Jyoti Resins & Adhesives Limited (with bloated reserves)

They are cash flow negative and never generated cash. Any pointers on why?


Also their receivables are always high.

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If you could click, on the (+) sign, then you would find, the real reasons. I think there is no such problems.

DISC-Invested

trade receivables is also increasing very rapidly. could be a red flag to monitor

Hi, this company is running a very interesting model - they own the distribution channel themselves to whom they present significantly longer working capital cycle than any building materials companies. Then secondly they give these channel partners a 10-15% of sales as discounts/benefits yet for some reason growth guidance is tepid. They somehow need cash to keep the channel happy but the channel is owned by them? Open to interpretation but capital allocation here is questionable.

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Cause for concern -

  1. Today is the Q4 results day as they have submitted to BSE and yet results haven’t been update.
  2. Mgmt has stopped doing earnings concall since last quarter .
  3. Is this like sunset industry ? I’m really concerned .
    disc - invested

They are entering into newer states and it’s obvious that to sustain they must give higher credit period and thus receivables are high.


Updated

Highest CFO

Significant increase in cash balance , most PAT converted in cash.

In its Q4FY24, the company’s margin guidance was disappointing at 22-25% vs. current level of 30%+. They are venturing into newer geographies which has led to higher working capital already and looks like they may compromise on margins as they get into UP and other terrritories. Other things look promising though. The company looked confident for sales growth hereon.

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Great hilarity on the earnings transcripts.Kept wondering what is this fatter fatter they are talking about. Deduced it must be mota mota (approximate colloquially in Hindi). . Or am I missing something?

Probably, they were adressing market size in those states.

Shabdon se zyada bhavnaon ko samjhna hoga. Reading between the words rather than lines :grinning:

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