PS: Dumping thoughts to refine myself. Not Advised for recommendation but appreciate constructive feedback.
Sharing quick snaps of the companies.
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Stallion India
Company Growth: 30-35%(on conservative level) cagr target guidance for next 3years (Currently Biz is in Cyclical Upturn).
Demand: hfc/hfo are sunrise, to rise nxt 7-10 yrs then moves to after-market. specialty gases is starting. Hfc to hfo (value migration).
Supply: They are into multiple products,40, each have its own compition for big to small(at least 10 players) relative to their size.
Bottleneck/Key Variables: TODO
Legal: Dispute (with a Chinese firm) were called off. Write off 4cr.
Finance: Looking for 90 days payment cycle, no debt, CFO not satisfying.
Revenue: Approval based(3-4yr) for some products like specialised gases.OEM & After-Market (major mix) for next 1-year. then mix changes. Honeywell is unofficial exclusivity (1-yr, perpetual, renewable contract).
Management: Tone, Explanation (bisecting the questions) is good in concall. Confident, self-aware on credibility. First Generation Founder.
Valuations: Narrative is fine and 1-yr FwdPE at 13-14. At 30-30% guided growth, npm to increase by 3-4% from, eps grows b/n 2.5x-3.5x + PE rerating if happens.
Technical: CMP crossed 50DMA, about to cross 200DMA with RSI 70. Formed a base for almost an year. No Volume spike though.
concall Learning on sector:
we give anti-dumping duties on china, they rise input/intermedary prices.
Inventory level can used to offset volatility (price/ demand).
forward/backward integrate: manufacturing molecules, pan India/world supply chain(4X more transport cost)
west get rid of hfc hence sourcing from India/china/mexico.
30k tn capacity (whole industry) for 15k tn domestic demand, with focus on exports (20-25% more profits)
Refregents demand is 4k tn in summer, 400 tn in rest of year.
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Fedfina:
Valuations are at 1.6x p/b, Mr.D expecting growth from them.
They are already at best of their cost of funds.
Yields : Reducing gold loans to 25%, currently at 35%, increasing LAP for better diversification. UBL is seems to be not working for them. Need a relook on this. This mix with give NIM at 8-9%. can they can improve from there ? Co-lending might do the job.
Since AUM growing, net profits also, cost to income might improves; is my assumption valid?
After comparing with peers, IMO, they are behind on net NPA, PCR, NIM.
RoA/RoE is is declining: what should management do to improve? Product mix, focus on lowering NPA, improving nim.
How to measure efficiency on stage 2/ collection side? : I can’t, so hope or trust.
Sector level:
On a fun note, noticed on valuation exercise with AI:
50 bps change in NIM will change 9-10% in NPM.
30 bps change in NPA will change 9-10% in NPM.
As of today, focusing on their restructure of product mix will limits NIM. 100-150 bps at their best.
But NPA, now at ~1.3, tests their effectiveness. Bajaj finance at 0.3.
Any suprises from RBI will be a plot twist.
What to track from here:
- growth in non-intrest related income; recurring in nature.
- Co-lending, if it can reduce cost / improve cost to income.
As of now, they are moving as intrest rate cuts.
To readers,
Apologies for inconvenience,by not sharing the context/numbers/details of the company. All the data is available publicly.
I don’t want to spam the forum with redudancy.
Raymond Ltd.
Post demerger of realty, lifestyle business they left with engineering business citing as Tier 1.5. They acquired Maini precisions (highly reputed), gives them 28% to run the division, Raymond helps with deeper pockets, strong network, visible brand. Thats a good synergy, so far.
They make files, power tools, precision engineering (auto, non-auto) which runs in 3 shifts. So they make one product per day and keeps it in inventory until it got sold, forecasting the demand. current qualified parts are over 350 now, making 1800cr revenue. no.of parts increase over time.
Currently restructuring the business as aerospace and defence, auto segment. 1200cr capex in line. sansera is doing 590 cr, azad 300cr. Guidance to maintain 15% rev, 20%ebidta. growth comes in from product led, volume led.
Aerospace and defence are growing at faster rate, higher margin, longer validation period hence stickiness, more business over time. this demands higher PE.
However, overall margin is avg down by other low margin businesses. sansera has presence in medicals, Azad in energy. hence enjoy high margin.
Structural advantages come from global supply chain moving to India, more business from long-relation customers.
Quick valuations: Over next 3 years, if they do around 4000 cr sales, up from 1800 now, then mcap/sale is at ~1. Good Margin of safety now (azad at 20 Mcap/sale, sansera at 2). With Dip from current level, risk-reward improves more.
sona blw has enquires for robotics precision products. so, new sector is rising.
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Textile Industry/Sector:
only 3 are into watchlist now, vardhaman, borana, gaware.
Primary selection is debt(<=0.5x), since industry growth <10%, having less debt helps in downcycle of industry.
borana plans to go debt free by '26 and coming into IPO with fresh issue and putting all money into capex gives them better than industry growth and yet execution should be tracked.
MSP for cotton, US Tarrif are reducing the margins for vardman, got the scale. Should wait for all-is-well days.
Garware is innovation based, it really has an edge over those two via pricing power and not cyclical(cotton price,etc). pe consolidated at 30 levels for 5 years. it safe to label as a compunder. 12% cagr bet.