@Pratik_Patel9
Firstly, the stock tended to be stable, mostly staying above 100 even during significant corrections in the last couple of years. That obviously changed this time around, which wasnāt good news for those speculatively holding the stock to see if something significant happens in terms of order inflows.
Coming to the business, as of this writing, the āDefence Make in Indiaā has turned out be a whole lot of noise, & not much substance. We could say that about the entire āMake in Indiaā ācampaignā.
If Iām not wrong, Govt said during the budget that their defence spending would go up only if there is some kind of a war situation. That is significant considering Govt is the only end buyer. So, the order inflows for the company will mostly be from the indigenisation programme, which so far hasnāt moved the needle significantly enough in terms of sales.
By managementās own admission, the two JVs arenāt going to see much activity in the near future.
In terms of numbers, the company has guided for sales of 380Cr (revised downwards from 420Cr) this year. i.e., a Q4 sales of 189Cr (9MFY18 sales is 191Cr) with a PBT of 18-20%. They are guiding for a FY19 topline of 450Cr (a 18% growth for someone holding the stock for 2 years isnāt really noteworthy, considering FY19 was supposed to see a big jump in the topline). The current orderbook is 533Cr & they expect to get orders of 650-700Cr next year. One can go through the Q3 concall to get the breakdown for both sales and orders.
Coming from an ECE background, I can say that what the company does is highly knowledge intensive, & requires extensive R&D; not to mention the exacting standards required to be a reliable long term supplier of subsystems for the defence PSUs. They are ready to take advantage if (thatās a BIG EFFING IF) and when something significant happens on the defence manufacturing in India. The company needs topline growth to take advantage of their operating leverage. I doubt thereās anything left to squeeze out in terms of bottomline.
I feel the management is competent, & going by the concalls-- fairly honest & upfront. The promoter holding has always been low. It was 17% when I invested a couple of years ago. There were rumours (mentioned on CNBC last year) that the promoters were looking to sell out. There will be more than enough takers for this business if that happens. I donāt see any problems with the balance sheet.
Disclosure: Holding on for now, but likely to sell sometime in the near future. Iām just glad itās back up above 100.