Hi Hitesh Sir any views on Raymond reality and Garuda construction’s. It is having deep value. @hitesh2710
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In case of HBL the management gave two important footnotes related to results. First was that this q2 quarter was an extraordinary quarter and may not be repeated for future quarters.. Second was that FY 26 is going to be an extraordinary year.
First thing that I found was that electronics division revenues were to the tune of 800 crores. This was largely Kavach. I think this segment should continue to do well going forward too. I am hearing that further order allotments are also in the pipeline. And since HBL has been quickest off the blocks in terms of execution, it might find higher percentage of orders, if this criteria is considered favorable.
Besides Kavach, defence could be a growth driver going forward. There are a lot of pointers to fuze being a good business going forward.
While evaluating a company, attaching a single quarter results to the investment thesis seems a bit too simplistic. We have to look at the overall picture and then take a call.
First half profits have exceeded 500 crores.. If next two quarters also total 500 crores, then full year FY 26 profits can be 1000 crores. Current market cap is around 26000 crores. Based on that valuations will be 26 PE. This for a company that has decent growth opportunities lined up is not too expensive.
Some other aspects of results that are positive but markets might feel negative are the margins of the electronics division. Margins above 50% are a great number to have, but there will be worries that these margins may not be sustainable. While that may be valid concern, we have to base our calculations on slightly lower margins say around 40% and do the math.
With the kind of results reported, we are assured that execution is never a problem with HBL management. Second aspect is that with these kind of margins being reported, the concern that is there in a lot of other companies related to siphoning of funds is out for a toss. Kavach tailwinds can continue for the next 2-3 years, so growth can continue. Margins may fluctuate but overall the base levels of net profits has probably shifted much higher in HBL from earlier 300 crores net profit levels. It remains a debt free company. Management indicated possibility of investing in some high growth high potential companies or start ups. Tonbo has been a great investment for HBL.
Overall picture to me looks good for now. I may be biased because I am invested in the company and its one of my top allocations, and hence to that extend my views should be taken with a pinch of salt.
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Thank you, @hitesh2710 sir. I’d like to contribute one data point: Tonbo Imaging, one of the invested companies, achieved a net profit of INR 72.7 Cr in FY25, representing a 6.3% growth from INR 68.4 Cr in the prior fiscal year. A successful listing of Tonbo Imaging would also provide an inflow of cash for HBL.
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Yesterday marked some more positive newsflow for HBL eng related to Kavacch.
Cancellation of GG Tronics Kavach order for around 600 crores will go in for re tendering (unless something else comes out of the blue) . This could also set precedence for similar order forfeiture with other companies which had bid for Kavach, and had been given orders, and could not execute order in stipulated time frame.
New tenders for Kavach worth 2100 orders have been floated from BLW. This again provides opportunity for companies which have got Kavach 4.0 version and have demonstrated order execution in stipulated time frame.
Another aspect of this whole drama is that order awarding to companies not capable of executing them in time would be discouraged. Because this whole process impacts timely rollout of Kavach, which remains one of the top priorities of the govt.
Overall this improves Kavach revenue visibility possibility for HBL as it now is in pole position to bid for and get awarded more Kavach orders.
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I afraid same is true for HBL too.. The Chairman had mentioned during the AGM that they won’t be able to complete the entire 2200 loco order before 11th Dec 2025 (tender completion due date). So let us see how it is going for HBL also..
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Electronics division accounted for 794 crores revenues in q1. ( roughly 1000 plus locos ). So expecting some ramp up and trying to complete the full 2200 till 11th Dec could be possible. How the actual things pan out needs to be seen. I think even if some part of order is forfeited, it will be by a small margin..
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Hello @hitesh2710, Sir, have you been following this company called BCC Fuba? It is a PCB manufacturing company and has a niche product that is used in the EMS industry. The company has recently started doing capex, and it feels like a turnaround story. It would be great if you shared any insights of yours.
@hitesh2710 Hitesh bhai, after going through your threads, I’m genuinely impressed by how early you identified opportunities in companies like Thangamayil and TTK Prestige. For the past couple of years, I’ve also been trying to find similar early-stage compounders, but I often struggle with the valuations at which quality businesses trade today.
If you could share a few company names that you feel have strong long-term potential in the current market, I would be truly grateful. My intention is purely to study them in depth and understand what makes them promising. Anything that passes through your filters is, in my view, worth spending serious time researching, and it would really help me develop stronger conviction in my own process.
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@hitesh2710 bhai, FIIs have been sellers in the market almost for a year now.. Despite this sustained selling pressure, the market has remained relatively resilient because of strong and consistent domestic flows via mutual funds and retail participation. Even with FII outflows, current market valuations appear to be on the higher side.
I may be wrong but I guess there may not be immediate very strong earning growth seen in short time.
Could you please share your view on If and when FIIs turn net buyers again, how should we think about the impact on overall market valuations? Or it looks unlikely that FII will not return unless there is valuation comfort and there is very strong earning growth which can abosrb the additional liquidity from the FII without elevating valuation?
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FIIs have been on a selling spree since a long time. And they continue to sell even as we talk about this topic.
If I am an FII, I have the whole world to choose from in terms of where to invest. So we have to figure out why an FII, or FIIs for that matter would want to invest in India.
I see their problem as two fold.. First is the USD INR equation. Rupee has been continuously weakening and that causes currency losses for the FIIs. In simple terms, say when USD INR is at Rs 60, they have to sell Indian equities only worth Rs 60 to get their dollar back. Whereas if it is at 90, they have to sell equities worth 90 Rs to get their dollar back. (Converse logic will work when they start buying, but they have to be sure that US INR is going to be steady, or go up to say 80-85 or something like that. )
Second problem I think they face is taxes. If you are incurring currency risks, and investing in Indian markets, you want atleast long term taxes to be negligible or nil. Reducing LTCG or removing it can be a quick fix for the govt to attract foreign money, if it does want to do so.
If I were in a policy deciding role, I would do away with both short term and long term taxes and increase STT. This to me looks attractive because no matter who makes profits or losses, govt does end up getting money in form of STT and its paid upfront. Govt does not have to wait till the investor sells to collect taxes. Besides it can be a very efficient mechanism of collecting taxes. I think even with all recent advances in softwares in IT dept, there will be still be folks who might not be declaring ST or LT gains and avoiding paying taxes.
Coming to next parameter of growth, there will always be a few companies which will show good growth each year. So it all boils down to finding those kind of companies.
I personally do not give too much importance to what FIIs are doing because that is not something under my control. What I can do is research individual companies and find those with best growth prospects and available at reasonable valuations. The current correction in small and midcaps is a fertile ground for finding those companies. Simply running a screener showing companies that have shown good growth and have given good commentary will provide a list of stocks to work with. These days a lot of Youtubers also provide such information on their videos.
@Karthi_Keyan1 I don’t want to venture into the quicksand of talking individual stocks, unless I can put up details of a company with all published information. When I find something worth discussing I will put it up.
@manan1 I have not heard of BCC Fuba.
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Another (possible) reason for FIIs selling is the rising yields of Japan (JGBs). For years carry trade was easy for big trading houses to borrow in ¥ and invest elsewhere. All leading dailies are reporting this unwinding of trade structure.
##*# MC Link
When yields on Japanese bonds rise, investors, especially large institutions, get an incentive to shift capital back home to safer, higher-yielding Japanese assets.
“When Japanese bond yields rise, global investors may shift capital away from emerging markets like India. This can lead to temporary FPI outflows, a weaker rupee, and upward pressure on Indian government bond yields,”
##*#
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As I believe, Sir, you should take a look at this company. When I got to know about the company, it felt more like an MSME that cannot be of great use. Later, as and when I studied the history of the company, its business and financials, it started looking more promising and can be an advantage of the bull run that is/will be coming in the EMS sector, and the company can be a multibagger as well.
If you can look at the company and, with your knowledge, share some insights here, that will be of great use to us.
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@hitesh2710 Sir, Hope you are doing good and thank you for sharing the immense knowledge to the group. I would like to understand the structural approach/techniques to identify the potential companies in the early stage based on Mental Models/Stock Selection Theme which you discussed in one the webinars. While I use screener as a primary source of information, which is good platform to nail down the companies based on quantitative metrics. However i assume you would identify the companies which are structurally getting transformed well before their quantifiable metrics are getting reflected in the results and balance sheets. if possible pls share your thoughts/methods on how typically to filter the potential candidates for assessment from 100s and 1000s of listed companies. hope my ask is relevant. thank you.
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In this day and age of social media, and investor friends, there is no dearth of investment ideas. Even VP forum is a rich source of good ideas. The job left for us is to filter out ideas based on our framework.
I follow sectors in fancy by preparing a watchlist of stocks from sectors that keep showing relative resilience during bear markets. Resilience can be in the form of stocks holding key levels, say staying above 200 dema, or stocks that have corrected not more than 20-25% from their swing highs even during strong market declines, or stocks that break out first when markets show signs of reversal, etc. This can take various forms of resilience and there can be a lot of subjective patterns and parameters one can look at.
Just to give example, the current market shows a lot of sectors in fancy, like Financials ( has various subsets, but one can check each segment and find which are strongest ones), Auto ancillaries, Metals, Autos, PSE, etc. Conventional wisdom has it that stocks and sectors that show resilience during bear markets, or are first off the blocks once markets resume uptrend are likely to throw up a lot of future winners.
Just to give an example of how I latched on to HBL eng. Anant had started a thread on HBL (signs of change) back in May 2022. Now our markets were in corrective mode since Oct 2021, and in the midst of this corrective phase, HBL was attempting to cross its previous all time high of 76.50 posted way back in January 2018. This was sort of a 4 year high and an all time high. So once I read the thread and looked at the chart, I immediately started looking at the company in details, and went through available material on the company. I liked the techno funda picture and managed to invest in HBL at that time at price ranging from around 80-100. Since then I had been keeping tabs on the company’s performance, and its been a rewarding investment.
That was in the past, What about now? I think keeping the sectors I mentioned earlier namely financials, ( this includes, private, public sector banks, NBFCs, brokerage stocks, insurance players, micro finance players, etc) , auto and auto ancillaries, metals, PSE etc.
As of market behaviour during the week ended 2 Jan 2026, it seems momentum is returning to the broader market after a long time. We have been in a corrective mode since September 2024 with intermittent rallies. Now whether this rally will be the real deal, or just an intermittent rally is a tough question to answer. But even if this is an intermittent rally, it would throw up potential winners.
We need to make a list of stocks with either good results, and encouraging commentary, or with good chart patterns, or preferably combining both characteristics, if possible, and work on that list and find out good companies to invest in. And then apply the characteristic traits of multibaggers discussed in the mental models webinar (or there can be other methods to do it too, as there is no single holy grail of finding multibaggers).
If the rally that has begun is the real deal, there will be sector rotations going ahead from time to time and these too are likley to throw up big winners.
Hope all these musings help. Regards and happy,healthy and prosperous new year to all friends.
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Thank you @hitesh2710 sir for taking time to detail the thought process. much appreciated. Certainly, i would adopt the approach.
P.S. off late i setup filter @ screener (company announcement) with specific key words and email reminders, i get notified now and then when there are updates based on the key words. This helps me to identify any new candidates based on my setup. Just thought to share if someone wanted to use the feature. Thanks again.
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Yes sure please do share the link or details about it.
I think the filter link is not working for others as it is assocciated to individual profile (Just tried to share with someone); screener-tools-company announcement-add filter and enter the keywords (e.g.“change in promoter” OR “private equity” OR “open offer”). That should work.
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Dear Hitesh Sir @hitesh2710
No orders to HBL Engineering from CLW loco Kavach tender and company declared same that other bidders with lower price got the order. Price also crumbling after same.
Is that a point of worry. Request your views on same.
Regards
HBL did not get any orders from recent 6300 loco kavach CLW tender, which has been disclosed by the management. This may be a concern for near term because it reduces visibility for q4 Fy 26 and FY 27 growth. However there are more impending tenders as enlisted by management, and company is eligible to get a decent pie from around 12000 loco kavach as per management disclosure. Plus it will also get to participate in retendering of unexecuted orders of earlier tenders. What percent of the pie HBL manages to grab needs to be seen.
The comforting factor for HBL is that it has demonstrated a decent track record of executing orders and that too with good margins. So if company receives further orders, things can get back on track.
For more details, you can keep track of this theme on Kernex and HBL threads on valuepickr. A lot of learned folks keep updating the threads with useful information.
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I got a query from someone as follows..
Hi Hitesh Sir,
I am a VP member since 2017 and have constantly invested. I am good in reading BS, PnL, CF, business from their websites, conference calls and annual reports, using AI nowadays to understand the opportunity size and business model
But I missing all the stocks which are running ahead and end up seeing stocks only after it has run up. So end up investing only in value stocks with limited upside
Pls help to understand how to catch the cycle, how to know which stock has to be picked to study, how to identify a stock before it is run up or early stages
Pls help me
I think for this kind of an issue first of all try to identify what kind of investor mindset suits you. Whether you are comfortable using fundamental analysis, technical analysis, a combo of above two, or some other method of investing.
Coming out of a bear market it is very easy to figure out which is the place to be in the next leg of rally whenever that happens.
Simple approach to this is to watch stocks that are showing resilience during market downswings. This can be figured out using various methods. Simple method is to check stocks which have held out above 200 dema, or such similar important moving average. Or find out stocks which make 52 week highs, or multi year highs during such turbulent times.. These too will at some point of time correct but these are quick to bounce back. Or find out stocks that have corrected minimally from their recent swing high or all time high, or such other level.
Once you have compiled these kind of lists, many a times a sector or multiple sectors will come to the fore and it makes sense ot look closely at those sectors.
Next step is to don the fundamental lens and look closely at stocks showing resilience of any form and find out if there are any discernible triggers. If out of say 20-25 stocks list we can figure out strength and investment merits through both fundamental and technical analysis, it makes sense to fine tune entry near support, or accumulate gradually.
The above approach also may fail during highly turbulent markets which remain volatile for long, but overall in the usual garden variety of corrections these should help in picking up the winners of next leg of rally.
Other purely fundamental approach is to keep track of earnings, listen to concall, keep track of balance sheet and working capital status, maybe even read valuepickr thread on the company if it is populated by learned opinions. This can also be one of the methods of finding winners.
If you are into value buying, atleast try to figure out if there are chances of this value based company showing any growth. Sometimes a company bought solely as a value buy transforms into a growth stock within a few quarters and that helps in landing a big multibagger.
So there are various ways to find out big winners. We have to keep in continuous learning mode and keep observing things in the markets.
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