereof. The scrip seems to have a mood of its own.

Third, fundamentally it’s placed in the right sector at the right time with a good tailwind. The only question is whether it is capable to capitalize the cyclical upturn or not.

Disc.: Holding since 12.75 levels and added more recently @ 23.50. Not a buy/sell/hold recommendation. Please do your own diligence.

(Bheeshma Sanghani, PhD) #330

Doesn’t the lack of cash flows bother anyone when looking at the business?

Item Mar-06 Sep-07 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
Profit from operations 30.74 22.81 -47.03 -7.62 -17.15 24.96 31 40.89 52.04 62.81 50.6 69.26
Working Capital Changes -5.5 -7.54 6.34 29 -102.8 30.33 -42.4 -26.23 -39.63 -27.21 10.57 -60.04
Taxes paid -1.35 1.88 -0.63 -0.04 -0.01 1.46 0.65 -1.5 -5.32 -6.17 -5.69 -6.11
Interest -3.12 -10.93 -9.65 -2.39 -2.46 -5.35 -3.73 -7.06 -7.06 -10.4 -13.42 -18.75
Depreciation 5.62 10.89 20.86 11.36 9.19 13.3 16.63 14.99 16.31 18.72 19.55 21.19
FCF for shareholders 15.15 -4.67 -71.83 7.59 -131.61 38.1 -31.11 -8.89 -16.28 0.31 22.51 -36.83
3 yr cumulative rolling FCF for shareholders . . -61.35 -68.91 -195.85 -85.92 -124.62 -1.9 -56.28 -24.86 6.54 -14.01

(Akash Padhiyar) #331

As capex is over FCF will improve with increasing profits… e-governance business is also at break even…whole opthalmic lense story is still to play out which is a very high margin business with less competition in india…

(S_Banerjee) #332

Import duty hike on Temecom equipment, how this can affect on Aksh opti. Any view?

(Manohar T. Patil) #333

Aksh declared results today -

Revenue - Rs. 178 Cr. vs 141 Cr. in Q1 & 145 Cr. in Q2’18
EBITA - Rs. 40 Cr. vs 32 Cr. in Q1 & 16 Cr. in Q2’18
EBITA Margin - 23% vs 23% in Q1 & 11% in Q2’18
PAT - Rs. 17 Cr. vs 13 Cr. in Q1 & 5 Cr in Q2’18
PAT Margin - 10% vs 9% in Q1 & 3% in Q2’18


Improvement in performance is quite easily visible in these numbers. Key would be - with majority of capex behind, sustenance of such numbers for subsequent quarters. Growth drivers seems to be in place (5G, etc.), the key question is - can the management deliver with transparency. If there is going to be a concall, pls. suggest

Views on negative risks and alerts would be great to hear about.

Disc - Invested

(Mehnazfatima) #334

Let me just recount the positives of Aksh

  1. Topline and bottom line have improved…the company is set to do a turnover of around 800 crores in fy 19

  2. the operating profit margin is now @22%…which is quite good.

  3. the input prices are going down while the demand for optical fiber cables is going up…hence the operating margins may go up further

  4. the services sector losses which were eating up the yearly eps by around 50 pasie are almost gone.

  5. having a substantial export component and almost half of manufacturing capacity outside India, the company benefits from rupee depreciation…for H1 the unrealized forex gains have been around 8.5 crores…if the rupee stays down till march, then the forex gains itself can add around 50 pasie to the yearly eps

  6. the china capex too has been completed on time…now only the dubai capex is left. Dubai may be completed by end of December and after 3 months of trial run, the full impact of massive dubai capex will be felt from Q1 of fy20 onwards.

  7. The Q3 eps may be around 1.3 to 1.4 rupees as the mngt has told that Q3 is the best quarter fortheir sector. That sets Aksh on course towards 4.2-4.5 rupees eps for fy19…and maybe 6 rupees eps for fy20 once the massive dubai capex kicks in. Thus Aksh is now a value buy, the improving earnings reduce the downside risk.

  8. In the AGM, the investors requested the promoters not to subscribe to warrants but to buy the stock from open market below 30 rupees…the promoters have started making purchase as per the declaration filed with exchanges…as and when the buying by the promoters goes up, the float will decrease and stock becomes more bullish. Till significant promoter buying comes in, Aksh may continue to be range bound in a weak market.

(Mehnazfatima) #335

while coming to the negatives…

the recievables continue to be very high as the mngt has said that historically this has been a feature of the sector. The mngt has taken certain initiatives (reorienting the business model0 which may bring down the recievables …they have said that as and when the improvement is reflected in the numbers, they will make an investor presentation.

I think, the recievables position will improve from Fy20 onwards…as business model chages take time to get reflected in numbers…

(Mehnazfatima) #336

Check out @MoneylifeIndia’s Tweet: https://twitter.com/MoneylifeIndia/status/1059724822421426176?s=09

Aksh is slowly getting the attention that it deserves. There is very clear earnings visibility and uptrend…this stock will not stay ignored for long…sooner or later, it’s bound to fly… EPS for fy19 is expected to be 4-4.5₹…next year around 6 ₹ EPS…@27 ₹ stock price, it’s a steal…a very good deal for value investors, growth investors and momentum players…

Good fundamentals and bullish technicals…

(Ragav1024) #337

Aksh claims that 70% of the raw material cost is in-house manufactured. but looking at the financials between peer to peer comparsion ( Aksh and Sterlite tech gives me a different story).

Sterlite tech RM cost is between 35-40% where Aksh RM cost is minimum of 58%.

source: screener.

Dics. Invested with minimum tracking position.

(Ragav1024) #338

Do anyone have any insights on why Aksh RM cost is very high.

(yembee) #339

Agree with you

(Ragav1024) #340

Do anyone has any visibility of Order book of Aksh for each of its product lines. I was reading the Sterlite tech investor presentation and it does cover extensively and the status of its order book. wonder why Aksh hasn’t published anything about its order book in its investor presentation.

(sgkfinance) #341

Pleasant surprise to bump into you here, as I benefited a lot from you about sugar in the last cycle. While I’m bullish about optical fiber’s potential, going through this thread fully, Aksh really worries me on the corporate ethics front and if us retail investors could really benefit, especially after @phreakv6’s insights.

I’ve decided to not even have a tracking position, but do my due diligence for now, think till Lok Sabha elections there’ll be enough buying opportunities.

Thanks a lot for the great thread.

(Mehnazfatima) #342

Here is a comparative presentation of first half of fy19 of Aksh and other optical fiber companies…just have a look at the Ebidta, PBT and PAT percentages…Aksh is matching Sterlite on operating profit margin level and just slightly behind it on PAT percentage…its performance is not as bad as it is made out to be…once the services sector starts making profits, the percentages may become better than even Sterlite tech…that gives hope that the p/e rerating of Aksh may happen…sooner or later…

aksh comparitive.pdf (319.0 KB)

(yourraj) #343

sir could please tell What is the source for this ??? Thanks

(yembee) #344

This is my stencil I have designed mainly taking data from Screener.in . It is an access database linked with many external excel files … for EOD, 52W high Low etc

(ramanhp) #345

This post was flagged by the community and is temporarily hidden.

(njain1983) #346

Nice comparative study.
Issue with Aksh

  1. High receivables
  2. Low return ratios
  3. Very low Promoter holding
    I consider #1 & #2 transient in nature. They can be temporary and be improved.But #3 is a huge red-flag. Every one knows that this industry has lots of potential, then why not the owners who have the insider info not hiking their stake, why they want to give away 73% of the pie away?

(Harsh04) #347

Q3 Highlights !

The good :
On Year To Date Basis Company achieved a Total Income of Rs 458 crore, as compared to Rs 423 Crore in the corresponding period previous year.
Company maintained healthy EBITDA margins of 22% on YTD basis, as compared to 11% previous year.
Higher PAT recorded with YoY 184% increase on YTD basis.
During the quarter gone by the Company achieved quarterly Total Income of Rs 140 Crore and EBITDA of Rs 26 Crore.
EBITDA margins for the Company stood at 19%, as against 13% in the corresponding quarter of previous year.
Profit after Tax at Rs 9 Crore reported an increase of 35% as against Rs 7 Crore in the corresponding quarter in the previous year

Promoter holding increased from 27.64% to 27.95% in the quarter gone by.

The Bad :
Increase in inventory by about 22cr QoQ.

From MD : " We are focussing on improving the overall operational efficiencies
and consequently improving the cash flow cycle with lower inventory level. However, due to postponement of deliveries of few orders in hand by few customers and temporary slowdown in the industry, there has been a momentary decline in the quarterly turnover"

(yudiagg) #348

Is there a slow down in the industry ?? - As per MD.
Can we trust their words on future optimism.