Thanks for your response!
The major difference I understand is that Genesys is trying to build the metaverse itself, while Ceinsys is focused on developing applications within the metaverse apart from their ER&D busines.
Any reading recommendations for beginners? Your repose was well research and well put! Would love to work on my reading and researching skills!
Regarding Garware, what do you think about the possibility of price getting re-rated before the new capacity comes online? Result wise its almost sure that they can’t do much better for next 3-4 quarters since they are running at full capacity, but the p/e ratio is very cheap considering current market and roughly 100 rupee eps in FY 25. I also sold it at around 2K, since in past I have held onto cap-ex stories and sold in frustration because of interim turbulence as things like depreciation, interest starts immediately but full capacity utilization takes much longer and by that time market sentiment changes for worse and the price basically goes nowhere profitable .
With the current capacity, they have a guidance of 2500 cr by FY26. Which will be 20% YoY growth over FY24-FY26. The new capacity will stary contributing post that. There is chance of slight operating margin going towards 18-20 %. This business to me still fairly valued. They are churning out new products via R&D, creating a brand in the domestic market, strong balance sheet (possibility of an inorganic acquisition). Biggest risk to me is the corporate governance faltering, as they have a history.
Invested in a small way in Ceinsys.
Your post got me to start reading about the “Metaverse”. Here is an article from WIRED which may help others. What Is the Metaverse, Exactly? | WIRED
After a modest election result by NDA government the opinion going around was this government will have more populous reforms. That is evident on the union level by the announcement of farmer loan waver off and 20000 cr for PMAY scheme. And yesterday Maharashtra government also gave away a lot of freebies in the budget. Hopefully these all things will be a catalyst for growth in Tier 2, 3 & Rural economy.
For instance Mah gov. giving Rs. 1500 per month to women could lead to buying of 2 wheelers (without spending too much of their own money they can manage to pay the EMI thanks to the month money they will be receiving) or increased spends on alcohol or branded clothing.
What would be the best way to play this story?
Very broad themes are difficult to play to the precision. Sometimes you may deduce that one particular sector will be benefitted and some other ancillary sector gets benefitted. Sometimes you think one company will perform , but some other company starts performing.
At the same time ,Less money will be available towards capt spending such as infrastructure , road and others , thereby reducing employment generation , as company will have lesser order for new work development and that lead to reduce consumption of cement and steel so don’t anticipate it’s out come towards GDP
valuation is very high that is the main concern
Almost a month has passed since what appeared to be “Day 1 of bear markets” which in hindsight has turned to be 17 sessions of uninterrupted, and as yet unbroken rampaging green streak at pf level. I will not delude myself to think this was the only possible outcome although it was a likelier outcome I felt at that time (can’t afford to not be optimistic). The panic was brief and passing when the pf drawdown crossed -10% and hit -11% briefly. Did not expect the swiftness and ferocity of bounceback though which has led to biggest gains in any month for me, which I doubt will be matched in a long time. In terms of emotional capital, June 4th has given more than the financial capital gained in the month perhaps.
Sharda Motorsm Weekly - Long tail on week 1, followed by 3 weeks of gains. What’s also special is the breakout from that upwards sloping trendline which was dictating rate of gains previously. This breakout should set in motion a new trendline yet to be established.
Parabolic moves like this generally lead to more gains. The chart reminds me of what VBL went through in June '22 when I took position. The buyback at 1800 is completed which has taken the lid off the prices. There’s also lot of institutions which have got into Sharda this month, taking their ownership from 0% to ~10%.
Despite all this, and doubling since initial breakout, it continues to remain very cheap.
Wockhardt, Monthly - Some good updates from the AGM and the dispatches. Nafithro could do 100 Cr sales in FY26. Emrok could double the sales, WCK 5222 has been used to treat a cancer patient with CRPA (NDM-MBL producing) in the US successfully which is a big deal as FDA has indirectly approved the drug in its “Extended Access” program which is like DCGI’s compassionate use. It also tells us that NDM-MBL producing bugs which were specific to developing countries are now present in Developed countries as well (WCK 5222 is the only drug capable of treating NDM-MBL producing Pseudomonas Aeruginosa based on papers I have read). CLSI has awarded an investigational breakpoint of 64 mg/L. @Sanjay_Kumar_E has dissected it beautifully in this post.
The short answer is higher breakpoint increases market size and applicability. Some of the papers for eg. thought acineto was resistant to WCK 5222 based on their notion of Cefepime’s breakpoint. Now CLSI has agreed that the way WCK 5222 works is different and thus awarded the higher breakpoint which makes the drug usable in even Acineto that few papers classified WCK 5222 as resistant. It also makes it a better drug against existing ones as its MIC is several dilutions away than competetion.
Resistance development also will take time against WCK 5222 - so simple interpritation would suggest a bigger market size for longer. The CLSI verdict also potentially brings the “best-in-class” and 'first-in-class" that blockbuster molecules that do things differently than the rest get. Current drugs are Beta-lactamase Inhibitors (BLI) while WCK 5222 also enhances the function of Cefepime by bringing its T% > MIC down and thus forges a new category called BLE (Beta-lactamase Enhancer) which could again potentially increase value of the drug.
Shaily, Weekly - Another breakout from an upwards trendline, similar to VBL in Jun '22 I mentioned above in Sharda section. Fundamentally nothing more to discuss than what’s done in earlier posts. This too could get a move on.
Ceinsys, Weekly - Closed above 20 WMA and has set itself up for resumption in direction of uptrend from brief correction. Fundamentally have discussed this in depth in multiple posts in this thread. There was one more order extension disclosed which could be ~50 Cr in value. Can pick up steam on a weekly close above 600 levels which should happen before Q1 numbers comes out. I presume Q1 should be a good quarter going by the deferrement of large order from Q4.
Genesys, Weekly - On the weekly chart, it has reversed its downtrend and closed above 20 WMA. The monthly chart shows the potential of a breakout above 650-700 levels. The company has inked a partnership with NNG Auto and Mobility Solutions which will bring AI powered ADAS navigation to vehicles in India (mostly high-end luxury cars). This is probably the first customer for the new HD Maps made for ADAS product.
Garware, Weekly - Has made a strong close above those pesky 2200 levels which was seeing lot of supply. Should help in continuation of trend.
Taal, Monthly - A close above 3000 would have been very positive here but it retraced back some of the gains. I still think it could surprise on the upside pre/post AGM as more clarity emerges on growth plans. May remain cheap until then.
Disc: Invested. No recent transactions in any of these
Krishca Strapping- a breakout after a long time, with strong volumes confirming the shift in the trend.
The new unit which is to sell higher margins straps is commercialized. They have doubled the capacity with this unit, taking the revenue potential to 300cr at peak utilisation. This yr they plan to do 40-50% utilisation, and will fully utilise it over 4yrs (although i expect it to be a lot earlier)
The peak revenue of 300cr, is excluding the packaging segment which can do a lot more then strapping segment once they get more approvals
They have also introduced another segment of products, primary packaging, which again is expected to be higher margin.
Have opened up their khaata with SAIL with 2 orders. Its very difficult to get into PSUs, SAIL has given them their smallest plant for now, SAIL has a lot many more plants, huge opportunity opens now.
Only 3 companies compete here, the new fourth one is krishca.
Mid East plan is still on, to setup a unit there, this can be very huge, as they will be the only one with a unit here and will be able to source rm from cheap asian countries, hence can compete even with china
Export sales is growing very rapidly, to do 30cr+ this yr and 100cr in the next 5yrs, i feel it can be done sooner.
Focusing on several new countries and already getting repeat orders, although smaller orders
The biggest risk here was a small TAM, but now they are getting into other prods (ofc a natural diversification and nothing else), these are higher margin then straps.
Also recently the company has given an intimation of a potential fund raise, which i assume will be used for this new expansion and the Mid East expansion.
there is detailed thread on this company, if needed
invested and biased
TCS forming a nice H&S on weekly chart.
Breakout on daily chart seen
Disc: Holding, no recent transactions
Some churn after months of sitting and doing nothing which has been quite a challenge for my monkey brain - I raised some cash selling Sharda in the runup to 3k. Think its fairly valued and further growth from FY24 base might be hard. Still have a 5% position left, to see if TREM-V or the new acquisition plays out and also since its a stellar business in terms of cash flows and management quality. After writing “its still cheap” for several months, I don’t think I can say the same anymore. Added little more to the Shaily position from 460-470 levels since I have grown to understand and like the business a whole lot better and have better understanding of longevity and long-term triggers.
Pix, weekly - Pix is consolidating on the weekly chart for around a year.
Pix makes transmission belts including v-belts and timing belts that are used across industry and automotive space. The products have persistent replacement demand. They are growing in export market mainly with export contribution in FY24 going to 60% mark from 46% in FY20. The growth overall though after the FY20-FY21 period has been flat and consequently, the stock has been going sideways without much return in the last 3 yrs (~50% return as compared to 2.5x the microcap index has done and ~5x most names have done).
Now with the base built, there are signs that growth might be back which is all that might be needed to get the price moving up leading to a breakout from the base that has been built. The downside is perhaps 10% at most here and upside depends on the quantum of growth and how persistent it will be.
Disc: Positions in Pix between 1450-1500. Not qualified to advice and am just a novice sharing what I do and writing for clarity.
Nifty Microcap 250, Weekly - Bullish engulfing candle on the week where LTCG and STCG were hiked. Despite all the rants on social media, the market has closed so strongly for the week to everyone’s disbelief. (I personally don’t think a 12.5% LTCG and 20% STCG is end of the world. I was paying ~35% tax incl surcharge and cess when I was briefly employed and to me personally, it feels fair. Its only my personal opinion and I am no expert, so lets please avoid debates in this thread)
I see skepticism on valuation and overheated market everywhere I turn. It appears almost contrarian to be bullish these days. I am not saying there’s lot of value. I am saying you can’t argue with liquidity (Bulk of 1.5 lakh Cr on the sidelines is chasing small/micros - so though as a % of overall equity AUM it might be low, it is still very, very potent in this space). Its fund managers playing defect card in prisoner’s dilemma. Everyone whining about valuation in public and buying in private and those actions are what’s reflected in the prices. Retail is of course selling but not staying out - invariably finding new bets to get back in.
RBI, SEBI, Finance Minister, CEA have all played their cards. Every raging bull market has had a blowout top when restrictive measures fail to restrict. RSI is around May '23 levels (~70) when there was again lot of skepticism after Mar '23 last week. moves until May. Once that was overcome, the chugging train kept chugging.
Nifty Pharma, Monthly - The most supportive sectoral index I see at this point for further runup is Pharma. This has been a relative underperformer and now might be the time it plays catchup. Lot of the other relatively underperforming sectors like IT, Banks and Chemicals have failed to deliver as all have headwinds in the macro environment (Banks with cost of funds and provisions and chemicals with China and IT with AI - all these 3 sectors are also very well setup technically but fuel for further moves is relatively less)
I have an aversion to generics focused pharma, so am looking only for differentiated bets with some moat. Personally I am heavy on pharma and healthcare already with Shaily, Wockhardt but added one more position recently
Orchid Pharma, Weekly - A breakout on the weekly after 6 month consolidation, post previous runup that came after the Investec report (one of the best on the company and worth a read).
Fundamentally, there are multiple things going on with the company
The company is a ceph powerhouse with presence across all 6 generations of cephalosporins. They make the APIs at present for these but are getting into formulations as well in some products
Cefepime+Enmetazobactam (Exblifep), the company’s NCE got approved by US FDA. Their partner Allecra is marketing it everywhere except China and India. Orchid has partnered with Cipla to market it in India and with Shanghai-Haini in China. They get royalties from all this and will also be manufacturing it for Allecra as a CMO - all this could bring in PBT of 150-200 Cr to the company. Taken from the recent B&K report
Cefiderocol for LMIC countries - the company has partnered with GARDP/Shionogi to manufacture Cefiderocol which is a niche drug similar to WCK 5222/Avycaz
They will also be selling generic Avycaz (Ceftazidime+Avibactam) and Ceftaroline with filings done in US
There’s a merger planned with Dhanuka Labs which is a promoter owned entity in similar space which will be synergistic (And promoter shareholding with go up to 75%) which could happen in the next 1 year
7-ACA capex will help in backward integration and will be a import-substitution/PLI play with good payback and is a good capital allocation decision. Over time this company will be a fully-integrated KSM + API + Formulation + Fixed dosages/Marketing player in the ceph space. The management is stellar in terms of execution.
There’s a bit of geopolitical tailwind as well (this is from the book “China RX”) from both India and US decoupling themselves from Chinese supply chains for essentials KSM/Intermediates/APIs. The US BIOSECURE act is a step in this direction as well. The book was writtein in 2018 but its playing out now with Granules DCDA capex, Aurobindo 7-APA plant and of course Orchid’s 7-ACA (better synergy and product mix here than the other two).
Overall though valuation appears rich, there are lot of triggers lined up here and the company could grow profits at 40-50% CAGR over the next 2-3 years. For its capabilities, the < $1b valuation to me sounds reasonable - since most of the growth is in the future.
Disc: Positions from 800-1400. Though I bought initially a small position around 800 and added another small pos. around 1100, I didn’t have enough cash then to add more, so bulk of the buying at higher prices after selling Sharda. The tax implication of churn + possible good future justifying a 2-3 year hold + Nifty pharma relative strength, makes this a promising bet for me. despite its runup. I am not qualified to advise.
Associated Alcohols & Breweries Company came up with good set of results after muted last few quarters.
Fundamentally, company is slowly moving into premium products - introduced premium Gin in the last quarter, premium Single Malt whiskey this quarter and several other drinks lined up for the next couple of quarters. They are also tapping into several new states like Maharashtra, UP, Goa, Pondicherry etc. This should give a big boost to the overall revenue going into the future. On top of that capacity utilization for the ethanol plant will be fully ramped up this year.Promoter did some buying as well in the last quarter.
Technically, the chart is very well placed. It completed the rounding bottom pattern and broke the lifetime highs at 650 with good volumes, retraced and retested the level and continued its upward journey last week.
P.S. this is my first post in the thread, so please excuse if any mistakes.
disc. invested.
Be careful with Associated Alcohol. I don’t know much about technicals but fundamentally they have governance issue. I sold my holding last year because of the same.
Santosh Ji, can you please elaborate the governance issue they had …
Can u specify the Corporate Governance issue that u r talking about ( wrt Associated Alcohol and Breweries ltd )
That ll be helpful
Thanks
disc : invested from 1100 levels
