Chins' Portfolio

Thanks for calling it out. Very valid rebuttal, I should have looked at this as a consistency check. Point was that this is the first source we have of onboarding 12-15 more co-lending partners.

Yes, so that’s the occasional bits of new information you can often get from credit reports.

The qualitative forward guidance (this instance, for example) in any credit report is probably procured via a questionnaire, so if you ask the right question, the management will sometimes give information it hasn’t specifically stated elsewhere. Or it could just be intentional to provide some additional data to the agency. Rating is an important metric for an NBFC.

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hi…I liked this method…Can you please give me more info on this? how I can do it?

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Hi Mudit,

I shared the details in the post you’ve quoted. Is there anything in specific you’d like to know more of?

In general, I changed my framework from looking at moving averages, to thinking about valuations, earnings and eventually trying to time my entries closest to quarters showing growth. It’s for these reasons I wouldn’t be comfortable owning some of the companies mentioned in the title post of this thread :slight_smile:

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I’ve been having private conversations with fellow investors off the forum, and they’ve contributed to me becoming a better investor over time. I thought I’d share how my approach to an industry has changed from the start of this thread, as I hope it will add value to those reading.

This may be obvious to seniors :slight_smile:

As gross margins are a measure of value add, I like to place companies into buckets based on their gross margin profile. In the chemicals space, this is one way to differentiate between a speciality chemical manufacturer vs a commodity player.

  • Paushak and Clean Science have the highest margin profile.

  • Speciality chemicals companies like Navin Fluorine, Gujarat Flurochem, Vinati (not shown) are in the 50%+ bracket.

  • By this metric, Deepak Nitrite’s phenol isn’t a speciality chemical. Revenues from other verticals / downstream products need to improve the gross margin mix into the higher brackets before one can make this claim.

  • In the Deepak Fertilizer thread, I had made the claim that TAN should be seen as a speciality chemical. Revisiting this through the lens of gross margins is difficult. Firstly, their TAN is a part of their subsidiary Smartchem, which had gross margins of 32% in FY21. However, this subsidiary also deals with other things like fertilizer subsidies, and trading, so one can’t isolate TAN’s gross margins.


  • Most auto ancs fall in the 35-40% gross margin bracket.
  • RACL Geartech, SJS Enterprises and Sona Comstar (not shown) are amongst the auto ancs in the higher 60-70% bracket.

As gross margins are the maximum that EBITDA margins can reach, one can see how close/far the EBITDA margins are to the gross margin mix to see how much the company is losing to logistics and overheads (especially for export facing companies), and how much they can improve by cutting costs.

Thinking about Deepak Nitrite, I look at other companies in the sector with comparable gross margins:

Company Gross Margins EBITDA Margins
Fineotex 34.53% 17.7%
Valiant Organics 33.52% 17.1%
Jubilant Ingrevia 32.95% 16.53%
Deepak Fertilizer 32.61% 18.00%
Deepak Nitrite 31.33% 21.92%
Laxmi Organics 30.24% 8.29%

They have no right to be putting out such high EBITDA margins despite having gross margins of ~31%. A part of this is helped by being 80% domestic facing, but as an investor, it’s a nice sign of execution. If future capex into downstream products is margin accretive, one hopes that the company eventually moves into the 50% gross margin bracket.

I think Q1 of FY23 for Deepak Nitrite will continue to be painful, seeing degrowth YoY. It looks like the larger triggers for growth will play out towards the end of FY23 and in FY24. I’ll be using this time to accumulate a larger position.


Considerations of gross margins in Laurus also show why it has a long way to go before comparisons to Divi’s are justified:

As they scale up the custom synthesis division, an investor hopes that the margin profile will look progressively different in two or three years.


On these lines, I’m studying two companies that could be bonafide speciality chemicals companies (the latter at very reasonable valuations): Chemcon Speciality, and Excel Industries.

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Nicely expressed! It triggered a thought process in me would like to share, kindly ignore if it’s not productive…

I would relate to above that I also look for companies in simple words I would call them companies with “gaps to fill” as that is where the extra return may come…

We maximise our chances by choosing the worthy management & promoters who have this important task of filling this gap…(that is whom we think as worthy)

From my experience so far the crux lies in - The other important piece which we may knowingly or unknowingly miss. Infact even our chosen worthy management may miss this piece…it is the number of variables impacting the business for which we all have to bridge the gap…some or the other variable would simply come out from the back and ensure the gap remains or in worse case even broadens…also some variables remain dangerously unknown to all until they strike one fine day…

What we may do - either be thorough and along with that hope for the best… Or chose businesses with least variables, be thorough…and still…hope for the best!

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Thank you. It’s an interesting post!
I filtered chemical cos with 50% gross profit margin in latest quarter (few cos haven’t posted Q4 results yet). You can see some bulk chemical names there as well. For a few, say, Meghmani Finechem, high gross margins have always sustained.

Yes, all things being equal, higher gross margins are better than lower ones but based on a co.'s strategic positioning, value addition may have different paths. For instance, a company can be the lowest cost producer, it may chose to get into specialty products or may be both. One thing we now know that the specialty chemical companies were not immune to margin contraction when it actually mattered. I would call Deepak Nitrite a bulk chemical company with scalability plus a diversified, niche product portfolio. And for me, that beats spec chem six days a week, twice on sunday. :slight_smile:

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Came across a nice tool for analysing web traffic, and other data. Out of curiosity to see how covid affected e-commerce websites and how they’re doing right now, found some interesting insights on some listed companies.

Viewership over time


Engagement

One can look further to see once someone visits, how long they spend on the site on average, and whether they leave without interacting (bounce rate)

  • Myntra and Nykaa Fashion are almost identical on clicks and bounce rate, but people spend longer on Myntra than Nykaa Fashion.

  • Trent has seen a recent surge in traffic in the last 3 months, but the quality of traffic is subpar. On average, 7/10 visits to the site end immediately with no interaction, and the average time spent on the site is a minute. They look the worst of the lot.

  • Vaibhav Global ranks top for engagement metrics, with a 40% bounce rate, and a whopping 11 minutes spent on average: One should dig deeper to understand why they’re able to keep people engaged for this long. I’d bet it’s the $1 auctions that they offer.


Demographics

  • Sites like Nykaa, Myntra and Westside share common demographics of age distributions - they’re primarily popular with the younger age group.

  • Vaibhav Global is the clear outlier in the demographic basket, seeing an almost equal split between age groups with a bias towards older viewers.


Clarifications:

  • Sites differ in counting traffic. Most articles on the topic reflect that tools like these often underestimate organic traffic.

  • Data differs in counting desktop vs mobile and app users which partially explains difference in numbers between pictures.

  • Data shouldn’t be treated as accurate for any investment decisions, but just an exercise out of interest.

  • Websites are semrush.com and similarweb.com should anyone reading want to look for themselves.

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Excellent insights (as always), Sir.

  1. For Trent viewership chart, I think you have accidentally chosen 2Y instead of all time
  2. The Nykaa viewership chart is Nykaa BPC or Fashion?
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Hi Malhar :slight_smile:

This was deliberate, you’ll see that viewership wasn’t noteworthy prior to that time.

Nykaa cosmetics in the first chart, Nykaa Fashion in the second.

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