I interpreted it as cost of materials consumed was 19 crores, and maybe finished goods from last quarter in inventory were delivered this quarter. It is not possible with the info available to figure out whether the inventory was of raw materials or of finished goods. This is why I wrote that if the new sales were just 25 crore, it was a bad result. But current inventories of 45 crores mean maybe there are pending deliveries which will be billed in next quarter.
If the next Railways - RTIS order not received from L&T this year, then current year revenue/profit will be lower than last year.
why would that happen, ideally once they have been qualified as vendor, they will keep getting orders so long as L&T keeps getting it, decisions maybe delayed since this is an election year but railway spend is expected to continue for the forseeable future. That beside, trust the management to creat value and make sure they grow
this link is not working
If anyone attended AGM, please help with the notes. Thanks in advance.
I would welcome the notes from the fellow investors. The company usually shares the AGM transcript on its website: avantel.in > Investors > Financial Information > AGM - EGM Proceedings
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Attached the transcript of the AGM dt: 30/5/2024
Avantel_Limited_AGM_Transcript_30_05_2024.pdf (770.8 KB)
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Thank you for sharing the transcript. How did you get this? Is it on the company website?The one thing which caught my interest was the enormous opportunity that SDR seems to present for the companyā¦
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GSaaS update:
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anyone has any idea on what is the revenue potential
Can somebody tell me if these are concerning red flags or am I missing something?
CONCENTRATION OF EXECS
- The company is run by Dr. Abburi Vidyasagar, who is the managing director and his family.
- His wife is the CFO. His son is also a director in the company.
- Dr. Abburi Vidyasagar and his son are entitled to 2% of the companyās profits each. The family has high compensation in relation to the business.
CS ISSUE
The Company Secretary's compensation is significantly lower at only 11.67 lakhs compared to that of the Promoter familyESOPs ISSUE
The median employee salary is 5.62 lakhs, raising the question of why the company is issuing ESOPs when the salary component is so low. The company has 274 employees and 28 workers. A total of 38,95,300 options have been issued, averaging approximately 12,898 option contracts per employee. With the fair value of options at the measurement date being 127 (source: AR), the value of the options is approximately 16,38,084, which is 2.9 times the median salary. Considering that the options were issued at 50 rupees, the profit from the ESOPs amounts to 9,93,184, which is 1.7 times the median compensation.This calculation does not account for the exponential rise in share price.
I am of the opinion that this leads to Short-term Focus and Retention Issues as stock profits have been so high.
This can also lead to extreme dissatisfaction among those who didnāt receive ESOPs.
LACK OF COMMUNICATION
- I was not able to find any Conference Calls and Presentations.
THE JUNE QUARTER WAS TERRIBLE COMPARED TO VALUATION
Please tell me if anyone has similar concerns and if I am wrong in my concerns.
DISCLAIMER: INVESTED
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Hi All,
Any idea why the Q1 2024 results were poor? Revenue is down almost 25% compared to Q1 2023. Operating margin has shrank compared to last quarter. EPS is down too. Have I missed any adverse developments for the company in the last few months?
A thing in the results i noticed was a Rs 3.64 Crs charge on account of ESOP. This was not there in any of the results in the past ( as per qtrly filings). So PAT was down, if we remove this then the PAT woull have grown 25 - 30%.
This is my limited understanding from the results.
But why would you remove that? Isnāt it a legitimate charge? Remember what Munger said about excluding ESOPs to arrive at the earnings (by whatever name you may call it)
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I do not think there is anything adverse going on with Avantel. I also donāt have any suspicion on the management. Also, this is a company with clean accounting practices, is my belief.
I welcome ESOPs. One of the key concerns I have with this company is employee retention. I was looking forward to knowing what they do to identify and retain people, which I believe is key to the companyās future. I mentioned earlier in this forum that the lower salaries relative to software industry (yes, not exactly same industry, but this is how employees tend to compare their potential salaries), and also the location (Vizag) could be holding the company back in the regards. Since then, the company made significant progress towards these concerns. Now the company has R&D facilities at Hyderabad. This alongside ESOPs are steps in the right direction, in my opinion.
I do have other concerns. Typically, a company which wants to retain employees should also pay attention to strengthening feedback systems. But I suspect defence companies tend to be hierarchy heavy and the top management tend to miss critical feedback from much lower levels. I donāt know if the quality of mid/lower level management being supportive and motivational to the subordinates at Avantel. Improving on these aspects and employee friendly policies will be required for this companyās future.
I have another significant concern. It is well known by now that the defense companies, in India, have significant potential for growth and Avantel is definitely one of them. But do they have processes, capabilities, and capacity building to keep up with this growth? I remain skeptical. Iām not sure if the company is agile enough to take on the flood of orders. The systems and processes that sustained the company this far, may not be suitable in the new reality and expectations.
If my fears about defence companies are true, orders will come, but deliveries will suffer. Iām not sure if these companies even can recognize the need for an overhaul of their processes to get there.
Iām sorry if these thoughts are vague or shooting in the dark. Iām afraid that the current valuations simply assume that delivery is a given. I think the potential order growth is the correct assumption. Iām just not sure if ability to deliver can also be taken for granted about these companies unless they adapt and evolve themselves.
Disclaimer: Invested and potentially biased views.
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no, you got me wrong, I am not saying to remove it, its just to show like to like numbers since this seems to be one off and not something which will happen every qtr, maybe once in a couple of years.
its as per accounting standards so nothing wrong.
But ESOP compensation is so high compared to median compensation. What if employees continue to expect such ESOPs? With the stock touching 224 and falling to 196, the ratio of stock options to median compensation is very close to 3.5 times.
Isnāt this ratio different from conventional salaries?
Also the stock was down 8-9% due to bad result but at the time of writing this it is up 7.5% in the next trading session. Isnāt this suspicious?
DISC: Invested
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But no top line growth is concerning for a stock at close to 90 times earnings. In fact there is de-growth of around 25%
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I believe these ESOPs are staggered for the next several years. So I see them structured towards the goal of retention. I havenāt given a detailed look at these ESOPs. Iām also not very familiar with its nuances.
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