COSMIC CRF LIMITED - sme

Stock Opportunities Untested - but worth a good look
1

The Company was incorporated on December 21, 2021 as ‘Cosmic CRF Limited’, a public limited company under the Companies Act, 2013. . Subsequently, the Company executed a business transfer agreement with Cosmic Ferro Alloys Limited on January 19, 2022 (NCLT company), Company acquired the CRF unit of Cosmic Ferro AlloysLimited.

Cosmic Ferro Alloys was their family business - which had gone to NCLT in 2018.

The purchase included a manufacturing unit in West Bengal spread over an area of approximately 3.82 acres together with plant, machineries, assets and liabilities, . The unit manufactures a range of cold rolled stainless sections,such as fabricated items for railway, coach & wagons, cold rolled formed items for wagons and coaches, cold rolled formed items for infra companies and EPC projects and products for roadways and national highway.

Current Capacity - 18000 MTPA
Proposed expansion (as per RHP) - 18000 MTPA

As of March 31, 2023, the total order book value of our Company was ₹ 53,640.82 lakhs, out of which orders amounting to ₹ 13,566.33 lakhs have been executed and orders amounting to ₹ 40,074.48 lakhs are ongoing. - As mentioned in RHP

Latest-
Press release on 05th July,2023- Order received from Titagarh Wagons woth 25 crs(to be completed in 4 months)
Total order in hand as on 05/07/2023- 380 crs.

Clientele-
Titagarh Wagons Limited, Hindusthan Engineering & Industries Limited, Melbrow Engineering Works Private Limited, Jindal Rail Infrastructure Limited, Allied Construction Engineers & Fabricators, Railways

Visit their website to know about their products.
https://cosmiccrf.com/
Read
Cosmic-CRF-Limited_RHP.pdf (5.2 MB)

We got the oppurtunity of meeting the management, Mr. Aditya Vikram Birla, and these are the key points noted-

  1. Their family has been int he railways business for the past 70 years.
  2. Their largest customer is Titagarh Wagons and mostly all orders related to CRF is fulfilled by Cosmic.
  3. Capacity has been expanded from 18k to 22k MTPA with a very little capex of 80 Lakhs.
    • Confident of achieving 90% capacity utilization in FY24 (Current Capacity - 50%- FY 23)
  4. They have back to back arrangement for RM, so their EBITDA is mostly fixed
    • they have a price variation clause
  5. They also directly suppy to the Railways.
    • Daily 20-25 cr orders are given out by the Government
    • Government has more than 100 workshops in which they do refurbishment
    • Every 4-5 years wagons go through refurbishment
  6. In Railways, there are only 7 RDSO approved supplier of CRF
  7. There are 21 types of wagons and Cosmic is the only company which can cater to CRF components of all the 21 types of wagons.
  8. Expected revenue for FY 24- around 230-250 cr
    FY 25 - around 300-350 cr
  9. They are also looking for further capex oppurtunity and there is a company takeover from NCLT in pipeline.

Financials-
The company started its operations in FY 2023 and that too not for full year.

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Risks -

  1. Very High Client concentration - Top 5 clients - approx 95% of Revenue.
  2. The NCLT company from which the company has taken over the CRF unit was the promoter’s father company.
  3. The promoter is estimating FY 24 revenue double of FY 23. (September results will give us a clearer picture)

Disclosure - Invested

8 Likes
4

There is a litigation going on between the two companies on the tech. Any idea about it?

Also, why there is no financial information (P&L statement) present before FY22?

1 Like
5

Co was bought last year and was operational only 6 months u won’t see any history.

6

So, who has acquired the company? Are they already into railways sector? If yes then what was their existing business?

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It appears that promoters are very greedy, as the IPO price was set very high. Since the IPO, the share has seldom gone above issue price.

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Cosmic Ferro Alloys was Aditya Vikram Birla’s Father company which had gone to NCLT.

Aditya Vikram Birla had taken the CRF unit from from Cosmic Ferror Alloys. Their family is into this sector from a long time. They know in and out of it.
That is the reason, he was able to make 121 cr topline in just 7 months into business.

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yes, definitely the IPO issue was at a high price but the management claims that when FY 2024 revenue will be posted then this price will be justified.

10

Prmoter holding 98.43% ? either upper or lower circuit :slight_smile:

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No. This shareholding is before IPO.

Post IPO - Promoter shareholding was suppose to be - 72.51%(as mentioned in DRHP)

12

Yes. there is a litingation going on but the management is confident about resolving it soon. They have appointed arbitrar and will soon resolve it.

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Hindalco tied up Metra SpA of Italy for making Aluminium Rail coaches.

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cosmic crf.pdf (2.3 MB)
Latest order update by the company.
CRF(Cold rolled formed) products are not only used in railways but it has various applications like in dredging, road constructions, highways, mountain regions - crash barriers, automobile sector etc.
They are cost effective and hence in demand.

2 Likes
15

@ca.ankitarathi :does this company promotor Aditya Vikram Birla belong to actual birla group (ABFRL, Ultratech) as i could not find this person in birla family anywhere.

Thanks in advance for your reply.

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No, not the Birla group you are referrring to ( ABFRL, Ultratech).

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For a detailed study on Cosmic CRF, you can go through this link posted by an investor.

https://x.com/Rahul_Invest/status/1710522019710967887?t=c2UZhkNe75uBxUzn2n9xoA&s=08

Really feel that this stock is undervalued.

18

Press Release today - bagged another order.
Eagerly waiting for the results.

cosmic crf press release.pdf (2.5 MB)

1 Like
19

@ca.ankitarathi Can you explain what is the litigation in this company. Why the company went into NCLT? What is the background of AV Birla? We need to understand why is the company undervalued if the entire railway sector is rocking? Happy to discuss on this.

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See what I know is-

AV Birla’s father’s company was Cosmic Ferro Alloys - which went to NCLT due to some reasons unknown to us.
AV Birla now has taken only the CRF unit of Cosmic Ferro Alloys from NCLT.

The company actually got listed at a high valuation (according to me) - If we see the last year results and this high valuation will only get justified when the H1 FY24 results will be posted (which as per the management guidance can reach double of the previous year)

1 Like