Awesome, sure, will keep the thread updated.
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good initiative ,will join ,thanks
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Great. Also, you have anymore info for these 2D3D folks ?
Fellas, I followed up with the IR guys a few times, since it was taking time, I messaged the MD Amit directly (got his contact from my arch friend) to request for a call. Initially he said it wont be possible because one-to-one discussions are illegal and comes under insider trading…
When I pressed ahead, he said he would check and get back, if it is permissible. But it would be only in May, as he is overseas now.
On a second thought, is asking about the concerns (corp structure, subsidiaries, personal investment in design company, dilution so on… ) to the MD himself useful? Useful in making any investing decisions i mean. Will he say anything that is negative, if at all? Can we take his responses at face value?
Focus might be doing everything right. But How can an investor go big on them based on their own explanations? unless one has some insight into how truthful and minority investor friendly the management is.
Given company is doing public concalls, frankly i dont see point of 1:1 discussions. Why not join next Q concall & ask company whatever you want to? Let whole world know the answers.
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Sure we can. but dont want to wait until then, that is the main reason i was trying for an early one.
Company started con calls just now, not sure if they will do it next qtr as well. Also, we might not get enough chances too… analysts take much of the time, number of questions will be limited too.
But yes, we can use the qtr con call definitely.
really good thread. And thanks @johnsgeorge.cet.
1 important thing to check…promoter holding is reduced by -15%…NOT GOOD 
anyway stock is near ATH and awaiting to correct…definitely not a buy at CMP. Let it cool at least 30%.
PE is OK .
In SME cos…I look for 4 things
1> Promoter must be hunger for success.
2> Promoter SHP near 60-70%
3> if having big client as in this case…is good… as Reliance, BMW must have done due diligence…
4> BUY only during consolidation… never buy at peak… I did same mistake in CHEMCRUX…but i learned it…
what’s others say… Dis- not invested…but looking to invest…
Thank you @kumar010203
The reduction in promoter holding is due to the preferential issue for raising funds, promoters have not sold their stake.
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thanks @johnsgeorge.cet . do you see fall in near term …ahve you invested… what’s your criteria for going for micro cap biz…
I might not be the most qualified to comment, still learning the art 
Anyhow, to answer you from my viewpoint, for such small companies, it depends upon your destination - if you are looking at long term, returns like 10x or 50x in say 10 or 20 years, the buying valuation is not as important as we think. 10x is 1000% total returns, a difference of 25% or even 50% here will not be of a great deal.
Just to take a random example:
300Rs stock doing 50x in 20y is 22% cagr.
But same stock bought at 600Rs, cagr will still be 18%.
This is assuming the microcap in question is capable of pulling a long haul - buying right - which is a different topic in itself.
However if you are looking at short/medium term, returns like 50% or 100%, then yes, you must buy it cheap. Especially because we cant say whether the particular stock or market will fall in near term.
I have not bought Focus yet, not waiting for price correction but mainly to know more details about the concerns i have, which I mentioned earlier in the thread like corp structure, market leadership claims and so on.
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Criteria for microcaps, let me try to summarize a few points:
- Long runway - either under penetrated market or fast growing market, with the company growing faster than the industry.
- Improving margin profile, ROCE and ROE, Stable or Improving Debtor days and Inv days. (In short, improving leverage)
- Growing without need of debt.
- Right capital allocation
- Honest, capable and passionate management - I think this must be given the most importance, to be able to bet big on a stock. Smaller the company, the more important it is, more than the numbers.
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Methedology
Focus talked in the concall about one of the competitive advantage being nationally accredited testing laboratories
The reason this is important is so that large reputed customers like GMR, L&T, jockey would want quality & some assurance of the same.
202206060949-NABL-400-doc.pdf (3.6 MB)
Above is list of ALL NABL accreditations from 2022
link: https://nabl-india.org/nabl/file_download.php?filename=202206060949-NABL-400-doc.pdf
we can see Focus’s NABL accreditation here for Electrical & Photometry.
Now there are 42 companies which have telemetry instruments (400 odd for electrical). Most of these are testing & instrumentation companies & so not competitors for focus. I went through all 42 to find possible competitors for focus (based on pricing, quality, target cistomers etc, they may or may not be competitors in reality)
Potential Competitors
Venture lighting
Venture seems to provide 5 year warranty for their products & to that extent seems to be of good quality.
Venture also has focus on Outdoor lighting (seen from website)
Interestingly venture is also HQed in Ohio, USA so is an MNC competitor (hence needs to be considered a serious competitor & studied more deeply).
Lighting technologies
Lighting Technologies is also an International Manufacturer and Supplier of lighting solutions.
Focus on outdoor lighting is visible.
Gupta power infra
Seems a bit more diversified than other 3 companies. Gupta Power Infrastructure Ltd is a into manufacturing array of Cables & Conductors. Overhead Conductors, HT-LT Power Cables upto 66 KV, Instrumentation Cables, Mining Cables, Thermocouple Cables, Airfield Lighting Cables, Railway Signaling Cables & Specialized Cables. With its own EPC Division, GPIL provides. I would not be surprised if lighting is not a focus area for them.
https://www.linkedin.com/company/gupta-power-infrastructure-limited/about/
They do seem to be present in industrial lighting, commercial lighting etc but couldnt find too much on website on this. Mostly focused on Wires, cables, conductors.
Non Competitors
Interestingly i am not counting surya roshni as a competitor since it only has photometry accreditation but not electrical.
surya is listed btw but lacks focus imo, no pun intended).
Varroc:
Though varroc has both accreditations but we know that its focus is on auto sector, so i am excluding it from potential competitors list.
Fiem:
Fiem doesnt have electrical accreditation & focus is on Auto (fiem investors should take notice that it doesnt have electrical accreditation)
Wipro:
I think a lot of us have used wipro products. It is clear though that they also, do not have electrical accreditation
Signify:
Signifty is phillips. We know that signify/phillips focus is primarily on end customer segment with lower value, quality & shelf life. It has its pros & cons. Due to this focus it is more akin to an FMEG manufacturer. Whereas Focus is closer to a Capital goods provider (where quality & economic value much more than brand).
I could only find 3 potential competitors who have both accreditations. This is definitely interesting. I will try to dig deeper into all 3 by visiting their website & downloading their financials.
Overall interesting stuff. 2 MNC. 1 local competitor who might be diversified. Need to do more due diligence on all of them.
Disc: Invested, biased
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Hi Sahil
I noticed one Red flag in their Annual Report:
Auditor’s fees has increased 3X (4 lacs to 11 lacs) from FY21 to FY 22.
Maybe this needs to be clarified by the management on this generosity shown on their Auditor.
Disc : Invested since last two months with good position size (> 20%).
Hi all,
The quarterly call or the conf call we requested is nearing, sharing my remaining questions/concerns here. I have sent it across to the IR, will update here if I get any response. Otherwise, will want to get these clarifiied on the call.
If any of you have any inputs, please feel free to add.
1. The above table shows the fixed assets (property, plant, machinery) and capex data as per statements.
a. During 2018 to 2022, there was a capex of 27.5 Cr but gross block addition was only 19.4 Cr. There were no intangible assets added too. What was the extra 8Cr capex spent for?
b. Also, heavy capex of 27.5Cr has been spent for plants - I suppose it was for the Bhiwadi and Ahmedabad manufacturing plants/lab - which is sufficient for future growth, as per your recent interview. Then what was the need for the preferential issue of 31.4Cr in 2022? What will this capital be used for? As per the IR company Kirin, this amount is used to expand R&D team and so on, however why such a big amount for R&D team? If it is for any other purposes, please elaborate.
2. Shethvinod has the same directors - Amit Vinod Sheth and Deepali Amit and Vinod Tarachand Sheth (Who i assume is Mr. Amit’s father) - then why keep it as a related entity, why not merge or bring under Focus as a subsidiary?
3. With reference to Sethvinod financial statements pasted above (got from Tofler.in):
a. Looking at Shethvinod financial statements, I see there is a Net Profit of amounts like 1Cr, 2.4Cr etc. Had Shethvinod been inhouse manufacturing unit, Focus Lighting would not have spent this amount. Similarly, there is a selling/distribution expense and other misc expenses like Auditing fees, which would not be needed also. How can you then say this arrangement is in the best interest of Focus lighting company and the shareholders?
b. There is long term debt in Shethvinod balance sheet, does Focus Lighting have any relation with this debt?
c. Also, had Shethvinod an inhouse manufacturing facility, its assets and liabilities will be on Focus Lighting’s balance sheet, which will be different from the current state. Is this in the best interest of Focus Lighting share holders? (For example, more property/plants will increase fixed assets, debt of Shethvinod will be in Focus’ balance sheet, which then cant say a company without debt and so on).
Screenshot of Other expenses from 2020 report of Shethvinod:
4. Related Party Transactions:
a. Why is there a sales transaction with Shethvinod. It is the manufacturing unit for Focus, why would Focus sell anything to Shethvinod?
b. When a sale transaction through Shethvinod is recorded, how does the auditor verify if it is a legit sale to an end customer, considering that Shethvinod is not audited as it is not a subsidiary? (In the case of direct sale or sale via a subsidiary, there will be invoices from end customers which the auditors can verify.)
c. There are substantial amounts of loan given to associate entities like Arion, Shri Jay Exim, Opti innovation. Even though going by your previous response that this was given to help with their capital needs, why is Focus Lighting obligated to do this with an associate company? In what way these companies help or add value to Focus lighting that necessitates this hand holding? Why is this in the best interest of Focus Lighting and its shareholders?
Disc: Not invested
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Some capability points
Focus was empaneled with ICF (Integrated coach factory) for LED supplies per mgmt as development source, here is the certificate
here is the list of both approved and dev sources for same product category from https://icf.indianrailways.gov.in/uploads/ICF%20ELECTRICAL%20VENDOR%20LIST%20VER-14.pdf (there would be revision of this doc as focus was added in october and this list is from April - point here was capability side)
and here is the screenshot for focus
If we see both doc - focus is across all categories - A.B,C,D - where as we can see some known names like Syska, Philips, Kilite are supplying only subset of these categories.
Also for Klite (comparable peer in thread) has external driver per screenshot, where as focus has its internal driver
these are cursory findings and sizable revenue kicks in from railways once they are upgraded from Dev to approved source (due in may 23 per last con call) - it does provide us with validation of mgmt claim + tech capabilities. It also tells that there is competition warming up given lot of names in Dev category.
Folks with better understanding of ICF LED categories and vendor shortlisting criterion know how can further enlighten rest of us , or something we can ask mgmt during upcoming concall.
some more stuff on categories - D seems difficult and Focus seems only among few - high level observation
D : Invested
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Has anyone here received the annual report from the company?
Results are out. While sales/PAT growth are impressive, Inventory shooting up, no cash flow.
Cash flow statement shows a preferential allotment of 31 Cr. Another dilution?
https://archives.nseindia.com/corporate/OutcomeofBMwithResults_03052023190929.pdf
Absolutely not time for this - was the reply from Focus this time for my questions. Hope to get these clarified in the call today.
Who else is joining?
Here is the invite, you can register in the link there.
Focus Ligting & Fixtures Limited Q4 FY23 Concall Invite.pdf (252.3 KB)
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What is your takeaway from the concall?
Any question diverted to the CFO goes either un-answered or insufficient details shared in the concall which I found very disappointing.
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