Vivek Gautam Portfolio

(Finrahul9) #489

Vivekji this seems to be a good business . Eps fy18 should be close to 5 which makes it a PE of 11. A part of the IPO proceeds will be used for backward integration which will further help them lowering cost and increasing operating margins. Good client base . Also good top line growth in the previous years .

(Vivek Gautam) #490

Applied in Dynamic Cable IPO due to good promoters having good reputation & low valuation of 7 PE on pre issue & 11 PE post issue equity.Good opp size

Anyone else tracking it.Views invited

(Vivek Gautam) #491

From Rs. 5 Cr in 2001 turnover to Rs. 331 Cr in 2016, the company has not only been able to clock a sterling topline, but has also expanded its product range to include one of the most comprehensive baskets of cables and conductors. With an increasing overseas footprint and a new plant in offing, the company is targeting Rs. 1500-2000 Cr topline in ten years with an objective to keep pace with changing technology, manufacturing process and quality controls.
Dynamic Cables has become a global player in supply of cables and overhead conductors. The company has continuously been expanding its capacity, capability and product range by improving and expanding existing facilities and also setting up new facilities from time to time. Dynamic Cables is now in advance stage of setting up a new plant for HT cable up to 66 KV at Shree Khatushyamji Industrial Area, Reengus (Rajasthan). The same plant will be later expanded to include manufacturing of railways signaling cables and OFC.

In 2007, we planned for our second expansion; this was a pure expansion plan. This third unit in Vishwakarma Industrial Area (Jaipur) is spread over an area of about 100,000 sq ft to manufacture LT and HT cables up to 33 KV. In this unit, we started making cables based on Sioplas Technology. Over a course of time, we came to a point where expanding in the form of fourth unit became imperative and we started setting up a 200,000 sq ft facility in 2016 at Shree Khatushyamji Industrial Area, Reengus. The overall capex to create this facility is to the tune of Rs. 35 Cr. This new plant is expected to come into operation by December 2017. This will include a CCV line with the latest dry curing technology to manufacture XLPE cables with online curing. We are an ISO -9001:2008 company and are in the process of Implementing OHSAS and ISO 14001 compliance.

WCI: Will you please elaborate us on this ongoing Reengus facility, the technology you are investing in, and the planned next phase involving the OFC facility?
AM: The Reengus facility is around 8 Acre plot and is in the RIICO industrial area, which is fully-equipped with the crucial infrastructure and other requirements an upcoming industry needs. Dynamic Cables will now gain entry into an elite group of manufacturers with manufacturing range up to 66 KV cables; but this will be done with CCV technology, which is latest right now. Our CCV extrusion line, which is from Supermac Industries, utilizes a single- point- triple-extrusion method which can take care of long continuous production schedules, frictional heat and pressure to deliver a uniform production cycle. The most critical part, i.e. the CV tube for this extrusion line has been procured from Scholz Machinenbau, Germany. Other machineries are coming from China and India.
Rs. 35 Cr is the immediate investment in land, building and plant machinery. We are planning the second phase for railways and OFC, which is around 10-15 Cr and will be done in three years down the line and we have already demarcated the space for that. The first phase of 66 KV plant can be expected to start from this year-end.

WCI: Since your company has been continuously doing the expansions, will you please tell us the kind of growth you have witnessed in your turnover over a period of time?
AM: In 2001, we hardly achieved a sales turnover of Rs. 5 Cr. The turnover figures were roughly around Rs. 12.7 Cr in 2005 and Rs. 59.7 Cr in 2007 respectively. From the last 3 years, we are in the range of Rs. 250 Cr to Rs. 331 Cr. This growth has been consistent and steady and gave us a lot of experience, strength and confidence in the tasks we are about to embark upon. I would also like to add that we have been successful in retaining and managing dedicated teams of managerial staff, workers, technicians and engineers with us who are motivated towards a common goal of growth and development.

WCI: Tell us about the strength of Dynamic Cables. What is its USP?
AM: USP or strength can’t be expressed in few words. It is a combination of many things. We contribute our success to three major points. Firstly, we have a very strong vendor base and we treat them as our partners. We ensure whenever they are in need, we are there for them. Also, we make sure that our supplies are regular and a quality product is supplied backed by on time delivery and efficient after sales service. Now vendors supplying to the top cable manufacturing companies of India, consider Dynamic Cables at par with them as we have proven ourselves to be a reliable supplier. We have a kind of vendor-based reputation, which is one of the components of our USP.
Second USP is our style of working with EPC contractors or the electricity boards. We have our regional offices in Delhi, Mumbai, Kolkata and Hyderabad. The costing is controlled by our head office (Jaipur), which is done by us primarily and has to be approved by the top management. We work on viability. If it is viable, we do it and if it is not, we don’t. Another thing is if we take any order then there is no backing out, even if we are at loss. There may be some exceptions, but we are on time 99 percent. Our whole technical team is there who is supporting our EPC contractors in terms of any issues that come up while installing cables.
Third and equally important is our Dynamic team. Any venture or endeavor relies on the shoulders of a dedicated and motivated team of employees which make any objective attainable. I understand that unless we all work as a cohesive unit with a common goal in mind, our planning and operations cannot come to fruition. Hence, I am extremely lucky to have a great mix of technical, managerial and operational team who have stuck by us through thick and thin and have enabled us to reach this far and pave the path for further growth. This is our core USP.
Our teams are constantly exposed to in house and outdoor trainings, audits, seminars and conferences, expert guidance on ever changing rules, regulations, and customer requirements to stay up to date with the Industry.

(AmitContrarian) #492

There are lots of litigations and pending cases against the company and promoters ,
what do you think about them ?

(1.5cr) #493

Typically during the final phase of a bull run we see the IPO market explode… Guys please sit on atleast 15-25% cash in the portfolio as you will see a correction maybe not today or tomorrow. But within the next three years. So it will prudent to be cautious. Make sure you buy quality cos because you dont want to get stuck with junk. You will get opportunites to buy some strong cos at attractive prices in the future. Be optimistic but be cautious as well.

(Yogesh Sane) #494

Receivables over 6 months old rising rapidly and now close to 50% of net worth. Their customers are cash strapped state discoms and company may be having trouble recovering dues from them.
They even filed lawsuits against their customers for recovery of dues. Still have not made any provisions for unrecoverable debt. With such a low margin business and customer concentration even if one customer defaults it can wipe out year’s profit. Be careful.

(1.5cr) #495

Two things a business needs to be succesful from an investment perspective. Cash flows and earnings growth. If those are two are available at an attractive price or a reasonable price it makes a strong case for an investment.

(Vivek Gautam) #496

Please go through the enclosed interview I have posted. It clarifies lot of things. Opp size constantly increasing for Dynamic & other cos in sector. GOI investment in power sector n schemes like UDAY improving DISCOM financial health gradually. Dynamic moving into next orbit thanks to due its IPO & new plant. Technology & machines bought from German makers like Schloz same s that of other reputed cable makers like KEI & APAR.Co growth is good .I bet mainly on promoter and scuttlebutt on him is positive. Sector though competitive is large.Exports are increasing n giving better margins.

Dynamic is surely moving to next orbit.litigations are all part of business & we shud look at big picture.

In todays overheated market with mktcap of 88 cr vs sales of 331 cr in fy 17,BV OF 38 N IPO price of 40 , PE of 7 on pre issue & 11 Post issue & co utilising money for new plant EPS is bound to improve in future,RONW of 20%,good cagr,I believe there is good MOS in Dynamic.I have applied in IPO & may buy more on listing with 2 year POV. No wonder HNI portion got oversubscribed 121 times.Seems some knowledgable persons have applied in IPO.

(Vivek Gautam) #497

Agree. Uptil what prices will one buy Ice maker getting listed on 8 dec 17.views invited.What valn will one give to it & whats the expected EPS for fy 19 .

(Yogesh Sane) #498

If the fundamentals and prospects are so good then how can one explain low valuations at which the shares are offered in the IPO?
My experience is, companies whose Object of the Issue is working capital enhancement do not do well in the long run as these are just cashing in on the rally.

(Vivek Gautam) #499

Please have no preconceived bias before investing as it leads to loss in mkt.One needs to focus on promoter quality & then on sector.SME stocks 70-75% remains with promoters so some of them offer it cheap to retail investors at times. MOS is there in some IPOs but liquidity n big lot size is a problem there.

(Manoj Agarwal) #500

Receivables over six months are in proportion to sales growth year on year. If one sees the balance sheet of Universal cables, they too have substantial debtors over six months as cables are supplied to electricity boards and payments at times take time but are never a bad debt, Further as per prospectus of the company only the following cases for recovery has been initiated: page 217

With the 66 KV cable plant slated to go on stream shortly, the company is looking to triple its turnover in next three years.

(aditya modi) #501

Vivek sir,
no allotment for me. DO you see UCs to continue given the subscription no. only or does market see more IPOs to divert their attention?

(Amit) #502

How do you see assess promoter quality here. How long is this business been running? What events have led us to believe that promoter quality is good. Recent 66kv expansion? How does it coorelated to promoter quality? Even bad promoters can bring new expansion plans.

Has anyone done scuttlebutt here? You can only asses after talking to present employees, past employees.

Looks like we have mixed kind of reviews on the promoter quality.

(AmitContrarian) #507

Cheers guys …

SME IPOs outperformed mail board IPOs… Keep investing in SME. This thread has been proven a great way to separate wheat from the chaff.

(sriramb12) #508

Why this thread is still relevant? And many recent posts are not even related. Keeping thread relevant conversations among other things help in mining data Requesting moderators to assign attributes (such as temporality) to predate applicable threads. Some threads are sticky and are stay relevant perennially.
Can thread moderation be delegated to thread owners for lessening the burden on centralized moderation?
Thanks for listening

(Vivek Gautam) #509

Scuttelbutt from several residents of Jaipur is positive wrt payment to vendors,employee satisfaction, reputation in the city & community. Mangal family it seems is having 10-15 industrial units in VKI indl area whose realestate value itself is substantial. Ashish mangal is said to be a hands on workaholic 2nd gen promoter in right age of 42.

Turnover increased from 5 cr to 300 cr in last 15 years. Asset turnover is good.Constantly expanding & now this new unit at Reengus is coming up which cud be a game changer and capacity cud increase substantially.tailwinds there for power cable sector due to good requirement of aerially bunched cables to prevent theft, underground laying of cables,IPDS scheme in cities,DDUJ in rural sector,100% rural electrification in form of reaching every household in all villages by Modi govt.

Valn comfort also there as mentioned earlier.

(Finrahul9) #510

Vivekji , In my opinion the business is unique but currently at 100+ price it is fairly valued . Also it needs to be seen what impact will GST have on the revenues of Sep quarter.

(Vivek Gautam) #511

which stock u r talking about at 100 rate

(Finrahul9) #512

ICE Make Refrigeration