This is an unrelated venture to its core business or am I missing the link?
Seems co is venturing into renewable energy space. I am assuming so looking at the earlier announcement of the renewable energy order and the below announcement of amendment of company association.
However it is very surprising move given that:
1/ Company has never talked earlier about this plan.
2/ Co had unfulfilled vision with the existing steel/pipes business, where they have lot to do.
3/ Co do not have / may not have required expertise and mature plan in renewable business where the space is quite crowded.
Not sure what is company trying to do overall and seems to be going in all directions without proper investor comms / plan.
Looks like the scrip is getting rerated due to this kind of quality of management.
Can guys / @SwapanBansal who has done study of this business throw some light?
To be honest; Even I was confused when I seen those press release. Rather than focusing on their core business they are diversifying to unrelated areas like Renewables and telling it their growth strategy…
Last call also they hadn’t guided anything about such shift… will wait for Q4 Results & management commentry about same
Can’t say whether this is good or bad without management commentry… but this sudden shift is concerning as they had aspiration plan in Pipe Business.
No Reco; Invested, Biased & Holding
Renewable is an entire different business and is not related to pipes in the slightest way
They should focus on pipes by forward/backward integrating and growing that business as big as they can and then diversify
As a shareholder i can simply buy a renewable energy company and diversify my portfolio
Why do i need a management that has zero experience in an already competitive field
Looks like a future CG issue is on the cards
The latest move by the company to RE sector appears to be a red flag. Though details of expansion is not shared by the company. I am not an expert on RE sector. So only experts can throw light. It is also surprising to see order wins. How can a company without any expertise/ prior experience can win orders from Govt Sector?
Whatever may be the fact, seeing the cutthroat competition in RE sector, I am not willing to back the company for success. I am certain that like it happened in telecom sectors, many companies in RE sector will bite the dust. Are we not aware of RCOM episode?
I am also sort of amused, about this venture , since they never communicated or hinted such aspect. That’s the problem.
However , I won’t see it as a redflag, unless it’s not hurting the company"s OPM or botomline.
If the move is revenue accrual and contributes to the numbers, I don’t see the venture a problem, since they are into pipes, they might already have some input raw material manufacturing capabilities inhouse, like panel mounting structures etc.
P.S: I could be wrong, and biased, since holding.