Hi Rajeev ji,
Sorry but the trip got cut short and I couldnt get any info.
Hi Rajeev,
Any reason why have you exited/ trimmed down your holding on this stock?
I continue to hold a significant quantity & am very bullish on the Co. I feel that Kriti has a long way to go. Have trimmed my position slightly as I needed to redeploy in some other emerging opportunities.
I think that that investors should wait a bit for the prices to correct before getting into kriti. I believe that prices are on their way down for a while after a nice run. Already the correction has started and will present an attractive opportunity at lower levels
2 Likes
I came across a recent very well written blog on Kriti Industries. I am not clear if putting the link here would tantamount to violating any guidelines of this forum or of the blogger, so refraining as of now till clarity emerges.
If it’s a public blog, please post the link. If it’s paid, then no.
Perhaps it will be wrong to post the link on the thread, but as the access to the blog is free for all, those interested can read the blog of arunthestockguru.
Admin, kindly delete the post if there is any violation.
3 Likes
Hello Rajeev , I’ve been following the story and I’m seeing this evolve. Do you have any color on the muted Q4 results ? (Compared to yoy). Any view on why their inventories have gone up quite significantly as well?
My view is that recent Q4 FY17 results are below expectations and hence its share price movement will be range-bound. Technically, people entering the stock above Rs.32.60 may come to loss anytime.
I have seen the public blog of arunthestockguru which was actually written recommending the stock to his paid followers at Rs.34/-, two quarters back. By this time he and his paid followers might have exited the stock in huge profits. I would request other boarders never to follow that blog because that blog has several bad records, one I shall cite here is “CONCURRENT INDIA”, five years back. That company is de-listed now, management has vanished. Better not to mention anymore about that blog here.
2 Likes
Hello Saran,
The Co. was severely impacted by de-monetisation, the effects of which were felt till as late as January, which perhaps explains a muted Q4. I gather that normalcy is gradually returning to operations. The June qtr is an important one for the Co. & will be keenly watched. A good June qtr should logically take care of the inventory as well.
Meanwhile, the stock is not seeing any meaningful correction on the exchange, despite a muted Q4. A couple of good quarters could materially change things here.
This post was not meant to be a recommendation based on the blog, but to be better informed after reading it. As investors, we try to read/ research any information that can help us in formulating our investment thesis either way. But in the end, we have to take responsibility for our decisions as the buck stops with us! No investment decision can be taken on the basis of someone recommending an idea. That would be a recipe for disaster as there are always vested interests at play.
5 Likes
Kriti’s AR for 16-17 is out. As discussed earlier on this thread, the Co.'s performance for 16-17 was affected first due to modernization & relaying of plant & later due to demonetization.
It expects demand to peak up in the current year 17-18, with the new plant to manufacture Water tanks & CPVC pipes / fittings also having become operational.
Kriti Inds 2016-17.pdf (2.2 MB)
1 Like
Kisan Mouldings, a peer company, posted poor quarterly results. This was mainly due to GST disruption. However, on account of good monsoon mgmt of the said company is expecting to have a better Q2. We can expect something similar from Kriti Industries as well.
Today, Kriti Industries Q1/18 results were out. Contrary to Kisan Moulding (the peer you have mentioned), it is superb. From Q4/17 quarter, sales have increased 2 times and profits increased 5 times. Although, on YoY basis results are little depressed. But going through the results I think it is nothing but a buy and hold with a very high target. Till next quarterly results it should give at least 50% appreciation from the current market price. Please see the results by yourself and comment.
I request you to pls chk the results one more time. The netprofit has declined by 50%. Hope you read it wrongly.
If you look at the past records of results, June qtr is the best performing qtr. Pls chk screener.in
Latest quarter results not updated in screener yet I think…
The June quarter results finally showed some traction in sales, though the operating margins have been under pressure. Perhaps the Co. is offering higher discounts to establish its newer products, though it must be said that Co.'s like Kriti do not have much pricing power in the first place & sell at market determined prices. The results have to be seen in the context of a tough operating environment with the impending GST from July, due to which most companies are showing de-growth in sales in Q1. The results, also seen in the context of the mgt commentary in the AR, wherein it expects sales to peak up in the current year augers well, though we will have to wait & see how the next couple of qtrs play out.
You did not read my message properly. I told that in comparison to Q4/17, Q1/18 sales more than doubled and profits multiplied more than 5 times, which looks very good. Comparison on YoY basis i.e. June/16 and June/17 looks results as bad. But the same should not be done due to current situation like demonetisation and imposition of GST, which have made all the corporate results bad.
A fellow investor in Kriti Industries attended the AGM & has forwarded the following note:
Kriti Industries AGM Notes:
-
Kriti Ind is a dominant piping player in central region with MP, Rajasthan, UP & maharashtra contributing more than 80% of total sales.
-
Last year was bad as demonitisation hit during the peak season of Oct-dec, and resulted in sales being down from 460 crs in FY16 to 360 crs in FY17. They also set up a unit II for manufacturing water tanks and cpvc pipes and it became operational just before demonitisation.
*They also spent around 10-15cr last year in modernisation and automation of the existing plant which would result in operational efficiencies in coming years.
-
Current overall capacity is 80k MT and runs at 100% during peak season of from Oct-Dec. However overall utilization can be max 60-65%.
-
This year during the 1st quarter due to gst there was lot of de-stocking by dealers and that affected the sales for a month or so. Demand is improving and they are hopeful it will pick up during peak season of Oct-dec. All govt schemes and housing for all will create significant demand for pipes n fittings going ahead
*PVC resin prices are volatile and due to that there would be inventory gain/loss depending on the price movement as it is not a pass through. Chinese dumping is also there.
-
Sustainable operating margins are 8-10%, in a good year can do around 10%.
-
Normal capex is 5-6 cr every year.
-
Their main strength is agricultural pipes and fittings, in CPVC pipes they are going slow as they are seeing tough competition there. Current capacity is around 1500MT.
*They are looking to buy a plant in South and also planning to shift some products in their Pune subsidiary plant to cater to Maharashtra and neighboring places, which would save logistic cost.
- For FY18 they are hopeful to do 500+ cr kind of turnover as they see demand improving and with good monsoon next year they said thay can easily cross 600 cr mark. Ebitda margins can slightly improve from here. On a 600 cr revenue in FY19 with around 8-8.5% ebitda margins they can easily do 22 cr PAT (mkt cap is 175 cr).
4 Likes
Thanks for the information. Most of these developments were guessed by me from news posted to BSE by the company. But now you have confirmed it and obliged me for many thanks. Actually, I have a very heavy holding accumulated recently, above 50K shares. But my cost price is very high i.e. 40+, due to losses made earlier by purchasing at 46/- and selling at 39/-. Anyways, I am happy with the results and the information given by you.