Agarwal Industrial Corporation Ltd - Profitable Microcap with high growth potential in infrastructure space

I agree with you on the bizarre price action in 2016-17 and i had mentioned in an earlier post about the selling of a substantial holding by a big group leading to that price drop.

Regarding current move, i am looking to rely on technical picture for better price guidance to see if it can be validated. Here is one view on a cup and handle breakout with price projections.

Today it hit UC for the 4th consecutive day ! This action actually unnerves me a bit. In the interest of disclosure, I sold half of my holdings here given the unexpectedly quick gains. Still want to wait for results to reveal the picture.

Disc: Invested but sold half today.

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Just moved to the sidelines on this one for now. Have sold off remaining when the circuit got open today.

Disc: Not invested anymore but tracking

Still it seems to be quite undervalued in my opinion.

Disc: I am not invested.

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By the way, I think Coal Tar prices haves rise in recent days.

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Blowout results by Agarwal Industries in Q4 FY21

Agarwal Industrial in an exclusive list !

Multipie on Twitter: โ€œWe heard you: Here is the list of companies that have grown minimum 5% in each of the last 10 years - only 33 names. PS: Not an investment advice. https://t.co/174C114jYOโ€ / Twitter

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Two things

The Bitumen revenue growth looks really good but I guess and I have read it that asphalt roads do not last long then concrete roads. Heavy rain will wash the road out.
Second is that iโ€™m not impressed with the capital allocation. Do you really need 650 trucks and 5 vessels?
Lalit in Q1FY21 conference call said that the demand of Bitumen is more than supply and there is a 2.4 Mn tn deficit. Why cant you focus on adding capacity to meet the deficit instead of owning vehicles.

As per my knowledge,NH authorities are not inviting tenders for concrete roads now.

AICL do not make/produce bitumin. They buy from foreign markets at lower prices and supply for domestic requirements. For this, vesels and trucks are necessary.
One cannot put a plant which produce bitumin only. Bitumin is the by product of petroleum refining. Adding refinery capacity is costly and a long process.

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Thanks Anwar,

Can the new scrappage policy impact AICL? They have a large fleet of vehicles.

@jet_nebula are you still tracking this company? Is it true that they donโ€™t produce bitumen?

If i remember correctly, they mentioned that bitumen is in deficit currently and most of it is imported and they are looking to replace this import substitution.

With continuous govt focus on infrastructure development, future growth looks sustainable in India.

Do they target export markets also through their shipping business?

Also, Sunil Singhania has built stake in the company (in private capacity) in last quarter. strong text

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Can you please share the link to the newsโ€ฆ

Its on screener

https://www.screener.in/company/AGARIND/

He has taken 1.6% stake through valueworth advisors (where his wife is the director)

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Sorry. i am not tracking this anymore. To my knowledge they dont produce bitumen and its a by product of refining. one thing to watch out for in future is though bitumen demand may have been high, pls check on NHAI tenders to see if they are switching to concrete since bitumen roads perform badly in rainy season and cause potholes.

the news below is dated but reflects the thinking of the those in charge

Disc: not invested

There is no point in looking for QoQ for AGCL. Bitumen/road business will be highest in Q1 and lowest in Q2 due to monsoon. Look for YOY and the increasing margin. They are adding vessels, which is a high margin business for them.

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Hi Folks,

Fantastic q3 results by the company. higher bitumen prices led to higher sales and profits as per concall.

Bitumen prices are going up with increasing oil prices. Q4 being seasonally the strong quarter looks like q4 will also see a very good growth as they are guiding 20% volume growth.

I have a query. Does higher bitumen prices temporarily impact road construction activity or slowdown?

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Since its a derivative of crude, the price will settle down in the coming months. this company is largely betting on the government spending on Roads. so government spending should not get affected. prices keep fluctuating, prices can go below average as well. one has to look at the average price for the year

Bitumen price is coming down along with brent crude. Will this benefit the co?or it will cause reduction in topline as well as bottomline?