Aksh Optifibre fundamental analysis

(Mehnazfatima) #121

Himan…its a tricky legal issue…a guarantee is invoked when the original debtor is not able to pay…the same thing happed in case of Aksh optifibre which issued corporate guatantee for its subsidiary AP Aksh…

But now the subsidiary has been merged with Aksh optifibre…so now Aksh becomes both the debtor as well as the guarantor…

The question now is whether regular proceedings will have to be initiated against Aksh as debtor or as guarantor? The matter is now before 2 judge bench of Rajasthan high court and is likely ti be there for some time…maybe 2-3 years…

(Mehnazfatima) #122

Answers to some important issues …from the AGM

Q1) What is the present manufacturing capacity
Ans) cable - 3 million fiber kilometres per annum
FRB rods - 1.2 million kilometres in India plus 0.4 million kilometres per annum in Dubai
Optical fiber: 1.2 million kilometres per annum

Q2) What will be the manufacturing capicty after completion of capacity expansion?
Ans After capacity expansion, the increase will be as follows Cable from 3 million to 4.5 million fiber kilometres per annum
for FRP rods it will increase from 1.6 million kilometres to around 5 million kilometres and
optical fibers the increase will be from 1.2 million to 3 million kilometres per annum.

Q3) status and progress of the capacity expansion program?
They showed the investors the imported machines which have arrived in the company premises…the unpacking and installation will start in the next few days as soon as the engineers from England come.

Q4) What is the status on acquisition of unitape which was supposed to be completed in 15 days?
Ans) Unitape acquisition is almost over, will announce it as soon as the some pending paperwork is completed.

As per the details in the Annual report, various streams have caused a loss of around 21 crores and this has brought down the profit significantly. so want to know the stautus of those loss making activities.

Q5) There was an exceptional loss of 7.3 crores, going forward any more such losses can be expected?
Ans) That was a one time loss, there wont be any exceptional losses in the present year.

Q6) There was a loss of around 7.90 crores on account of Dubai operations which impacted the consolidated profitability?
Ans) Yes there was a loss in Dubai operations as we had taken a loan and the interest payments and depreciation impacted the profitability due to delay in operations. However, the Dubai operations are now running at a profit. So from this year, there wont be any loss on account Dubai operations…infact Dubai operations will add to the consolidated profits.

Q7) The Dubai operations showed a very modest turnover of just 14 crores…why?
Ans) OPerational issues in Dubai have been resolved and this year the output from Dubai operations will be around4.5 - 5 million Dollars (around 30 crore rupees)…and next year the turnover will further increase to around 50-60 crores as the Dubai plant is with very advanced technology.

Q8) There was a loss of 5.74 crores from the services vertical…are Aksh e mitra kiosks still making a loss?
Ans) No the Aksh e kiosks business is making a profit. The loss is on account of a business vertical which we are almost exiting…its IPTV operations in Jaipur…The loss is on account of depreciation of around 17 crores that is there for that vertical.

Q9) so why not fully shut it down?
Ans) Its now restricted to just Jaipur city…and since deprecition is a tax benefit to us, we don’t want to forego that (maybe it means that if they don’t show that depreciation then the income tax will be more)…the depreciation will be there till FY 2018.

the next few questions are on valuation and operations on e kiosks…

Q10) Srei infra has 40000 e kiosks and they are valuing that business vertical @ 2000 crores…how would you value your e mitra vertical?
Ans) May be sre infra is valuing that business because they want to sell it…But we don’t want to sell our e mitra business, rather we want to further expand it.

Q11) Expand it? where? You already have 8000-10000 kiosks in rajasthan?
Ans) we are exploring the posiibility of starting operations in other states too…we see this as a growing business as time passes and as a interace between citizens and Govt. We also want to get more money out of such a huge network of emitra kkiosks…maybe by selling some items through this network

Q12) are you looking to sell patanjali products through Emitra?
ans) Yes…we are looking at patanjali and other products too for distribution through e mitra kiosks…intention is to get more profits out of this big network.

The next few questions are on the FRP rods, which the promoter and the management is very proud of…they say almost all the indian cable manufacturers buy FRP rods from Aksh Optifibre and good demand for it overseas too

Q13) Why are you selling FRP rods, why not expand the cable making business and use your FRP rods for your own business?
Ans) Our cable making business is already working at full capacity…further, we are expanding its capacity too…but we have gone for maximum expansion in FRP rods because while our margins are around 14-15% in Optical cables, we get much higher margins (above 20%) in FRP rods…so we think we should sell more of those items where our margins are higher.

Q14) But by selling FRP rods to your competitors, you are giving them ammunition to fight you in cable business and this brings down the margins in cable business?
Ans) In a way you are right…thats what our cables division incharge keeps telling me…to expand capacity for cables …he wants us to make more and more cables as the demand is there…the Board will seriously look into this (expanding cables vertical)…maybe even take action on expansion of cables business.

Q15) on ophalmic blanks…
Ans) that’s a business where 98% of the indian equirement is imported and we see a big demand for that too…after all that too is from a similar composition material which we are using for optical fibers…so why should it all be imported…why not we too make it in India…as the Prime Minister says…make in India…

(weblinsolutions) #123

Source of the info? Did you attended the AGM?

(Mehnazfatima) #124

Sir…aap aam kahaiye…pedh kyun gin rahen hain:)

(weblinsolutions) #125

Well, I wanted to know the details of the AGM and the plans of Aksh going ahead.

(Mehnazfatima) #126

The AGM was in Bhiwadi plant where the optical fibres and cables are manufactured. There seems to be some healthy competition between Bhiwadi plant and FRP making plant at Rengus…while interacting with the shopfloor people (not the top mngt), felt that they are tremendously bullish about optical cable…they say that more cables can be manufactured and that there is good demand for their products…one person asked me, how is all the digital india, 4G and all going to be possible without our products…another said that expansion does not require much space, can be done in the existing plant itself…while another said the management may start cable making business in Dubai too at FRP plant premises…or they may expand even at unitape factory (once acquisition is completed)…

Mr Satyendra Gupta is a old hand at Aksh and is now Dy MD…he is a chartered accountant and has all the figure about Aksh at his finger tips…he offered to meet and interact with any group of investors and talk to them…Mr Mehta - the company secretary too made the same offer…but they said they cannot give any forward looking statements in view of SEBI regulations…the promoter Dr Chaudhry too said the same thing so he was asked…

Q) if some investor assumes that in the next year the topline of Aksh will be over 750 crores…then is that investor being too optimistic?
As) Dr Chaudhary answered that such a person would not be very optimistic but can turnout to be a conservative…(and he was then cautioned by Dy MD, not to proceed any further…the sebi thing)…

My take away: fundamentally the company is doing good and is on the right track…as of now the Unitape acquisition does not add much (in percentage terms) to existing capacity…but the management may have big expansion planned there (otherwise why buy it…)…and looking at their favourite product FRP rods, Unitape facility may get a capacity expansion in FRP rods business vertical or even cable making business…its good to see shop floor people so bullish and positive about their product…

If there is a steep fall in price of Aksh Optifiber, then investors will be better off buying more of Aksh in their portfolio.

The rest I leave it to you guys to calculate as to how the EPS will be in future…maybe next year consolidated EPS will be around 4 or maybe even 5 rupees…but you already know that I live in a fantasy world…do your own realistic calculation.

(Mehnazfatima) #127

Another question was to the shopfloor supervisor…

Q) It seems that the prices of optical preform (raw material imported from japan) have increased a lot by over 30% …so have your raw material cost too gone up?
Ans) Yes there is tremendous demand from China and this has cause the preform prices to go up by more than 30-40%…but the price increase for us (aksh) has been very less (just above 5-7%) as we have a long relationship with the supplier and long term contract…

(Mehnazfatima) #128

Finally, as per Annual report, in the present financial year, Aksh may do a topline of above 500 crores…and in the next financial year the topline may around 700 - 800 crores…and in 2-3 years Aksh can be a 1000 crores turnover company…generating more than 80-100 crores profit…and there are no Sebi regulations which prevent me from wild speculation…hope that market too joins in this speculation and take Aksh towards 3 digit stock price on 1-2 years…

(Finrahul9) #129

I got this from the Annual report

During the year, Hon’ble High Court of Jaipur, Rajasthan admitted a winding up petition against the Company, being Corporate Guarantor
for Rs.540.00 Lacs, for the alleged /disputed liability of its subsidiary, i.e. M/s APAKSH Broadband Limited. Consequently, Company filed an
appeal in Double Bench of Hon’ble High Court of Jaipur, Rajasthan, which has been admitted by Court and pending for adjudication.

  1. The amount is not big and insignificant compared to the total revenue of the firm.

  2. This is a winding up petition and not a recovery case , and by my past experience, court will not order a winding up of the whole company just based on 1 claim and a small corpus.

(Meetesh) #130

Brilliant effort and Analysis. May all investors of Aksh make similar profits like some.of the sugar stocks did. Your in-depth knowledge, both technical and fundamental, is of tremendous help to your fellow investors specially in small stocks like Aksh Opti where getting info is not as easy as that for larger companies.

Once gain Hats off to your efforts.

(Empower the Looser) #131

@Mehnazfatima and fellow investors, I was reading the charts of major companies in Optical fibre cables, Sterlite, Aksh, Vindhya and Birla Cables (Sorry i did not found Birla ercison, so i guess the name might have changed)
I do not see major price movements in any of the companies except Aksh. Sterlite has shown little growth. I am invested in Sterlite from 1y 3months and sterlite is up 5% from my buying price, (after a choppy ride). I m not pointing to fundamentals , but i am not able to understand how the you are seeing the sector re-rated? Please correct me wherever, i am wrong.
I am attaching 1 year charts herewith.

Thanks in Advance,
Arpit (empower_the_loser)

(Manish) #132

Dear @Mehnazfatima

Great effort by you by constantly putting up so much of indepth Fundamental & Technical Analysis for Novice investors like me … Hats off to you… Please keep this good work going…
Hope so people like me who missed the Sugar rally from bottom … Get that kind of return from Aksh now …
Will be waiting for your charts too , Time and again !! Hoping for the Upward Breakouts now !!


(Mehnazfatima) #133

(Mehnazfatima) #134

(Meetesh) #135

Usha Jain sold 53 lakh shares today. No information about who has bought these shares. But something is really cooking in Aksh

(weblinsolutions) #136

I had heard some rumor about Aksh being taken over by a new promoter. Don’t know how true is that but let’s hope if the new promoter is more active and professional.

(Meetesh) #137

And where did you hear this rumour ???

(weblinsolutions) #138

MMB. But the credibility of messages there is hardly ever good.

(Mehnazfatima) #139

Usha jain has sold about 99.25 lakh shares till now…that kind of huge quantity will be through a structured deal…with a prearranged buyer…

Usha jains holding is almost as much as that of Dr Kailash Chaudhry (the promoter and MD)…

And promoters will not allow any unknown party to buy so much stake in their company…without their knowledge and approval…

I strongly suspect another promoter branch…belonging to the bombay businessman…Popatlal Fulchand Sundesha…

The story is nearing climax…lets wait for some declaration to be made…in either case (promoter or third party) the stock should explode on the upside…

(Meetesh) #140

Yes MMB is full of operator IDs and not many boarders are believable except for a few known and old boarders.