KP Energy - Lotus in muddy water


(senthilsp76) #56

What is your view/comment on first half result?


(phreak) #57

http://www.bseindia.com/xml-data/corpfiling/AttachLive/e05f861e-3244-4c9b-8102-ac2fe44fdee8.pdf

Results look absolutely dreadful. I would have been surprised with anything else considering the gutter the sector is in. EPS down to Rs.1.18 from Rs.15.20 YoY and Rs.13.44 QoQ (Half-yearly). In 6 months, they have commissioned 16.8 MW which is probably about the equivalent of erecting 10 WTGs. Market cap of 253 Crores for such a business makes no sense to me. Long-term borrowings up to 27 Crores from 15 Crore as of March 2017. Short-term borrowing as well has doubled which means that their D/E has gone from around 0.5 to near 1.0. Considering the second half of this financial year as well is not going to be great for the sector, there could be serious trouble for this company after the recent run-up in prices.


(Prasenjit Paul) #58

The result is undoubtedly muted and the stock price will react in the short term. However, one needs to read all the footnotes on the last 2 pages of the BSE result attachment. Since the beginning of the discussion, it was clear that the Wind Energy segment is in the transition phase in this financial year and the investment rationale emerges from the upcoming large-scale projects that will come through auctions. The footnotes even the very recent Crisil report also vindicates the same point keeping the investment rationale intact.


(Vishnu) #59

(Kshitiz Gupta) #60

(phreak) #61

From the first week of Sept when this thread was started, this has only gone down. From 350 levels to 190 levels as of now. All those risks pointed out in this thread clearly were valid and H2 results are bound to be a disaster (Just follow the sector).


(maheshkumar) #64

prasenjitp04
Are u still following this lotus,as it’s down from 300 to 175
If Any updates ,please share
Thanks


#65

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(senthilsp76) #66

Award_of_Order_Receipt_of_Order


(senthilsp76) #67

Bonus Record date announcement
https://www.bseindia.com/corporates/anndet_new.aspx?newsid=593d9cd0-b027-4a9b-96a1-50feb95453dd


(Prasenjit Paul) #68

My initial investment rationale proves correct with the two 300MW+300MW wind energy project development order. BSE notification here -

  1. 10th April 300MW
  2. 24th April another 300MW

Since the beginning, I was telling that FY18 would be a consolidation year and FY19 and FY20 would be attractive. (Numbers for FY18 is also expected to be bad). Now, considering they did 81.9MW in FY17 this 300+300= 600MW in FY19 and FY20 is a huge scaleup. Irrespective of the stock price upward jump, I am happy that it validates my investment rationale.

Another great positive factor is that, they earlier planned for preferential allotment for increasing paid-up capital for migration from SME platform to mainboard. Now, they are offering bonus in the ratio of 3:10. So, paid-up share capital will increase and clear the path from SME to mainboard migration without diluting existing minority shareholding. Kudos to the management! (By the way, my average acquisition cost is around 155 after the recent 3:10 bonus adjustment which was around 200 as per the pre-bonus level. All the price mentioned prior to this post is not adjusted with bonus)

Why I was silent for the last 5-6 months - Unfortunately, in India there are still so many investors those judge a stock only with stock price movement. While I started the topic, the price jumped, people accused me as a manipulator. Then, stock price corrected from 270 to 150 (after 3:10 bonus adjustment), again few started personal attack without understanding anything about the investment rationale/business. The good thing is that the moderator/admin of this forum is very strict, they delete/modify any non-sense. Thanks for that.

I will no more take active participation here, neither will talk about KP Energy as anytime it can cause a conflict of interest. My views will be biased as I am holding it, so better don’t follow my words.

Good Luck to all.


(Prasenjit Paul) #75

Good H1FY19 result by KP Energy https://beta.bseindia.com/xml-data/corpfiling/AttachLive/74e74e05-b557-4469-8666-fb2cff88270d.pdf Net profit 7.06cr vs 1.01cr and topline 51.25cr vs 36.71cr (YOY)

Amidst all negative comments from fellow board members, I kept my conviction that FY18 would be a consolidation year and then FY19 and FY20 would be big. As per the latest result and latest annual report it seems FY19 is going to be huge and FY20 even bigger than that.

Interestingly while maximum smallcap stocks are falling big, maximum microcap SME stocks are crashed by 40%-80%+, this particular microcap SME listed stock didn’t fall over the last 1 year that too in a time while players like Suzlon, Inox Wind are bleeding. Another 1-2 year of such consistent performance, then the biggest critic like @phreakv6 might also get convinced about the story.

Moreover, as per their recent AGM, the company is migrating from SME to BSE mainboard which will increase liquidity and increased investor’s participation.

Due to obvious reasons can’t comment anything related to stock price. Fellow members are requested not to follow me rather study annual report, result and other communications shared by the company in BSE platform for their personal research and investment decision.


(phreak) #76

The numbers look impressive. Too impressive in fact. What I don’t understand is how they managed to post a 7x profit in a period which saw markedly low executions. What makes me more skeptical is that the results have come within 3 days of completion of the half-year and Oct 2nd was in fact a holiday. The last time I saw such things was in Sanwaria and Fiberweb and both those didn’t end well for the investors. The numbers simply don’t add up for me. Sorry.

P.S. I am happy to miss out on too good to be true stories, especially in microcaps and SME. Please do your own due diligence.


(Prasenjit Paul) #77

For the same reason, I keep saying one need to read all the communications they shared and annual report and most importantly a management visit to understand how they are managing to do well at a time while the entire sector is bleeding! It is just a differentiated business model that is doing wonder.


(Prasenjit Paul) #78

I think publishing result early is due to the fact that they are shifting from SME to BSE mainboard on 10th October (as per AGM) where quarterly result publication compliance kicks in instead of the existing half yearly result publication compliance in SME platform.

Moreover, Sanwaria, Fiberweb used to publish result early in the high bull market to fuel stock price. I have never seen any company decorates result/timing at a time while the sentiment is worst. Right now due to bad sentiment in smallcap, SME segment turns as untouchable. Unlike 2017 while huge retail money flew in, now retail investors are getting scared hearing the SME itself which is a great indication for quality pickers. I don’t think in such situation any promoter/merchant banker/auditor is fool enough to decorate numbers. Rather bear market is the time to wash out all past sins and comes with negative surprise which many small companies are already doing.

To be frank, 7 times jump in PAT is still below my expectation, I had expected more than 10X jump. Going through their project execution in hand as disclosed in BSE, my personal expectation is more than 20 times jump in PAT in full year FY19 compared to FY18 and then FY20 to be even much higher than FY19. Let’s see how it pans out. (Don’t believe in my personal expectation, do your own research.)

As of now, I am highly impressed with the resilience of the stock price. Amid worst sentiment in smallcap and microcap while maximum stocks are falling big, K.P Energy is standing tall. It indicates major public shareholders are in no mood to sell off their holding. If the stock remains unaffected during the entire period of bad sentiment then whenever the sentiment improves, it would be the first to respond bullishly. Let’s see how long the stock would remain resilient.


(phreak) #79

If someone told me that auto ancillaries are reporting 7x earnings when auto sales were down - and not 10-20% down but with almost a 75% contraction, it is only natural to not believe the numbers. Ancillaries invariably do poorly when the sector is in doldrums - it should be business 101. Look at Sanghvi Movers for example - that is an indicator to substantiate of what’s happening in the space as shown by Suzlon and Inox Wind’s numbers. Suspension of disbelief is not how I would take my investment decisions.

SME stocks can be held up by one strong hand or a group of strong hands. I feel that doesn’t indicate anything substantial. Besides, why would anyone want to consider a SME in a high cyclical sector prone to govt. policies and intervention, when so many quality stocks are getting cheap?


(Prasenjit Paul) #80

My point was that there business model and the way they operate is different than other players in the sector and this is why 7 times jump in PAT looks very real and still below my personal expectation. As I meet the management on few occasions so a bit confident here.

Obviously we can reach a conclusion after 1-2 years while either it would become a big story or just another microcap name. Till then let’s watch.


(senthilsp76) #81

Q3 Results are good. Senior members please give your comments/observation.
https://www.bseindia.com/corporates/anndet_new.aspx?newsid=1337db41-13f8-445d-b345-7eec7f557096


(C.A. NAVNEET KUMAR) #82

Stupendous results yet again. Seems wind sector coming out of woods as very well presented by JATIN KHEMANI of STALWART ADVISORS here

The results can be seen here

https://www.bseindia.com/corporates/anndet_new.aspx?newsid=1337db41-13f8-445d-b345-7eec7f557096


(Gnana) #83

Appreciate if you can relate the current quarter results with the content of old presentation for the benefit of members.