Thanks - my apologies- wasnt meaning to address those questions to you. These were more in terms of my mental probes to understand the opportunity better. I understand that mgmt doesnt do concalls /provide guidance. May we worthwhile to reach out and seek a meeting The pointers on PPE help- will dig deeper. OPM estimates based on screener- the range seems to be 10-15%, ignoring negative margins on couple of occasions. Operating leverage - not accounted for simplicity sake- similarly int, dep, and taxes not budgeted (offsetting). Again this was meant to be a back of the envelop exercise. Of the 100% utilisation can happen in next 3-4Y, worth a deeper dive as MoS (both from loss and opportunity cost perspective) will be favourable. In any case, appreciate the effort and research put in by you. Kudos and keep doing the excellent work. Cheers,
100% utilisation seems unlikely. 2009-10 was one of the best years for the company and then it operated at around 55-60% utilisation. So around 50-60% is what we can reasonably expect in my opinion. Even so, there is a prima facie MoS. Valuations are too low to ignore
Only thing to figure out is the business cycle. I think utilisation is a good measure. 24% in FY 24 means we are either near the bottom or the recovery has already begun.
Warrants a deeper look. Seems the promoters have bought an additional 1% from open market in the last 6-7 days or so.
It was a normal day, looking for overvalued companies with no growth potential to go long and shorting under the radar beaten down stocks near cyclical trough which are soon expected to experience business cycle expansion, when I stumbled across International Conveyors Ltd. I will not bother to discuss the business, its products or any other usual stuff of the company since few participants in the thread have already done so in the past. Following is my take:
Investment/Treasury Business
Imagine an insurance company, using premiums paid by policyholders to invest and using that corpus to fund its liabilities. Obviously the biggest risk for an insurance company is that the claims would exceed the entire corpus. But what if I told you that the liability is not only not contingent but also fixed.
ICL is such a company. If you look at its balance sheet, the most significant borrowings are from Bajaj Finance and Deutsche Bank (which are Repayable on Demand) against shares. The company acknowledged that it used borrowed funds to invest in securities. Normally, any loan repayable on demand can lead to liquidity crunch for the company in the future. However in this case, it has more funds locked in Inter Corporate Deposits in the forms of loans to related parties.
Now if say the bank does demand repayment of loan, the company has the ICDs readily available if it is not able to service the debt. And since these deposits are made to related parties, I am assuming there will be no hassles in getting the funds back.
So what exactly does it mean? ICL is using leverage to magnify its portfolio performance. Its like insurance float but the claims are fixed and known. It can magnify both gains and losses in its portfolio. This is also evident by the fact that interest income earned on loans given exceeds the total interest expense paid (including that on vehicle and working capital loans).
Donât get me wrong though, I would be much more comfortable without any debt component in its balance sheet.
Talking about its portfolio, I did not see any unnecessary risk taking in SMIDs and micro caps. Almost all of the investee companies are well established with a long track record. The late founderâs son (Surbhit Dobriwala) (was?) a part of the investment committee of PNB MetLife. So he probably knows what he is doing.
Talking about the portfolio performance, the only down quarter for the companyâs portfolio was Q4 FY25 amidst systemic decline in equities. It also made fair value gains in the Oct-Dec 2024 quarter where the broader corrections commenced.
So as per the latest available balance sheet, adding current and non current investments, cash and bank balance, loans given as ICDs and reducing loans against shares, gives us a value of around 364 crores which represents almost 66% of the total market cap of the company. If you are optimistic about the Indian capital markets in the next 3-4 years, this portfolio has the potential to reach the current market cap in 3-4 years (or even earlier due to leveraged returns) as pointed out by @Bull_Miller .
Belting Business
I donât have really anything to talk about. Low utilisations in previous years, enables it to ramp up production in the near future. Trump tariffs is a worry point since most of its sales comes from the USA. Tariffs also got reduced for China which could increase competitive intensity.
Valuation
Removing 364 crores of Net Investments in the market cap of 550 crores gives us a balance of 186 crores. Aggregate of segment results (EBIT) of Conveyor belts, Wind Energy and Trading goods is 29.29 crores which gives us an EBIT multiple of (186/29.29) around 6 times. Keep in mind the cyclicality and the fact that profits are down since the last 2-3 years. So 6 times low base is cheap enough. I canât really compare this multiple with other players because quite frankly I do not have that figure. âFennerâ of the Michelin group is the only competitor I know and its financials are not available in the public domain.
Also the FY 25 Free cash flow (CFO - Depreciation) comes to around 13.2 crores. That with a market cap of 186 crores gives us a FCFF yield of 7.1%. Which means I am getting the other 3 businesses for 14 times free cash flow.
Being under the radar and misunderstood, with a potential mean reversion trend in the core business and the ongoing of existing investment business, this company screams value to me.
One of the reasons why I feel the security is mispriced is because when people see its profit and loss statement, they conclude that all of the earnings are due to the other income component. Whilst true, I donât see any reason as to why it is different from another capital market play. It is not everyday you see a company which has net investments equivalent to 65% of its total market cap WITH strong presence in another segment as well. And letâs be honest, who wants to own such a boring, working capital intensive heavy business when one can yolo their life savings in overvalued quality stocks growing less than the nominal GDP of the country with 5 years of no profit growth.
Risks
1. Loan (ICDs) given to IGE Pvt Ltd.
The Inter corporate deposits discussed above were given to IGE Pvt Ltd., an investment company that invests in young start ups and real estate.
Source: Ministry of Corporate Affairs
Here is a list of all charges that were created against the companyâs assets that have not been satisfied. (A charge is a lien created against the companyâs assets for a loan. So if you take a secured loan, the loan provider registers a charge against the underlying asset so in event of default, it can claim the proceeds from the sale of the said asset. So a charge of Re. 1 means the loan amount is either equal to or less than Re.1)
A total of 379 crores of charges are not yet satisfied by IGE (India) Pvt. Ltd. that means the company is levered. This can hinder its ability to pay its interest costs.
Also as per a circular by the Insolvency and Bankruptcy Board of India, which commenced CIRP against Cinema Ventures Pvt. Ltd. in July 2023, one of Cinemaâs creditors that filed for its insolvency was IGE (India) Pvt Ltd. for an outstanding claim of Rs. 8.5 crores. This further solidifies that IGE engages in transactions with smaller companies with lesser age who may have a problem with meeting its investment requirements.
Link for the IBBI pdf is given below.
- Gross Block
Gross block for plant and machinery appears low. Although I do not have any evidence or any other company to compare it against.
Conclusion
While I admit I am a bit averse in buying when a particular security is up 37% from itâs lows, I still find value here. I had a position, though small, before the recent upward trend.
Catalysts are not required here. Outrageous value is enough for me.
Disc. Invested with a mental note of selling after a 10% gain and holding it till I breakeven if it falls 40% or more and then eventually selling it for no profit no loss; reaffirming my faith in the noble profession of cutting flowers and watering weeds.
People have many hobbies - reading, dancing, trekking, etc. My hobby is playing drums. The promoters of International Conveyorsâ hobby is to buy shares of INTLCONV in their free time, almost 3 times every week, even after a 35-40% runup.
Potash is the key export revenue driver for the company. but that doesnât seem to be any kind of cyclical downturn.
Maybe a good way to check the hypothesis for industry recovery is to check the major coal and potash players.
See screenshot from Nutrien annual report below:
As for the increase in coal in the US, I donât see any significant volume increase. I was hoping to see an increase following Trumps policy changes (Described above by some users)
Coal production volumes in the US
Just an idea I had to check to check the hypothesis we were working with.
What do you guys think?
Market Cap is 557 Crores, They have investment in shares worth 330Cr, Loans given to their related party companies 143Cr and also have borrowings worth 118 Cr. This is no more a Conveyor company, its a holding company for minority listed shares. If you remove other income from the P/L, actual PE is around 22. No investments in Plant and Machineries, no growth prospects in products except geography change. Promoter made a killing in BSE sare sales and other shares as well. The company does Mark to Market every quarter and you can see in Sept 2025 there is a loss ot 25 Cr. We cant take all the investment in face value, any significant share market fall will impact the investment value but promoter seems to invest in good companies. Power of long term compounding will not play because investment is not in business which can be expanded. This is basically a Share investment or trading company. Another good thing is promoter is booking profits frequently i think. Not an investment for me though valuation is a screaming buy
Let me introduce you to a company whose market cap is 4550 Cr with investments and cash of 5,570 Cr. This company is even growing more than International Conveyors and is a digital business to boot.
That is even deeper value.
p.s. I take payments in Zimbabwean Dollars