Cerebra Integrated Technologies - Listed e-Waste business


(Bheeshma Sanghani, PhD) #16

My two cents on the chart. This is not a breakout - this looks more like a bull trap. Something similar happened in kitex a few weeks back


(phreak) #17

Assuming the worst that this is a pump and dump operation, what surprises me is they are able to get funds at these elevated valuations. They raised close to Rs.50 Crore from a fund in March through preferential allotment of 1.19 Crore shares at Rs.40. And now again they are more funds through the same fund. Why would someone invest Rs.100 Crores at these elevated valuations? That is something I haven’t been able to answer. The promoter is also shelling out over Rs.10 Crore for the warrants on the 1.06 Crore warrants issued this year.

From my research on the competitor Attero Recycling, they seem to have raised similar funds in 2014.

https://www.crunchbase.com/organization/attero-recycling#/entity

While overall they have raised $28.6 million, the most recent 2014 Series-C round raised $16.5 million which is around Rs.100 Crores. I did some research on the costs as well. It looks like it takes $2 million for 2000 ton capacity.

http://www.attero.in/technology.html

Going by this, 100 Crores would get about an additional 15000 MT of capacity to the current 36000 MT installed capacity. The numbers seem more or less right with what the management is claiming. Am hoping there is more to this than a pump and dump so will watch closely.


(phreak) #18

That triangle breakout I had posted few posts back has in fact been quite profitable so far with good volumes.


(Darshan Bhagat) #19

As per this study
www.indigoedge.com/IE%20Insight%20-%20India%20eWaste%20Processing.pdf

Total revenue from 1 Ton of E-waste is Rs58535.
All plants operating at average 25% to 30% capacity due to bad supply logistics.
Average Capacity Utilization around - 96000*30%= 28800 MT
If the plants run at this capacity by the end of 2018.
The total revenue generated will be around =168Cr

Bangalore itself produces around 18000T of waste per year. So Cerebra plants can handle about 5 big cities like Bangalore. Which means it can recycle most of the country’s metropolitan cities.

The only factor here is how much investment is put in developing the plant and what returns are expected out of it and at what rate.
Which can only be Seen after the plant is operational for a couple of quarters.

If they can deliver this type of result in the next 3 years this stock is worth buying.

@phreakv6 the capacity they are talking about is 96000T not 96000MT


(Amar) #20

Any idea what is driving this stock to 20% UC today? just wondering if there is any new information…


(phreak) #21

@DAB - The pdf is from 2013 and my estimates are from 2017 so that could explain the difference in calculations. Also, the recoverable amounts were from their investor presentation based on the technology they have.

The capacity they have built which is operational is only 36000 MT (Metric Ton) and I am not sure when it will start adding to their numbers in any significant fashion. The management has promised many things in the past none of which have materialised. The most recent is 100 Crore topline from e-Waste business in FY18 (Promised sometime last year). I don’t think they are anywhere close to this number, unless their revenue recognition is such that we get a positive surprise in Q3/Q4 which again I don’t have very high hopes for.

@agferrari - This keeps happening in this stock. It has moved in pretty peculiar fashion and has not followed any semblance of Price/Action and Supply/Demand. I think Rs.40 will be sort of a bottom though since this is the price where significant dilution has happened (Almost 30% dilution through Pref allotment and Warrants).

Disclosure: Holding significant quantity and been buying since Rs.17. Last purchase over 6 months back.


(Mute Spectator.) #22

Warrants , Preferential share & Mauritius forms a really good Cocktail & have given even better hangover to investors in past.
Right now you must be feeling high just be aware of hangover might follow soon.

My advice don’t drink too much …

Otherwise seems like a great story stock.


#23

@phreakv6, the diluted share capital as per sep qtr is at 120.38cr. I dont see any further warrants/dilution pending. Can you confirm if there are any? This qtr results at 7cr bottomline looks good. Would be interesting to know how much is being contributed by the new e-waste plant and its current utilization levels.


(phreak) #24

Maybe accumulation is over? Volumes more than 25% of the current equity base. Fingers crossed.


(phreak) #25

These seem to be too much of a coincidence to me.

Article on Jan 9th in moneycontrol.

Company dispatches pointless notice referencing the article on Jan 18th. Almost nothing in the notice is news.

http://www.bseindia.com/xml-data/corpfiling/AttachHis/1c294766-8816-405f-a682-c7aa2a598ec9.pdf

25% of the equity base by volume gets traded in-between and as if on cue, the new year has moved the price from 40 to 60 levels and post notice, a 10% correction. Nothing smells right.

Disclosure: Invested


(phreak) #26

Promoters buying. The one on 30th March is also Acquisition marked as Disposal incorrectly. These purchases are definitely not from open market having observed the price action in this scrip for well over a year now. These must be from SSJ Finance which has been accumulating for awhile. Everything here is shady of course. Best case e-Waste business is going to contribute well going forward, worst case this is a pump-and-dump operation in concert with the Promoters and some FPI entities (probably round-tripping money from some receivables that have been pending for years and some other transactions done years ago)

Disc: Invested and has been #1 in the portfolio for awhile.


(phreak) #27

Looks like a C&H breakout. But knowing the price/action here, its probably a C&H because someone wants you to see it as a C&H breakout.

Management is giving interviews and sending promotional dispatches to the exchange

There is a possibility of a 1000 Cr market cap post Q4 results. It is still a mystery if this is a pure pump-and-dump or if there is some semblance of business underneath.

Having done a detailed shareholding pattern analysis

I think the management has round-tripped a lot of money via Mauritius and grabbed equity via FCCB (between 2015-2017). I believe promoter and PAC shareholding here should be seen as sum of promoter holding + Heshika + Auctor + SSJ + Silver Stallion + Kuber. Scenic + Leytron + Cimelia was an advance given in 2010 for e-Waste technology from Cimelia in 2011 which they never got and the high court has barred them from selling or benefitting from that in any way so in the future there is a possibility of the company extinguishing that part of equity through a buyback. Then there is the problem of large receivables pending for a long time. Lot of things which I suspect may all fall in place if the e-Waste business is in fact legit. Otherwise this is just cooking the books for a plain pump and dump. Tempted to trim the holdings but being watchful. I am more interested in the shareholding pattern here than the P&L. That’s saying something.


(ravish) #28

Super observations form data. Really i liked your way of interpretation of data, it may be wrong but i think at present situation we have to be careful. I have burnt my fingers in these types of news oriented stocks.

Disc: Not invested, have it in my tracking list.


(Darkwanderer79) #29

(Darkwanderer79) #30

The Exchange has sought clarification from Cerebra Integrated Technologies Ltd on April 25, 2018, with reference to increase in Volume.

The reply is awaited.


(phreak) #31

Results look good with sales up 91% YoY and PAT up over 10x.

I was looking for a 25 Cr PAT for FY18, they have posted 35 Cr. At current mcap, its trading around 21 P/E. They claim a phenomenal e-Waste contribution. Nothing except a dividend will prove the cash is real though.

Receivables still high but considering sales have gone up considerably (20% YoY with Q4 alone contributing 42% of yearly sales numbers), perhaps its not too bad. Still holding 70 Cr cash (10% of mcap from the dilutions) with zero debt. WC has gone up.

Auditor’s remarks on some receivables still remains same for years and so has management’s response. Still ambivalent on the legitimacy, still holding.


(Darkwanderer79) #32

The Q1 results are out…


(Darkwanderer79) #33

Investor Presentation


(cool_gaurav) #34

Any news? Why share on lower circuit with huge volume?


(ramanhp) #35

@phreakv6 The promoters have been buying the stock in past few months. Are you stil tracking the company. Their additional plant was planned to be operational in December 2018.