Hi Hitesh ji, thanks for your notes on Digvijay Cement. What I have noticed so far from going through the results and reports that they are running at full capacity. You mentioned there will be single digit growth from pricing /efficiency/inflation.How much incremental cost saving do you expect? Anil Singvi is excellent. Have you read anything about capacity (growth has to come from expansion) in near term? How popular is the brand?
And if its running at full capacity and incremental cost savings are marginal, do you think its fairly valued considering a microcap with no visibility in the capex plan?
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@Quest4Value First of all let me clear that auto sector turnaround is on my watchlist. Taken position in bajaj auto. Rest of the companies including tvs motors, hero, and auto ancillaries are under watchlist only.
Among auto ancillaries, Minda inds stands out against most other companies in terms of consistent wealth creation. I was looking at some big auto ancillary companies because of @zygo23554.s presentation at VP meet Goa 2019, wherein he mentioned that very few auto ancillaries can cross the threshold of sales of a certain size and hence are worth looking. If the sector starts performing a lot of winners will emerge from it. Fiem was something I looked at earlier but their decision to go into less profitable LED division was what turned me off. Havent looked at it since then.
One aspect I tried looking at in these auto ancillary companies is which companies weathered the storm of auto slowdown with minimal damage and in that list, endurance, minda etc seemed to be the interesting. Against that, Motherson is one company which can give very high delta if investment thesis in investing in it is correct and company starts perfoming according to thesis.
But as of now it largely remains a theoretical exercise.
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Digvijay cement was a bet on the turnaround of the company under Anil Singhvi. That has started and continuing. Capacity expansion will largely be determined by limestone reserves. As far as I recall, during last AGM when he was asked about expansion plans for the company, he mentionied about leaving it to the next AGM in a humourous way… something like “next agm ke liye kuch to rehne do”.
With someone as experienced as Mr Singhvi at the helm, I would leave it to his capable hands to take a call on how he wants to take the company forward. Plus since a PE fund is the promoter they would be interested in taking the company to the next level otherwise they would not have invested in it.
So for me its a hold at current levels. If there are sharp spikes I would re consider my stance.
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Hi @hitesh2710 - Would like to know your thoughts on M&M from an auto sector point of view, they are the leaders in the SUV and tractor space, plus a holding company with stake in other arms of Mahindra group
Disclaimer : Invested
Thanks for the reply.That was helpful in evaluating my own understanding.
We probably have a couple of quarters before the cycle really turns,since as prices increase due to bs6,buying a vehicle becomes even less affordable especially in an environment where financing is scarce.
So I believe people looking to play the auto sector turnaround have some more time to zone in and evaluate their choices thoroughly.
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@hitesh2710 ji, have you looked into Subros? We don’t have any thread or any discussion whatsoever about this company at ValuePickr.
It is the leading manufacturer of ACs for PVs & they are now diversifying too. I’ve recently taken a position into it.
My investment thesis is the following:
- It’s now an affiliate company of Denso with 20% stake. Suzuki Motor also has ~ 12% stake.
- Constantly gained market share in this auto slowdown. PV segment market share is now 45%. Maruti is largest client.
- Diversifying away into CV (Truck, Bus, refrigerator Transport), ECM (radiator), Reefers, Railways & Home ACs (radiator, condenser). PV revenue contribution to fall to 70%.
- Not affected by EV transition. It is working with M&M’s E-Quadricycle & also bidding for electric bus orders.
- Constantly deleveraging. D/E is now ~ 0.3.
- ROCE & ROE improved to ~18% & 14% in FY19 from ~7.5% & ~4% in FY17 respectively due to deleveraging & operating leverage.
- Sales growth CAGR is 11% (TTM) & 18% (3Yrs). Profit growth CAGR is 27% (TTM) & 48% (3Yrs).
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Thank you Hitesh ji, that info is very helpful.
Hello @hitesh2710 sir, my question is not related to any stock per se but more towards financial planning, which I guess is the sole reason why anyone would invest in stock market. Sir, how do plan asset allocation (between equity and debt) and do you align stock allocation towards a particular goal ?
@hitesh2710 Sir , What is your view on BHEL ,India’s largest power generation equipment manufacturer. The market cap slipped to 12000 Crs… waiting for valuable comments.
Thanks in advance.
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@hitesh2710 - Hitesh bhai, any inputs on speciality chemicals in general and Deepak Nitrite in particular.
Can the china situation create some tailwainds especially for the forward and backward integrated players who dont depend on China for raw material input.
@hitesh2710 ji as you mentioned above that bandhan is a good buy at current levels, can we compare bandhan with ujiivan sfb? Similar lending profile and ujiivan is more geographically diversified and C/I ratio at it’s peak. Bandhan being a universal bank has its own advantage and adding gruh’s book some diversification as well but it’s major MF portfolio being in two states worries me.
Is there any comparison between them and which can be a good stock to hold for next 2-3 yrs ? Thanks
M&M is a leader in tractors in India. And tractors segment could benefit from a good monsoon and government sops to farmers. But it is also riddled with the passenger vehicle segment which has been experiencing pain since past many quarters. How long this pain lasts needs to be seen. While post this price correction, it might appear cheap, upside could remain elusive till things improve on ground and company starts reporting decent sales numbers.
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@sujay85 I dont track subros too closely so not much idea on it.
NESCO remains well placed to capitalise on monetisation of real estate by construction of new towers and increase in revenue through more rentals. Even the exhibition space is being expanded through capex. It remains a well discovered company and hence would probably mirror earnings growth.
Marico has been covered in an earlier post.
@sreenu_k BHEL seems to be an avoid unless someone has good insights into the business and knows more than the markets.
@dhruv11 Deepak nitrite is on a solid footing post its expansion. Only monitorable is the phenol spreads which have depressed earnings of the phenolics business. But that has been more than made up from super performance in other segments particularly dasda. The Chinese situation might benefit basic chemicals segment. The prices of H acid and vinyl sulphone have increased by close to 40-50% in recent weeks. Producers of these goods as far as I know are bodal chemicals. kiri inds and bhageria inds. How sustainable this advantage and elevated prices remain needs to be seen as nobody has any idea how soon or how late the Chinese would get up and running.
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Hi Hitesh ji,
I had read your post and had similar views on bandhan bank. The reason for it’s downward movement was considered to be temporary and probably because of Assam unrest.But it has moved down quite a bit since then and may reach around issue price. Have you changed your views on it?Are we missing something causing this damage? It should become another yes bank, an ultimate wealth destroyer.
Thanks for your early response.
@hitesh2710 what is your view on latest run up of newly listed stocks like IRCTC, Affle, Indiamart in terms of valuation?
sometimes heart aches because ignoring these as expensive on listing day but keep rising as if everyone desperate to get a piece of this expensive pie.
Quoting Munger:. “Someone will always be getting richer faster than you. This is not a tragedy.”
Hello@hitesh2710 Sir,
What’s your take on HLE glasscoat? It seems both gmm pfaulder and hle glasscoat are posting good numbers for a while with the large order book coming their way due to current tailwinds from agro chemical and pharma space. The stock prices have gone up quite a lot and do you think this growth is sustainable in the longer run to be a stable compounder here on?
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This is definitely not a buy and hold strategy. But, this company seems to have good visibility for the next 18-24 months in terms of growth. But, i would urge caution, people should learn from what happened with sterlite tech. Narrative changes within days. One more aspect that is in play is that NGT approvals come slowly, so rather than one year 40% growth, growth would be much more like 20% for the next 2-3 years.
My views maybe biased
Invested- 4% of my Pf
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Bandhan bank concall mentioned the situation in Assam largely under control and appropriate provisions also had been made. Besides that there is no newsflow on that front. Maybe someone from Assam can pitch in with the on ground views.
Coming to price correction I think it has been under constant pressure and probably due to some big institutional offloading. Till the supply does not get absorbed, stock price may remain under pressure. This has been discussed on Bandhan thread in one of the recent posts.
Comparisions to Yes bank are not apt because yes bank suffered due to large corporate loan defaults whereas Bandhan largely has small ticket retail loans.
As of now I remain invested.
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