Amit Singh Learning page

1

Sky Gold

IPO listed on 4th Oct 2018
Face Value Rs. 10 per share
IPO price was Rs. 180 per share
Total number of share were 14.2 lakhs
Total number of shares in 2023 1.1 Cr
Promoter of the Company:
• Mr. Mangesh Chauhan
• Mr. Mahendra Chauhan
• Mr. Darshan Chauhan

About Company:
Incorporated in 2008, Mumbai based Sky Gold Limited is a business engaged in the business of designing, manufacturing, and marketing of Gold jewelry.

2018:
The company operated from a 2,740 sq. ft. sole manufacturing facility located in Mulund, Mumbai.
Sales Office in Mumbai, Kerala, Telangana
2023:
SG has shifted to 80,000 Sqft manufacturing facility.

Current valuation Q1 FY24:
EPS Rs. 9.93,
Last 4 Q’s EPS Rs. 22.3
PE ratio 24
Industry Avg PE is 31.8 (Range from 90.59 of TITAN to Sky Gold 24)
CMP -Rs. 535
Expected EPS to be above 27.5 *Given Gold prices are stable and customer sentiment remains same. Mfg from 2.6 Ton Gold (FY23) to ~3 Ton. OPM improvement from 3% to 5%.
Promoter holding since IPO has not changed and is same at 73.55%
In FY22 Bonus share at 1:1 was issued. Current Total number of shares is 1.1 Cr
Company deals in

  1. Yellow Gold- 22K gold purity (91% 24K gold is part of the mixed in alloy)- 90% business comes from this segment.
  2. White Gold- 14K to 18K
  3. Rose Gold- 14K to 18K
    (Here the 14K means 58.3% pure 24K gold is added in the alloy mix, and 18K has 75%)

Management commentary:
Q3 FY23:
a) Capacity: 18000 sqft
b) 22K Gold business. Making jewelry through Casting process
c) 300Kg gold processing per month capacity, 3.6 Ton yearly, ~200-250 Kg per month is the run rate.
d) Malabar, Kalyan, Senco, Khimji are customers, B2B accounts for 70% revenue from top 5 customer.
e) Margin increased from 2.4% to 4.6% sustainable.
f) Venturing into B2C in USA, Varanium, Westeria brand, 18K to 22K range
g) Indian Industry: 57B dollar Industry, 60% is unorganized segment. Export promotion category by Govt India.
h) 11% growth rate YoY,
i) Customer choosing branded product at Rural market.
j) Jan 2023 launched on NSE. Further growth capital requirement is getting met for expansion.
k) EBITDA margin 5%, Currently in B2B in India.
l) Making charges- Fancy product, Monopoly product- Rs. 300 per Gm to Rs. 500 per Gm
m) Jewelry demand is Festive and marriage,
n) 90% gold jewelry outsourced by Kalyanji, Senco, Khimji, Malabar Gold, Joy lucas, Khazana, Lalita, etc… only 10% is mfg inhouse. Looking for tie-up with Tanishq
o) In US margin is very high if they like the product, volume in US to go slow. Being creative is the challenge.
p) Ordering:

  1. Inventory risk: Import is direct from importers on daily basis. Hedging team is there, 30 Sec timeline. No unhedged exposure, all Gold buys to be hedged within 30 Sec. This helps in Predictability and stability of business.
  2. Medium class range, lower class range, Rs. 15000, Rs. 30,000 to Rs. 1.5 lakh per piece inventory (ticket size), 3-4 Gm to 10gm per ticket.
  3. At 90% store of the customer product is available, 2000 to 3000 stores has SG product.
  4. Inventory buy by selection on 7, 15, 20 days for delivery of product. Inventory purchase by SG to delivery. Design selection online and factory visit. App, Whatsapp, Inhouse App,
    q) Largest client Malabar Gold,
    r) Loss:
  5. Security, scrutiny of all workers for theft, Proper measures at plant.
  6. Italian, German machine to suck all the gold and min the loss.
  7. Loss% from processing 100gm is 5% and after recovery 2 to 2.5%.

s) Capacity:

  1. Current Capa 200-250Kg per Month, Revenue 1800 Cr Capa.
  2. Expansion in Turbhe, increased Capa to 4000 Cr.
  3. Cost of new factory 20-30 Cr factory price.
    Risk:
  4. What if unsold inventory with the corporates: Any damage due to QC, 1 or 2 % is the damage product.
  5. If gold price drops, margin is same 5%, 6%, 7% of the sales. Rs. 300 per gram remains same. 2-3 years price change on making charges.
    Growth:
  6. Plans to grow in FY24. Rs.3000 to 5000 Cr in next 2 years. 9 months for capacity addition.
  7. High value added product: R&D for monopoly products- One time R&D expense of 7.1 Cr in Q3 FY23.
  8. 80% of the market share will be with Compliant Hallmark and quality assurance business. And SG will cater to corporate customers in this category.
  9. Tanishq has 10% margin.
  10. Volume business and not margin business for SG.
  11. Rose Gold/ White Gold, 5 to 10% share of business,
  12. Maximum is Yellow gold, Monopoly product to improve margin from current 2-3% margin from normal products.
  13. 3 exhibition every year IRGS (4 to 5 thousand new design every month added), all corporates different designs.
  14. 30-35 designers at SG, based out of Mulund,
  15. Design to master to market 25 to 30 days is the delivery speed.
  16. Almost 8-9 design by each designer per day for 26 working days. Rejection is 20%.
    Q4 guidance by SG management was for a superb quarter but the business was almost same as Q3 (Revenue)

Q1 Fy24 Concall

  1. New Mfg Hub from Aug, 80000 Sqft no1 Maharashtra hub, 5000Cr capacity, 5 to 6Ton gold per annum processing. 450 to 500 employees, hiring new resources, new karigar and new designer is getting hired.
  2. Margins created as promised in last quarters. Growth is possible and new corporate customer addition is going on.
  3. Debt increasing QoQ: Costly inventory, new customer acquisition will require this inventory.
  4. In next one year employee count to go to 1000.
  5. Working capital: PAT is increasing and used as working capital, Debt for WC, 4 exhibition (international), every quarter new clients addition. Normal and Monopoly products.
  6. Tanishq: Met the management and surprise is waiting from them by Diwali. Assurance by Tanishq visiting team at new facility of SG.
  7. Risk: As the business is growing in jewelry default from clients: Doing business with A, A+, AA, AAA rating companies like Malabar gold, kalyan ji, senco, 75% business from them.
  8. Sales is divided, 40-45 parties, dealing with top 20 companies in India.
  9. Export side: No good response from US. Not investing in Export. Very small allocation,
  10. Light weight jewelry: Rs. 5000 to Rs. 50000/- per piece. Gifting, and lower and medium income bracket. Not making inventory for 2-3 months hold. Not blocking the inventory is the key.
  11. Youth target, light jewelry.
  12. Supplier side: Competition is high, but Production capacity and Designer capability is the differentiator and SG is working to increase it.
  13. What is Monopoly design: 80%-90% is designer tech, Good designed based monopoly, Italian and German machine made.
  14. If SG acquire good client, Mfg and Design support then 5000 Cr is target in next 2 years.
  15. Pre Corona- 26% market Post Covid 52% coming from Corporate, All corporates are expanding their store count like 20 store by Kalyanji in coming quarter, 10 store by Senco, Expantion by them is business expanding potential for SG to cater them. All corporates source 90% of their inventory from SG like companies and 10% in house.
  16. Tanishq gives good margin for the quality product and SG is targeting to become their supplier, currently Malabar is leading SG business but next is Tanishq.
  17. Corporate cash turnover, 7 to 30 days depending, No defaults, No advance payment is taken from corporate.
  18. Managing Risk: 100 Cr order, 3-4 Cr jewelry is made and dispatched and payment received. Not 100 Cr at once.
  19. Retaining Corporate: Should have designing and novelty, if products are selling then corporates are interested.
  20. Entry barrier: Designer base and WC requirement and trust in the market w.r.t gold purity.
  21. Right now capacity: 200 to 250Kg Monthly, 1 Ton monthly in coming Monthly. 3 to 4 Ton yearly present, , capacity of 10 Ton is aspirational,
  22. 22K gold business is 90% per annum revenue.
  23. Fy24 revenue guidance is not given, it may go to 5000 Cr in 2-3 years, currently at 1800 Cr.
  24. Tanishq and Reliance provide Gold and making is done by SG. That is why targeting the companies. WC requirement will go down. Only making WC requirement by SG, designing by SG. This will improve the margin and WC debt will reduce. For per gm 300 to Rs. 400/-. Margin will be 40 to 50%. From current Rs. 114 per gm to Rs.150-200 per gm
(in Cr.) Jun-23 Mar-23 Dec-22 FY 22-23
Income Statement
Revenue 375.7 269.92 267.43 1,153.80
Other Income 0.82 0.22 0.14 0.96
Total Income 376.51 270.14 267.57 1,154.76
Expenditure 361.22 261.86 258.41 1,128.30
Epense % 96.1% 97.0% 96.6% 97.8%
Interest 4.16 3.63 3.12 10.81
PBDT 15.29 8.28 9.16 26.46
Depreciation 1.03 0.38 0.35 1.43
PBT 14.26 7.9 8.81 25.03
PBT % 4% 3% 3% 2%
Tax 3.59 1.82 2.47 6.42
Net Profit 10.67 6.08 6.35 18.61
Equity 10.74 10.74 10.74 10.74
EPS 9.93 5.66 5.91 17.32
CEPS 10.89 6.01 6.23 18.65
OPM % 5.18 4.41 4.59 3.23
NPM % 2.84 2.25 2.37 1.61

Disc: Invested.

Please help me improve my understanding of the business. Any suggestion and corrections are welcome.

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2

Kalyan Jewellers:

Company profile:
a) 161 Showrooms in India, 33 Showrooms in Middle east (Q1 Fy24 update)
b) 30 Years in business
c) 10779 employee strength
d) 5 countries, 22 States presence.
e) Jewelry Industry is changing from Unorganized to Organized currently around 35% has converted.
f) Wedding is 60% business share, Daily Wear- 30%, Fashion 10%
g) Rural India Demand and Ownership of gold jewelry is 60%
h) Indian Jewelry market, North-20%, East 15%, South 40%, West 25%
i) 70% of total gold share in India is Jewelry.
j) 6 Lakh SQft Showroom in India, 43L Sqft in ME.
k) FY23 ROCE 17.4%
l) Debt is ~29% of its current annual sales rev.
m) Total Number of Shares 103 Cr
n) Promoter holding has remained same from last 3 quarters and improve by .01% from the last 4th @ 60.55%.

Q1FY24
Salient Points

  1. Ramesh Kalyan Raman MD Consolidate rev growth 31%, PAT 23% (108 crores to INR 144 crores), Rev from India 34%, Operating momentum is good.
  2. Share of new customer in excess of 36% from last Quarter, Non South market 44% share up 35% from YoY,
  3. 16 new showroom opened, 10 new show rooms in plan out of 52 new showrooms in Non South Market was planned.
  4. Jammu opened 200th Showroom.
  5. Middle East rev 22%, Eid holiday driven sales
  6. Online platform Candere to launch omnichannel expansion strategy, 20 plus physical showrooms of Candere to be established during the next six months starting from August 2023.
  7. Divestment of the non-core assets which has been previously announced and we expect to conclude the transaction around the end of the current quarter. Selling its company owned Aircrafts and using the proceed ~Rs. 100 Cr net of Tax
  8. Candere is a Franchise Model FOCO. Cautious Approach, opening one store and letting it settle down and then going for the next.
  9. Eastern India to see more store opening, Jharkhand and Bihar
  10. Rev split between Plain gold jewellery 70% and Studded jewellery 30%
  11. COCO has 16% margin and FOCO has 8% margin.
  12. Next two years ESOPs will be given to Kalyan Jeweler employees till Store Manager level. ~400 employees. 30 Lakh shares pool is created for this ESOP.
  13. Ad expense as % of revenue will be around 2 to 2.2%.
  14. Same Store Sales Growth for ME is 21%, India business 15%.
  15. Studded Business comes with lesser margin, Non South market has more studded than Plain gold.
  16. Non South is FOCO model.
  17. Plan to reduce 15% debt. Debt is around Rs. 4295 Cr.
  18. Gold import which is being done from UAE under that Comprehensive Economic Partnership Agreement. 1% duty concession on import duty of Gold from UAE. KJ will take this benefit.
  19. Inventory is 15 to 20 Days in FOCO.
  20. Making charges used to be 25-30% which have dropped due to immense competition to 10-15%.

Q2 Earning Update:

  1. Consolidated growth of 27% YoY, Rev to be around Rs. 4410 Cr.
  2. PAT to be around Rs. 134 Cr, and EPS Rs. 1.3
  3. EPS for 4 passed Qtrs till Q2 FY24 to be around Rs. 4.83.
  4. Industry PE ratio is around 32 ( range of 91 PE of Titan to 32 PE of Senco). Kalyan Jewelers is having current PE of 62, CMP 295
  5. Debt is 28.4% of TTM FY24 @ Rs. 4295 Cr. This is to be kept in view as management intends to reduce it in Q2
  6. 13 new stores added in Q2 and 26 new stores FOCO to be added in non south market before Deepawali and 7 Candere stores.
  7. Candere stores recorded degrowth of ~15%. This is a concern as in last quarter it had loss of 6% from its buniess.
  8. As on 30th Sept 2023 Store count is 209.
1 Like
3

Saakshi Meditech and Panels Ltd

Came across this SME Machine Tools company with Market cap of Rs. 469 Cr, CMP 266, P/E of 37.9 basis FY23 numbers.
Total number of shares 1.76 Cr with promoter holding 73.6%.
They got listed on 3rd Oct on NSE platform, 1200 lot size at Rs. 150/- (Issue prize of Rs. 97).
Company is in business of making medical device, Electrical Panel, Mechanical HLA assemblies, Wiring harness, catering to Industry like, Health Care, Renewable, Aviation, Locomotive, Compressor in its 9600 SqMtr Leased premises.

They don’t own any manufacturing facility.

Indian Machine tool industry is to grow at ~10% YoY as per iMARC report.
This company is growing at ~30% YoY Sales (122 Cr in FY23 Sales). The Net Profit margin is at 10% (PAT), EBITDA at ~16%.

Company growth projection is in line with its past performance of 30% YoY. No Capex is planned as present 3 facilities in Pune are running in 1 shift only (8hrs work) with 37 Engg. They can scale up for 3 shift operation if business comes.

Their 90% business is from top 5 clients of Short term fixed price and delivery period order based:

  1. Atlas Copco (India) Ltd
  2. OTIS Elevator Company (India) Ltd, Long term Contract till 30th June 2024.
  3. GE Oil & Gas India Pvt Ltd, Kirloskar Oil Engines Ltd,
  4. Kirloskar Pneumatic Co.Ltd.
  5. GE India Industrial Pvt Ltd,
    Business Category revenue contribution:
    image
    image1816×449 29.5 KB

    All values in Rs. Lakhs

The above data shows that they are mainly into contract manufacturing and a dependency on getting contracts on competitive bidding basis. This works for them as a major risk.
In X Ray segment they are into Assembly of the equipment they source the components, only outer units are made, USA, China, Germany. A risk they have.

The company is having long term association with its top 5 clientele and that is the advantage they enjoy in this segment.
The peer comparison companies have similar profit margin (PAT).

If they grow at 30% rev as projected and PAT at 10% like past performance the stock could do good for the investors. Being SME stock 6 monthly performance report is to be looked at.
Current MP Rs. 266 per share is already high and has accounted the growth of 30% for next 5 years at 16 P/E. Industry Avg PE is ~22* (Range 37 to 11).
Fwd P/E rerating can follow based on YoY performance and Expansion (Liner or Non Linear way)

image
image822×168 5.53 KB

Assuming 30% Sales growth and 10% PAT YoY

Disc: Not invested

1 Like
4

ICICI Bank is the new HDFC in making.
ICICI Bank- Mar Cap Rs. 6.5 Lakh Cr, CMP 930, P/B 3.02, Annual Rev TTM Rs. 1.42 Lakh Cr, Cost of Fund 4.69
HDFC Bank- Mar Cap Rs. 11.41 Lakh Cr, CMP 1506, P/B 2.9, Annual Rev TTM Rs. 2.18 Lakh Cr, Cost of Fund 4.8
Post change in ICICI Bank Management focus and ease in doing business has grown.
some points;
Customer 360 is the approach of the bank.

  1. Evolving needs of customer
  2. Decongesting Process- Removing Redundancy helped bank to reduce response time, Leveraging power of subtraction in Service delivery, Abolition of non value adding process. (Video KYC, ILens for online loan approval, etc…)
  3. Re Orientation of Technology
  4. Agile HR practice- Job Rotation and moving across roles,
  5. Fair to Customer Fair to bank

Multidimensional approach to bring entire bank to the customer requirement and its eco system

Product and Service to meet banking requirement of Individual customer at every life stage.
Digital Platform has helped in Customer profiling and Banking need, helping cross sell/ up sell products by ICICI bank

Salient Point:

  1. Credit Card Spend grew by 60% in FY23
  2. 29% market share in Fastag
  3. Supply Chain finance grew by 56%
  4. Their lending in five segments:
    a) Retail- Is growing QoQ 6% at Rs. 6148 Billion, segment growing 18% YoY
    b) Rural Loan- Growing at 4% QoQ Rs. 937 Billion, segment growing 15% YoY
    c) Business Banking- Growing at 11% QoQ Rs. 828.33 Billion, segment growing 40% YoY
    d) SME- Growing at 7% QoQ Rs. 542 Billion, segment growing 15% YoY
    e) Domestic Corporate and Others- Growing at 3% QoQ Rs. 2489 Billion, segment growing 12% YoY
  5. Focus on SME and Business banking growth.
  6. Net Interest income grew by 23% Q2 YoY and Core operating profit by 22% at Rs. 136 Billion.
  7. PAT increased by 35% Q2 YoY to 102.61Cr.
  8. Overseas Non India linked corporate portfolio reduced by 29% to ~Rs. 95 Cr.
  9. Cost of Fund has increased from 3.93% to 4.69%, HDFC cost of fund is 4.8 in Q2 FY24
  10. Avg CASA is 40%, dip of 5% YoY and 2.6% QoQ.
  11. NIM of ICIC is 25.2% compared to HDFC 21%. ** HDFC pre merger was at 38% to 35%.
  12. QoQ Total Rev Growth is 5% Q2 FY24 and last 4 Qtr 7% Avg, compared to HDFC, 38% (post merger) and 8% (Pre Merger).
5

Macpower CNC

  • Company was established in 1980 named as Modern Machine Tools
  • Mr. Rupesh Mehta Managing Director
  • Rajkot, Gujrat Based Company
  • In 2003 Macpower CNC machine Pvt Ltd was incorporated as they setup their CNC machine assembly unit.
  • In 2018 it was listed in NSE SME platform, and in 2020 they migrated to NSE main board.
  • 8 acre manufacturing facility in Rajkot.
  • 2022 capacity was enhanced to 1100 unit manufacturing.
  • 2023 capacity enhanced to 1500 units per annum.
  • FY25 target is 2000 units per annum to cost Rs. 9 Cr for expansion.
  • Presence in 14 States with 39 sales center in From Punjab to Tamilnadu and Gujrat to West Bengal.
  • Promoter Holding is at 73.17%
  • OPM is at 9% Avg before Q2 FY24, IN Q2 FY24 it is at 14.23%
  • PAT at 6% before Q2 FY24, IN Q2 FY24 it is at 10%

CNC machines stands for Computer Numerical Controlled which uses Pre programmed softwares combined with Engineering Designing to achieve desired cuts.
Company is into making of different type of CNC machines;

  1. CNC turning centers
  2. Vertical Machining Centre (VMC)
  3. Horizontal Machining Center (HMC)
  4. Twin Spindle VMC
  5. Twin Spindle Turning
  6. Vertical Turret Lathe
  7. Drill Tap Centre
  8. Double Column Machine
    Catering to Industry:
  9. Auto
  10. Defense- DRDO, Indian Ordinance Facotry etc…
  11. Capital Goods/ Engg
  12. PSU- Indian Railway/ ISRO
  13. Die Mould Sector
  14. Agriculture

Sector update:

  1. CNC machine making sector is 67% unorganized only 37% is organized
  2. India bought CNC machines worth Rs. 18000 Cr in FY23 and only Rs. 9000 Cr was supplied by Domestic supplier rest all was imported. (Some high end imported CNC machines cost 2.5 Cr. Now India is making the same at Selling price of Rs. 1 Cr).
  3. The make in India initiatives and China +1 is driving the manufacturing landscape in India. Current Manufacturing to GDP ratio to change from 17% to 25% by next decade.
  4. China consumption per month (approx. 25000 units) is almost equals to what Indian CNC manufacturers make per annum.

Company Financials;

  1. In Q2 FY24 company sold 332 machines.
  2. Out of this 326 (Avg Selling price of Rs. 18 Lakhs per piece) was sold to private customers and 6 to Govt (Avg selling price of Rs. 56 lakhs). Total rev of Rs. 63.1 Cr.
  3. They have Rs. 190 Cr order book for Q3 Fy24. All orders are on advance payment basis and no orders are fulfilled without advance payment.
  4. Currently Rs. 9.3 Cr as advance is with the company against orders received.
  5. They have zero debt
  6. Lowered direct and Indirect cost control and brought the expense down even when the volume grew. Currently 25% operating cost by keeping the cost same but improving the productivity.
  7. 5% less expense compared to Q1 over Revenue of business.
  8. Defense business is to grow by 40 to 50%.
  9. Every month if they dispatch 4 machines they get orders for 5 new machines so in net they have 20 to 25% extra orders every month.
  10. Sales force to increase from 79 to 100 by Nov 2023.
  11. Backward integration for high costing product like Turret and ATC (currently being outsourced costing Turret Rs. 1 lakh and ATC Rs. 1.5 Lakh), getting it made inhouse. For this capex of Rs. 14 Cr is about to be done from inhouse accruals. This will improve EBITDA and PAT. This will add ~2% to EBITDA.
  12. Business share wise Macpower is around 2% and basket wise they have 335 models which will help them cater to more type of customer requirement.
  13. Every year commitment of 20 to 25% growth is the management commentary.
  14. 400 Cr revenue is possible if unit manufacturing capacity grows to 2000 units per annum.
  15. Company focus is keeping debt zero, increasing topline and keeping the cost of operation under control through higher productivity. Using internal accruals for expansion.
  16. Challenge is of distribution network where Macpower is trying to build.
  17. Focus of company is keep sustaining and improving EBITDA and PAT 14 to 15% now to 20% PAT once 500 Cr revenue is achieved in future.
  18. They buy RM on credit and sell the CNC machine on cash basis.
5 Likes
6

Senco Gold Q2 FY24 update

lPO Funds Utilisation: The funds raised from IPO from primary portion (Net of IPO expenses) provided a boost to the working Capital of the company and support its future growth plans. We have used the funds for working capital purposes as stated in prospectus and would be submitting the requisite disclosures as per listing requirements soon.

Total Stores in India at 145. In Q2 FY24 one FOCO was converted to COCO in Jajpur district Odisha.

Zone Own Franchisee TotaI
East 12 13 25
West Bengal Excluding Kolkata 14 48 62
Kolkata 23 0 23
North 20 1 21
Cenkal (including MPCG) 4 0 4
West 6 0 6
South 4 0 4
Total 83 62 145
  1. Consistent growth of 19% Revenue CAGR from FY20 onwards.
  2. Highest ever Q2 revenue with ~2% of gold coin sales.
  3. Q2 Sales growth of 26% YoY and 28% YoY in H1 was satisfactory in spite no festive season.
  4. Q2 SSSG (Same Store Sales Growth) was range bound it was 21% in Q1 but is ~17% in Q2.
  5. Gold Price in Q2 moved southwards about ~3% lower due to muted demand globally and in India. This helped in volume growth
  6. First virtual showroom ‘Sencoverse’ launched on the metaverse. ‘MySenco’ App download crossed 2.8 lakh users.
4 Likes
7

Hi Amit, Whats your view on on-going cases against the company ?

cases
cases641×960 127 KB

Thanks,
Sagar

1 Like
8

Aditya Vision Q2 FY24 Performance

Performance in Q2

Q2FY24 Q2 FY23 YoY %
Rev 315.6 260.14 21.3%
Expense 303.28 245.72 23.4%
Gross Profit 12.32 14.42 -14.6%
GM% 3.9% 5.5% 1.6%
PAT 9.63 11.35 -15.2%
PAT % 3.05% 4.36% -1.3%

No of Stores State wise (130):

Bihar – 97 stores

Jharkhand – 20 stores

Uttar Pradesh – 13 stores

  • Zero Store closure since inception

  • No Private labels are sold at Aditya Vision Store

  • Customer Service Strong Financial Management

  • :black_small_square: Aditya Seva - One-stop solution for after-sales services.

  • :black_small_square: Aditya Suraksha – Allows customers to enjoy an extended warranty

  • :black_small_square: Customer Loyalty Reward Program – Buy & Win since 2012

  • Operates on a cash-and-carry model

  • Efficient inventory management, (Inventory of Rs. ) for festive season and Q1 FY25

  • High cash reserves of Rs.

  • Avg Capex per Store is ~60 Lakhs

  • Avg period for break even of new store is 8 months.

  • Avg Working Capital per store is Rs. 2.25 Cr

  • Revenue per SqFT is ~Rs. 40,000/-.

  • Employee cost and Rent Cost at 3% of Sales.

  • Quarterly tentative Share of revenue based on FY19 to FY23 trend:

  • Q1 30% - Summer season led by marriage and AC sales

  • Q2 18% - Lowest due to monsoon and shradh

  • Q3 28% - Propelled by Festive and Marriages

  • Q4 24% - Marriage, Pre Summer sales, End of year sales by brands

  • Target to grow at 20-25% CAGR, by reinvesting cashflows at higher ROIC for next 3-5 years in hindi heartland.

  • Electricity consumption grew by 2 times in Bihar/UP/Jharkhand:

Electrical appliance ownership:

% of house hold owning TV,Fridge,WashingMachine AC owners
UP 15.70% 2.40%
Bihar 3.70% 4.0%
Jharkhand 6.20% 2.1%
Chattisgarh 7.90% 0.9%
Odisha 7% 1.5%
WB 4.80% 3.4%

Concall highlights:

  • Entire festive season has fallen in Q3 FY24, Good growth in revenue is expected. Electronic loan mela in Panchayat/ Block level for rural customers in Bihar/ UP/ Jharhand has got great response.

  • Aug and Sept sales were robust with >20% growth.

  • Bihar revenue share 81%, Jharkhand 8%, UP2% (new stores)

  • Expansion is steady opening of stores. Open 10-15 additional store 145 Store to be opened in FY24.

  • Earlier guidance of 150 Stores by FY25 end is revised to 160-165 stores. Southern in saturated market new market is the hindi heartland.

  • Inventory remain on the higher side in Q2 and Q4 as AVL does not want to face a stock out situation in Q1 and Q3 seeing the best demand during these times. Q2 inventory is at Rs. 283 Cr

  • 30% stores are less than 6 months old. Going forward they will achieve the break even and add to profit.

  • ESOP of Rs. 2.5 Cr given to employees.

  • OPM has gone down by 1.2% YoY, new store opening has its impact on this %. With new stores maturing in next few quarters this will normalize.

  • Very Bullish Q3 is expected.

  • AC business has grown by 30% in H1.

  • 18 Smaller store out of 130 rest are larger. Going forward larger stores are in focus for volume business.

  • Retail financing is helping big time in this store success. Plenty of money inflow from Outside Bihar is also one aspect along with improved electricity consumption.

  • Cashflow from operation has increased. Rs. 97.78 Cr Q2 FY vs Rs. 21.77 Cr. Q2 FY23.

  • Because big investors wants to buy large number of shares promoters are to sell from their share as the share is very illiquid. Post listing on NSE in FY25 this issue may get resolved when at a bigger platform it is traded.

  • No Private brand selling at AVL stores.

1 Like
9

Dreamfolks:

Q2 FY24 Highlights:

  1. DreamFolks has delivered a strong revenue performance registering 65% growth YoY in Q2FY24 while on a QoQ basis revenue grew marginally by 6%.

  2. PAT increased by 1.39% @6.25% QoQ at Rs. 18Cr.

  3. The domestic passenger traffic, as reported by the DGCA, has witnessed a growth of 20% on YoY basis in H1FY24, while the Dreamfolks pax has increased by 47% in the same period.

  4. Above indicated growing demand for lounge service.

  5. The industry is also going through a structural change where card issuers are changing the program structure of the benefits to a spend-based structure.

  6. At Industry level optimization in benefits for non-premium cards may have short term impact leading to reduction in revenue. For the longer term the move to a spend based benefit mechanism will be beneficial for all stakeholders concern

  7. As travel industry is poised from growth DreamFolks is well positioned to capitalize on growth opportunities

  8. Revenue Mix is 76% Domestic Card holders and 24% International card holders.

  9. Having 40 Cr as Cash reserve.

  10. Partnership with top E-SIM provider for hassel free service to International customers.
    image

  11. PAT avg at 9.38% for FY23 and now at the rate of

  12. ROE and ROCE is at > 60%

  13. Asset light company, and no capex is planned. Even if any capex is required it will be done through internal accruals and not through loans.

  14. Encouraging external tailwind in terms of increasing Air travel (@ 20% Quarterly increase )

  15. Margin prediction for future annual guidance is maintained at 11 to 13%.

  16. Avg Rev per passenger improved from Rs. 950 to Rs 990/-. With passenger base growing from 2.63 Million to 2.7 Million QoQ.

  17. Rs. 343 Cr is invested by company in overnight funds and FD. Completely secured based and not in equity.

  18. Any price increase on the lounge service is passed on to the card issuing banks. Power of pricing. Ensuring that margins are intact.

  19. Railway business is also gaining traction.

  20. 1.76 Cr is the ESOP charges.

  21. Additional lounges are opening up in all metros and Hyderabad due to increase in demand.

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Interaction with an Investor;

  • Tuition Fees to the market is a must, aka Skin in the game.
  • Whenever markets fall, go full scale into buying your favorite stocks.
  • Macro indicators of economy domestic and international are very important to track.
  • Have high equity allocation, that only will have the ability to move the needle in your lives financial independence.
  • Continuous Learning is the key.
  • Understanding Growth, ROCE, ROE, Debt, Promoter Feedback, Sector Tailwind, etc… helps in identifying good companies.
  • Reading Quarterly results, Annual reports, and listening to Con-call is a must to understand companies.
  • Whether a Stock is a Tennis Ball, or an Egg is what one must be aware, this awareness will come only with the understanding of the business.
  • Exit Strategy is less discussed but is most important.
  • When to take a Cash call and when to stay invested?
  • Valuation of a company to be worked upon and then investment should be made.
  • Knowing oneself is important as if you are a person who panics, then better to panic early in the market. This may have lesser negative impact on your Portfolio.
  • Protecting drawdown during bear market is necessary.
  • Questioning decisions/ understandings before investing; “What if you are wrong”?
  • Future growth and Value growth of a company is to be looked for.
  • Check before buying if Stock is priced in or still there is room for growth in it. PE, PE/PBV.
  • Sectoral Tailwinds are important.
  • Drawdowns are part of life.
    -Earning Growth along with PE rerating creates multi-baggers.
  • Keeping Open mind
  • Pattern recognition
  • Study market leader of the sector to know what will work.
  • Keep learning and sharing
6 Likes
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Which company it is?

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This attachment is of Kalyan Jewellers (https://www.kalyanjewellers.net/images/investors-new/pdf/shareholder-information/Other%20Documents/Prospectus%20Kalyan%20Jewellers%20India%20Ltd.pdf) - Page 35

Senco Gold cases are here: https://sencowebfiles.s3.ap-south-1.amazonaws.com/website/files/f3APXNe6mEXv7k9qjvvggwVKYNTDp5mwXqahq0wE.pdf - Page27

13

Waaree Renewable Tech

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TATA Sons listing and the beneficiaries:

In September 2022, the Reserve Bank of India (RBI) classified Tata Sons as an “upper-layer" non-banking financial company. The category, among other requirements, mandates that such firms seek a public listing within a period of three years.

Understanding NBFC layers as per RBI classification; these layers are based on Size, Activity, Perceived Risk;
• Base Layer- NBFC less than Rs. 1000 Cr
• Middle Layer- NBFC more than Rs. 1000 Cr
• Upper Layer- NBFC identified by RBI as warranting enhanced regulatory requirement based. Value is no bar and at any time top 10 NBFC will be in this Layer.
• Top Layer- It ideally remains empty, if RBI sees substantial increase in the potential systemic risk in a NBFC it moves to this layer from Upper Layer.

https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12179&Mode=0

TATA Sons listed investment is at Rs. 16 lakh Cr. The expected listing is to be on ~50% discount at 8 lakh Cr. (Open Source info)

Here thing to note is that TATA Sons share held by company are;
• TATA Trusts- 66%
• TATA Motors- 3%
• TATA Chemicals- 3%
• IHCL- 1%
• SP- 18.4%
• Others- 8.6%

TATA Sons Holding Company % Holding Rs. Cr as Financial Asset if listed at 8 Lakh Cr valuation Market Cap (Rs. Cr) Yearly Sales (Rs. Cr) PAT (Rs. Cr) PAT Margin CMPS P/E Post Listing share price No of shares (Cr)
TATA Trusts 66% 5,28,000 0 0 0 0 0 0 0 0
TATA Motors 3% 24,000 372533 423874 20149 4.75% ₹ 1,018 19.5 1800.00 383
TATA Chemical 3% 24,000 30000 16353 1770 11% ₹ 1,178 17 7000-11000 25.5
IHCL 1% 8,000 81733 6489 1170 18% ₹ 574 70 2000 142

Now this information is with the market since 2022 but the price of shares have not moved.
With the proceed the companies can pay off their debts and can go for expansion.
TAMO has 1.28 Lakh Cr debt and TATA Chem has 6000 Cr Debt.

Question is why?- 07/02/2024

Reason -

Disc: Not invested in any of TATA Group entity.

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Solar Energy is going to grow good.

4 Likes
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WHATS YOUR view on SWSOLAR ? how similar is its business model to WRTL ?

How is promoter quality execution track record and opp size for SWsolar & WRTL?

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Assumption basis today concall of Waaree Renewable;

~₹1840 Cr rev FY25
PAT ~303 Cr
EPS- ~₹28.9
Margins are higher than peer Solar EPC players.
Backward and forward integration is helping them.

1 Like
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My understanding based on 1100cr non listed solar epc contractor. Solar EPC Margins are ~10% for Govt tenders & ~6% for pvt tenders.

SW solar stands out with almost double margin, I wish to understand how they doing them good margins ?

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Comparison of Solar EPC companies

Comparison Gensol Waaree Oriana
Market Cap 4039 21025 4952
Stock Price Rs 1067 2019 2581
Stock PE 75.5 142 91.3
FV (Rs) 10 2 10
No Of Share Cr 3.7854 10.4136 1.9186
MW Executed 770 700 200
Debt for FY24 Rs Cr 1510 41.2 184
Interest Cost FY24 Rs Cr 108 7 6
Rev/ MW (Rs Cr) 1.250649351 1.251428571 1.915
Margin% 24% 24% 21%
PAT % 6% 17% 14%
Order may be executed MW in FY25 1426 1471 430
Expected Rev Rs Cr 1783 1840 823.45
Expected PAT 98 313 115
Exp EPS 26 30 60
Avg PE considered 59 59 59
Share price at end of FY25 1528 1772 3545

Imp: FV of Waaree is Rs 2 and rest is 10. So the return for the investors holding pre split will be 5 times more.
Views, Information and discussion welcome.

1 Like
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Aimtron Electronics
ESDM INDUSTRY - AN OVERVIEW

Electronics System Design & Manufacturing (ESDM) industry in India is poised for continued growth & transformation Supported by favorable government policies, investments in infrastructure and technology, and a skilled workforce

INDUSTRY INSIGHT

India’s electronics sector is set to harness US$ 7 billion untapped revenue by 2035 via circular business model and policy pathways, industry stakeholders said. Current commitments and targets set the projected market size for these circular models at US$ 13 billion in 2035.

India is the second fastest digitizing economy amongst the 17 leading economies of the world. :black_small_square: The Government of India aims to make Electronics Goods amongst India’s 2-3 top-ranking exports by 2026. :black_small_square: Electronics Goods exports are expected to increase from the projected US$ 15 billion in 2021-22 to US$ 120 billion by 2026.

India has overtaken China as the second-largest manufacturer of mobile devices in the world, according to a report released by the international research firm Counterpoint

40-50% CAGR for next 3-5 years.
Aimtron Integration

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Revenue Break down

Product Portfolio

  1. Box Build assembly- 24%
  2. Printed Circuit Board Assembly- 70.6
  3. Integrated Design solutions from Concept to Completion- 5.4%

Industry wise Rev split:

  1. Automotive 13.4%
  2. EMS 2.2%
  3. Gaming 20.9%
  4. Industrial 36%
  5. IOT/Robotic 7.2%
  6. Medical 6.2%
  7. Power14.1%
  8. Others 0.1%
    Geography wise Rev split:
  9. Hongkong- 2.6%
  10. India- 26.2%
  11. North America- 11.5%
  12. Spain- 11.8%
  13. UK- 3.1%
  14. USA- 44.8%

COMPETITIVE STRENGTHS

  1. Product portfolio expansion driven by customer needs and industry technological advancements.
  2. Wide -ranging portfolio with applications across multiple industries .
  3. Diversification mitigates industry concentration risks and reduces vulnerability to downturns in specific verticals.
  4. Engineering expertise in complex product manufacturing from micro -electronics to large box build assemblies.
  5. Comprehensive in -house capabilities for designing and manufacturing.
  6. Long -term, established customer relationships fostering collaboration throughout the product lifecycle.
  7. Well -positioned for increasing product variety, shipment volume, and expanding market coverage.
  8. Strong supply chain and sourcing network spanning India, China, USA, UK, Hong Kong, Singapore, Taiwan, Ireland, and Thailand. Quality assurance ensured through dedicated resources and rigorous testing protocols (functional, reliability, drop tests).
  9. Experienced management and qualified employee base enhancing operational capabilities and product technical quality.
  10. State of the art technology aligned with Industry 4.0
  11. Strong R&D

Weakness:

  1. Dependency on key suppliers for critical components.
  2. Vulnerability to market fluctuations in specific sectors.

Threats:

  1. Intense competition from global and local electronics manufacturers.
  2. Supply chain disruptions and raw material shortages.
  3. Compliance with evolving regulatory standards.

Financial Comparison:

Fy24 Aimtron Moschip
Market Cap 1290 5456
Current Price 632 289
No of share (Cr) 2.04114 18.87889
Fy24 Rev 93 294
Operating Profit 24 34
% OPM 26% 12%
PAT 14 10
%PAT 15% 3%
PE 92.14 545.60
EPS 6.86 0.53
Debt 14.6 69.5
ROE 44% 5.17%
ROCE 39.38% 6.62%
Inventory (Rs. Cr) 35.7 0
Inventory for months sales 4.6 0
Shareholders NA 1,05,938
Projection of 40-50% CAGR Aimtron FY25 FY26 FY27 FY28 FY29
Rev 130 182 255 357 500
OP 34 47 66 92 129
PAT 20 27 38 54 75
EPS 10 13 19 26 37
PE 92 92 92 92 92
Share Price 883 1237 1732 2424 3394

Disc: Not invested
Views and discussion welcome.

9 Likes