This article discusses in detail the flurry of activities that is happening in data center market. It’s a good read to understand the growth drivers for data centers.
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HBL Power FY 23 annual report attached. Very detailed explanation of its businesses and their prospects. Worth a read for those invested and those wanting to research it.
HBL AR FY23.pdf (3.9 MB)
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Please delete if deemed irrelevant.
My question is, HBL Power has been performing good and there’s visibility of growth as well. Despite of that there is hardly any institutional holding and for a 8000 cr market cap company the number of shareholders is over 2 lakh. What is holding back the institutional shareholders or even HNIs to take above 1% stake.
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Valid question. I would ask you to be patient and let them deliver a few quarters of consistent results. Also it is my perception that the management may not have actively engaged with any institutional buyers to create visibility about the business. In fact in the last call, their MD had words of caution about the stock price. Disclosure: invested.
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MOA amended to include production of night vision devices, thermal imaging products etc.
Tonbo Imaging - where HBL is already invested - could production of some of Tonbo’s products be done from HBL going forward?
Thanks,
Souvik
Disc: Invested
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Though the Kavach TAM is big pond but with entry of MNCs like Siemens & Kyosn no of fish is also increasing and will be interesting to watch the development.
It will surely gona affect existing player ,specially player like kernex who solely depend on Kavach revenue.
https://twitter.com/equitybyaadi/status/1730082127151022257?t=dqVamjxmw4VgbrnAEn7DDg&s=19
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My limited understanding on this piece is that the no of players currently there the execution was challenging as the execution is not in isolation but it is a function of everyone who has got a contract completes on time.
With the new players coming in the market will grow . The tenders also will be 5000 kms which requires quicker execution .
Mostly when a few players enter a new industry market develops.
Disc - Invested since last 1 year positively biased. Added recently
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Will it be a race to the bottom in terms of margins? Since there will be many approved KAVACH vendors and each of them will participate in open tenders, there is a high chance that vendors will underbid/undercut other vendors in order to get orders. Especially the ones whose major source of revenue is from KAVACH.
For any business to be done with government, tender is must. Tenders must be happening even today and price competition would be fierce. Entry of big players like Siemens can make things more competitive but I think there is enough place and opportunities for all the players given the size of rail network we have. Let’s see how does it play out.
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When there is sectoral tailwinds , everyone wants good margins and so companies become choosy.
Similar thing is happening in T&D sector. Read their concalls. Their order book is at 3-4x FY23 revenue. Still more orders are coming. Now, companies are very selective in bidding for the orders.
Disc: have small tracking position.
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Kavach will cover 2,500 km in 2024 and 5000km per year until entire network is covered which is 68,000km according to below article.
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BEL won the electronic fuze order from Indian Amry. Will be interesting to see, if HBL has any role here.
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Don’t think HBL will have any role in it. BEL works on a Transfer-of-Technology (ToT) with an Israeli company - Reshef Fuzes (subsidiary of Aryt Industries). There is an article in Haaretz (a popular Israeli News Publication):
Aryt’s main customers are the IDF and the Indian Army. The company has had a long-standing partnership with the BEL company of the Indian Ministry of Defense. Aryt assisted its Indian partner in setting up a factory to assemble fuzes and regularly provides technical assistance in the production and supply of fuze components.
BEL (in partnership with Reshef) is the main supplier of the Indian Army and delivers tens of millions of dollars in orders. “In 2015, we signed an agreement with BEL to help them with everything related to fuze solutions,” Steffler says. “To date, BEL has supplied about a million fuzes to the Indian army, all with our backing and assistance.”
Source: Shooting a Shell Without an Advanced Fuze Is Like Burning Money.
In the same article the there is a reference to this contract won by BEL:
Lately, one of Reshef’s biggest achievements was winning a sizable tender from the Indian Ministry of Defense amounting to hundreds of millions of dollars, with Reshef’s share in the tender in the amount of 170-190 million dollars. “There was a major breakthrough after BEL won a huge tender for a period of ten years, which will bring us projects of some tens of millions of shekels every year for the next decade. Winning the tender is based on our technical advantages. Reshef’s technical capabilities gave the Indian Army the confidence that it was worthwhile to work with us.”
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HBL Power came up with good q3 fy 24 results.
TTM PE is 64 as per screener. However in high growth stocks its all about future growth and trailing earnings are just a number.
Coming to specific segmental numbers, and details
HBL Power Systems Q3FY24 strong results.
-Sales up 80% YoY.
-EBITDA up 163% YoY.
-PAT up 229% YoY.
Segment Results
-Battery EBITDA 100% growth YoY.
-Defence EBITDA 150% growth YoY.
-Electroncis EBITDA Profit of Rs. 22 cr vs Loss of Rs. 1.7 cr YoY.
Margins in defence batteries are very good.
In a development shared with results, company has acquired 60% stake in TTL electric fuel Ltd for EV Charging infrastructure. This could be an ancillary play to its EV retrofit trucks business. If this EV retrofit trucks business clicks then it could be another avenue for growth.
disc: invested.
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