Introducing “Cranex Ltd “ a 43 year old BSE listed ultra small cap Crane Manufacturer :
Cmp : 7.30
Current Market Cap : 4 Crs
Current Turnover 21.6 Crs
Fy 15 Eps 0.7
Low Equity Capital of 60 Lac Shares
Promoter holding : 36% ( Promoters have been buying from open market continuously)
No Promoter Pledge
Promoters have lent 9 Crs over 6 years back without interest to the co which is shown as “Unsecured Loans”
Currently it is a non dividend paying company
Website : www,cranexltd.com
Triggers :
Co has recently got an order for 42.64 Crs from Delhi Metro along with IFE Consortium with execution by 15.07.2017
Brief Profile of the Company
Cranex Limited is one of the leading manufacturers of EOT Cranes and Gantry Cranes in the country. They also provide after sales service and reconditioning services .Cranex has its manufacturing facility measuring about 4,200 square meters located at Sahibabad Industrial Area, about 14kms. from New Delhi.
It is to be noted that Cranex had gone under BIFR in 2005 and came out of the BIFR in 2012 .
Promoters
The company was promoted in 1972 by Mr Suresh Chandra Agrawal and Mr Piyush Agrawal. They are both currently actively involved in the company management. At present the Board consists of 4 promoter directors and 4 independent directors.
Customers
Cranex supplies it’s products to several Government and Private sector industries.Clients in Government departments and companies include Bharat Heavy Electricals Ltd (BHEL), Railways, Delhi Metro, Indian Space Research Organisation (ISRO), Orissa Cement Ltd (OCL), National Thermal Power Corporation (NTPC).Cranex also supplies to the private sector and counts Alstom, Bennett Coleman, Jaso India, Durha Construction Pvt Ltd., Maruti Suzuki as it’s largest clients .
Disclosure : Invested under 1% of PF :
Lets use this thread to discuss more on this co and understand this co in more depth . Welcome anyone with more insights to contribute to this thread for the benefit of all .
Shareholding Pattern as on 30th Sep 2015:
Promoters : 36.93 % ( Last Qtr it was 36.66 % )
( Promoters have purchased 15625 Shares from Open Market in July-Sep Period )
Shareholders holding over 1% :
Hitesh Javeri 2.65% ( Small Cap Investor )
Harsha Javeri 2.33%
Anil Kumar Jain 1.7%
Public Shareholding 63.07 % ( Fallen from 63.34% in June )
Appears that Promoters are buying from open market using “creeping acquisition route” .
Results expected on November 14th 2015
Range of Equipment manufactured by Cranex include
1.EOT Cranes (Electric Overhead Travelling Cranes)
2.HOT Cranes (Hydraulic Overhead Travelling Cranes)
3.Goliath Cranes,(A heavy but portable crane, usually about 50-ton capacity, used for jobs requiring heavy lifting and for shop fabrication involving heavy steel)
4.JIB Cranes (A crane having a swinging jib, as opposed to an overhead traveling crane, which does not.A cantilevered boom or horizontal beam with hoist and trolley capable of picking up loads in all or part of a radius around the column to which it is attached )
5.Winches
6.Electric hoists
The products are tailor made suiting specific project needs.The company has a technical collaboration with Kuhezug Fordertechnik GmbH of Germany.
Cranex is today at a stage where most negatives are in the price.That said one must adhere to allocation rules since in such ultra small caps the unknowns can be debilitating.Which is why i will advise a 1% type of exposure .More than capital erosion risk the risk one must factor in is more of opportunity cost.
Triggers and events to watch out for
Operational Triggers
Composition of Services is just 4% of revenue . Improvement here can
dis-proportionately improve PAT . Typically this must be 60-40
We need to see how the Delhi Metro order gets executed.If properly
executed this can be a game changer for this company
At some stage (i believe when promoters have at least 51% or more
stake ) this co will have to consider paying dividends ( at least
1-2 years away i think ) which can lead to immediate re-rating.
Non operational Triggers
We need to observe how promoters intend to take control of this co
considering that m’cap is just about 4 crs whereas promoters have
lent their personal money of under 9 crs that too over 6 years back
with no interest (This was done to take the co out of BIFR in 2009
period ).In the past they have considered allotting sweat /
preferred equity and then dropped that plan.Since creeping
acquisition has its limits (5% pa cap & difficulty in getting
delivery as 65% holding with general public ) we have to consider
probability of preferential equity shares allotment to promoters
thro’ warrants .
Que : why should i look at Cranex when i have so many other "sure
shot " 20% cagr opportunities ? Ans : In Cranex we are betting on
non linear lumpy growth which if it works out will give us much
bigger upside with limited downside risk.Conservative capital
allocation of < 1% gives us the flexibility to “buy,ignore and watch
” this opportunity.
Que : Do you know or trust the management ? Can you give some
pointers ? Ans : No I do not . I have not seen any red flags yet .
However low ROE,low stake,and low npm makes me cautious in committing
not more than 1%.
Que : Have you sold or added to your holdings more post your initial
original post ? Ans : Added small portion - Will update the day i
sell .
Que : Whats your timeline for holding ? Ans : At this point of
writing wish to give them 2 years till Sep 2017
Que : How to get more info about the co ? Ans : AGM is the best bet
. Otherwise specific ques can be addressed either in this board or
better still one can write to the md/cfo thro’ investor relations
email id available in their website.
Que : Do you think mgmt will share information if i ask ? Ans : Cant
say but my gut is that they will not share much as their priority
would be to hike their stake.
Que : Whats your current strategy for this stock ? Ans : My current
plan is to sell half of my holdings at a certain price so as to make
the remaining half zero cost and then let it ride.
Que : Are you a "materials handling " sector expert ? Ans : No . I am
a learner.no specific expertise .As good (or as bad) as anyone else.
Que : Is this stock suitable for concentrated PFs ? Ans : I dont
think so . I will advise this for those who want to take a lottery
type bet with very limited downside as part of diversified
portfolios.
Those from Delhi can confirm but when i search 99acres i get indicative rates ranging from Rs.30000 - Rs.60000 per sq mt . At lower end of 30000 this translates to land value of 30 Crs ( Co m’cap 4 Crs ) . Book value of this land in the annual report for March 2014 is just Rs.1835000.
Link of 99 acres which i accessed is given below for ref .
I have been holding the company from IPO days and had high expectations from the management but hopes have been unanswered till now.Product range,Technical collaboration all looks good but management seems to be the problem in capitalising the opportunities.Even during growth times of industrial activity they were far behind in increasing market share.
thanks praveen706 you must have enormous insights to this co since you are holding from 1985 ipo ? I am unable to get info on why they dropped the plan to allot pref shares to promoters earlier do you know ? I also am trying to see why javeris are holding stake here for many years or so can you share any info if you are aware.Pl share whats your expectation for the future from this co too it will help .
Results are out . Sales up 22% from 3.38 Cr of Q2 LY to 4.11 Crs this year.Co seems to be investing for the metro project scheduled for completion by Sep 2017 .EPS 0.1 vs 0.14 .
Long term Borrowings increased to 14.17 Cr in Sep vs 7.72 Cr in Mar.
Short term Borrowings increased to 5.48 Cr in Sep vs 1.65 Cr in Mar
Trade Payables has decreased to 3.39 Cr in Sep vs 11.85 Cr in Mar
Inventory moved up to 10.48 Cr in Sep vs 7.24 Cr in Mar
Drs has come down to 11.14 Cr in Sep vs 13.44 Cr in Mar
Cash in hand 4.7 Cr in Sep vs 8 Lac in March
Balance Sheet Size at 28 Crs (Rs.46 per share ) . Cash in hand equals current m’cap ! Land with current market value between 30-60 crs not priced in.
In spirit of full disclosure : Today i have sold out of my positions in this stock.Reason:a)in need of funds b) realization that marginal positions does not move the needle but give dispropotionate stress c)investment based on hope and not earnings
thesis has not changed.Promoters are buying whatever qty being offered for sale.Good Bye Cranex Ltd it was nice knowing you.Learnt something new made some little profit too.
Good results to expect. Profit margin of company is increasing. With execution of Delhi metro project in coming quarters, significant increase in topline and bottomline is expected.
