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.
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 iโm 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.
@jet_nebula are you still tracking this company? Is it true that they donโt 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
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
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.
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?
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