Hi Friends,
I have been tracking this company for sometime and with market catching up with infrastructure theme and increase of govt spend in this area, it can be a big boost for this stock in future.
From the annual report - https://www.bseindia.com/bseplus/AnnualReport/538546/74259538546.pdf
The products are mainly in roofing category like
- Roof sheets (Steel sheets, Polycarbonate sheet, FRP sheets, Deck sheets, Panels, Sky light panels)
- Roofing accessories (Purlins, Ventilators, Louvers, Frame, Canopy, Gutter, Vent)
Use: These products are mainly used to setup infrastructure for plants, machineries, construction, temporary roofing for storage, labour etc.
Track Record:
- 10 year, Sales growth is ~18%
- 10 year, Profit growth is ~21%
- Management seems prudent and honest based on how they have managed the balance sheet of company, no pledge, or preferential allotment.
- Debt has increased in last two years, form ~nil to 6.5cr, mainly due to capex.
- OPM% are on the lower side, but the optimisation is visible during last two down cycle. Now stands close to 7%
- Unable to pass cost to customers, as visible from yearly results, especially during time when raw material price are increased in short span of time.
Triggers:
- Quality of clients, it boast of an impressive list of clients like Sun Pharma, GMM, ABB, Deepak nitrate, Transpek, L & T, Adani, Bajaj, Borosil, SRF, Roles
- Quality of products: design standards of product are quiet impressive as per AR. Confirming to both American and Indian standards
- Capex plan to increase the production from 600Mt to 2000MT, recently did the increase from 200Mt to 600MT.
Risk:
- The company has moved from SME platform to main board in 2021, which coincided with bonus issue of 3:1, unlocking enhanced liquidity in the counter. The price may remain stagnant due to this (already stagnant for 2 years)
- No long term contract for raw material, so it is exposed to market volatility and fluctuation in raw material prices can adversely impact the OPM.
- Serve the debt, even with healthy cash flows can be daunting if the margins are squeezed.
- Capex plan from 600MT to 2000Mt was announced but has not gathered any pace. This may keep newer business limited. Any adverse situation here can stagnate the growth.
Given the amount of money flowing in infrastructure growth, there are definite tail winds for the sector as well as company. Also the size of opportunity, especially with kind of established clients are huge.
Would like to get your opinion on this. Also any obvious miss in this thesis or known red flags can be helpful for community.
Thanks for reading.
Disc:
Tracking
9 Likes
Numbers look good. However this is a tough industry and looks like there is no pricing power at all, Everest Industries has been there for long, with same products, they are not able to improve their margins.
4 Likes
I have been tracking this company and following the Director on linkedin as well. The company is on a hiring spree. From sales managers to CEOs, they are expanding big time.
3 Likes
Thanks for posting the article, I was more interested in knowing some red flags of the company. Found some there and deduced some more from AR, especially regarding similar companies of director and his family members.
- Agrawal Associate (the director’s other company) - Disclosed in related party transaction, did sale and purchase of material in tune of 30/40 Lakhs, which looks fine. Only concern is the payment being made for service which is close to 30Lakhs, need to know what kind of service they are getting from them.
- Ashinishi Marketing & Engg. co. : This is promoters brother company, again in the same business, but here looks like more sale (in tune of 26 lakhs) have happened, and few thousands rupees are paid for services.
Seeing the previous AR confirms this trend, the business looks clean may be the service payment needs to be queried.
Incidentally, all these companies are based out of Dabhoi Road, Vadodara area.
If someone here is from that area, they can confirm whether these are separate plants or sharing/working through same premises.
Going by the other details and prompt disclosure of the transaction on arms length basis, my original thesis of management being clean still holds good.
5 Likes
New order of 9cr on 3rd august
but apparently the price has run upto 70-80% before the announcement.
That’s the microcap segment for you… hoping a better followup next time
Source : https://www.bseindia.com/xml-data/corpfiling/AttachLive/f0423eeb-278e-4327-8627-2f2945bfef51.pdf
3 Likes
Would beardsell limited be undervalued currently, considering both companies are doing same business ?
Sorry, I am not following beardsell limited.
Sharing my notes from their recent concall.
FY24Q4 concall
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Incorporated in 2008, Unit I commercialized in 2012, Unit II commercialized in 2021 and Unit I was closed and operations were transferred to Unit II
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Engaged in Pre-Engineering Buildings such as construction of Factory sheds or Buildings, Showrooms, Warehouses. Have completed 250+ products
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Order booked until October 2024
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Unit I is rented out and earns 3.15 lakh/month
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Unit II capacity: 800 tons/month which can reach 2000 tons/month in 3-4 years(thereby reaching 200-250 cr. annual revenues)
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Capex will be done via internal accruals
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FY24 product mix
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Roll forming products (roofings sheets, purlins): 56.88%
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Structures (column beams / sheds from steel plates): 28.42%
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Coil trading: 8%
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FRP sheets, polycarbonate sheets, hardwares: 7%
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90% sales comes from Gujarat with remaining coming from UP, Bihar, and South India
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FY24 margins were lower due to lower prices (Steel price reduced from 80 in March 2023 to 57 in March 2024) and higher employee costs
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Have built 16-18 houses for ~80 labours and started canteen services
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Q1: Revenue was 28 Crs., tonnage was 787 ton
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Q2: Revenue was 26 Crs., tonnage was 501 ton
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Q3: Revenue was 25 Crs., tonnage was 980 ton
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Q4: Revenue was 24 Crs., tonnage was 1100
Disclosure: Not invested (no transactions in last-30 days)
