PML Weekly - Bouncing off the 20 WMA. Hopefully the sideways movement is done. Fundamentals in the PML thread
Swelect Energy, Monthly - Long term breakout in a C&H or Inverted H&S sort of formation and trading above those levels last 3 months. Also has a flag formation on the weekly
New module plant of 500 MW has started production from Aug or so and should contributing to numbers in this FY, starting from this quarter.
Fundamentally, this year 100 Cr ebitda possible which is a 25% growth - that means its trading around 13-15x EV/EBITDA. Not cheap but not expensive either, considering at 500 MW nameplate capacity, this can probably do 150 Cr EBITDA next year and can potentially be valued 25x or 30x EV/EBITDA by then (if Waaree IPO lists well)
The company has also sold its alloys business (Amex alloys) for 110 Cr as of yesterday (pretty good valuation) to focus on modules and going forward a backward integration into cells as well. The company is also into EPC and IPP business so is somewhat in the entire value-chain, at a smaller scale than Waaree Energy which should be listing soon.
Risks:
- Crash in module prices due to imports could mess up the payback period for the capex done. Import should probably get restricted in a couple of quarters
- Risk of tech going obsolete. But this might be at least 7 years away as of now as the new plant has the latest tech
- Our stated goal is 50 GW per year as per MNRE, we are already somewhere around 37 GW in capacity. High growth can continue for another couple of years but later on, if we don’t find export markets, there could be margin pressures as it doesn’t seem to be particularly hard to scale this business (somewhat reminds me of diagnostics businesses - although here there is scope of reinvestment by backward integration further down the value-chain and also scope for exports)
Disc: Have positions from 540 levels in Swelect. PML from 550 levels (No recent transactions. PML isn’t cheap at these levels)