Absolutely, learned this the hard way. Bought this stock at 80 and sold it around 400 levels just on the back of TTM valuations which at that juncture looked very high in a already crazy market. I think the biggest lesson is to adjust the P/E with the growth rate for a better picture. PE in isolation can be very deceiving.
From a minority shareholder’s perspective a big negative point when the company is growing at this scale is they should be hosting concalls for the benefit of the minority investors so we can get better insights of the business.
Board of Directors of HBL Tonbo Private Limited (HTPL) have resolved to make an application for striking off the name of the company undersection 24B(2) of the Companies Act, 2013. There are no operations in the company.
Board noted that an amount of Rs. 86.67 crores was invested in 2023. Although, the plan was to
invest Rs 150 crs, a higher valuation was expected by Tonbo for the balance, which was not
accepted by HBL. No further investment in Tonbo is proposed.
So it looks like the relationship with Tonbo has soured and any plans for joint development of missile seekers/other opto electronic equipment have been scrapped.
A sum of Rs 175 crores was approved by the Board for capital expenditure during FY 25.
The largest single item is for Rs 60 crores, for the Lithium lon cell production plant.
There will be no borrowings needed to finance the total capex.
60 Cr for Lithium Ion cells. Not assembly of battery packs but manufacturing of individual cells. The company has been into industrial batteries (VRLA or lead acid) and military batteries (thermal batteries), which are an entirely different chemistry/tech as compared to Lithium Ion. If I am not wrong this is the first time that the company is venturing into Lithium Ion batteries. Not sure if they will tie up with someone or develop the expertise inhouse.
HBL Power corrects 9.8% with more volume. There is a blood bath in Mid and Small cap stocks. Still some good stocks have not corrected. Even if they have corrected, it is marginal .
What could be the reasons for this sustained correction in HBL stock in spite of good results.
The possible reasons could be…
Tonbo Imaging India Private Limited (Tonbo)
Board noted that an amount of Rs. 86.67 crores was invested in 2023. Although, the plan was to
invest Rs 150 crs, a higher valuation was expected by Tonbo for the balance, which was not
accepted by HBL. No further investment in Tonbo is proposed.
Market apprehension might be that this developement may affect future cooperation between the partners .
The recent announcement of Lithium Cell mfg when the Li cells price have fallen substantially.
The lithium battery announcement is nothing new.It has been declared in mid 22 and was clearly described under low growth opportunities in annual report released in Sept 23. So this is not a cause of price movement in any way .A month ago ,the share price was at around 440 and it crossed 540 in anticipation even before the results came .Good results took it to 600 but profit booking and panic selling has caused the price action since then. Since there was no fundamental reason for the move from 440 to 540, no fundamental reason needs to be assumed for the fall from 600 to 530.
It’s Mr. Market typical behaviour, we don’t have to find the reason for every down or up move, the situation is for taking the advantage either to buy or sell considering current and future prospects.
I recently had a chat with a representative from one of India’s leading data center providers. Last FY they have given 150-200Cr worth order for batteries (fresh and replacement) and most of it went to HBL. This used to go to other battery players but gradually shifted to HBL. This transition is because of superior longevity of HBL batteries, which reportedly last for 10 years compared to the 5-year lifespan of competitors.
Hbl makes PLT batteries not vrla afaik. They provide higher and quicker power for short period of time vs lead acid batteries. I think they got order from reliance data centre ( not confirmed though), Hbl is also now venturing into Li-ion
You are right that the batteries used in datacenters are PLT batteries. However HBL also manufactures VRLA batteries, they are used in telecom tower and as power back with UPS.
For those who wanted to deep dive, here is a good article comparing Lead Acid and Lithium Ion batteries. Using a vertical bar comparison, it shows where pure lead (PL) batteries stand. I guess you can place PLT (pure lead-tin) made by HBL slightly above PL.
The company in its recent intimation to shareholders shared a revised guidance for 2025 revenue and ebitda excluding new kavach tender projection, which is below FY 24. There seems some sort of uncertainity regarding the growth , hence market waiting for clarity.
“New OEMs are expected to be onboarded for the upcoming tenders as the railways plan to expedite the implementation of Kavach.”
“Other benefits of ‘Kavach’ include the controlling speed of trains by automatic application of brakes on the approach of turnouts, repeating of signal aspects in the cab, which is useful for higher speeds and foggy weather, and auto whistling at level crossing gates.”
Kaynes Technology in their investor call has projected significant revenue from Kavach. Not sure whether they are onboarded as an primary vendor like Hbl, kernex etc or they are supplying to one of the multinationals.
Unfortunate accidents like these, will once again bring back need to have collision avoidance systems like Kavach and accelerate Kavach implementation at a faster pace, benefitting all the players.
“New vendors are also to be on-boarded for speeding up the system installation process and two companies -Quadrant Future Tech (which is carrying out trails), and Seimens - are being considered.”
