Kalpesh's Portfolio

Thanks for writing, and sorry for late reply as I’m not so active on internet now a days!

Management has a track record of skipping con-calls, doing so in difficult time is definitely a yellow flag. may be they are shying away in this situation where other paper companies(wood based) are doing great.
Few months back they did provide business update and now credit rating agency provided enough data to satisfy me regarding how the business is developing.

As they have not stored enough agri raw material for newly commissioned plants, they are using waste paper at present, which is a costly alternative. I have heard now waste paper prices have moderated.
New pulp plant commissioning is due in Sep 2022, so their dependability on waste paper will go down and margin’s will improve.
Agri residue prices are only going up, so for this quarter also I’m expecting margin’s in the range of 17-19% only.
Increasing revenue is not an issue for them, so we can see increased revenue in this qtr.
I expect things to improve only after harvesting season in Punjab, so they can procure and store enough agri raw material for both new & old plants, that is going to be March-April-May of 2023.

Not expecting much in Sep22 qtr results, things will only improve from hereon.

One more thing to note, gov. seems very serious on NEP, if it materialize in next 2-3 years, Satia will be big beneficiary.

Happy investing!!!


Europe is entering into deep energy crisis this year, I heard some manufacturing facilities are temporary shutting down plants due to high energy cost. So companies which require huge power for manufacturing process such as glass manuf. industry(12-15% of sales) are becoming financially unfeasible.
Indian Glass manufacturers may gain market share very rapidly in next 1 year.
do keep a watch & update.

Hi @kalpesh4430, I was looking at asaha, haldyn but never got conviction that Europe wouldn’t find a way out, if not in 1-2 years but afterwards. Additionally which industries are these European glass companies serving, and if they have a (listed) subsidiary/JV in India - couldn’t figure how market expansion/profitability will play out. Any ideas ?

One may look at empire industries, Not pure play of glass mfg. Having real estate also both having rental yield as well as fresh projets along with glass manufacturing unit.

Time Technoplast Ltd

Products -
a) Industrial Packaging (66% of FY22 revenue) (Market leader almost wherever it has plants, world leader in large size plastic drums)
b) Infrastructure (9%)
c) Technical & Lifestyle (4%)
d) IBC (11%) (3rd largest in world)
e) Composite cylinders (6%) ( 2nd largest in world)
f) Mox Films (4%)

How the company makes money?
They are finding ways to replace metal products with polymers products with some kind of added benefit to customer.

They continuously try to find ways to reduce operational costs by keep upgrading machineries with new technology, automation etc
Get better discount from PE supplier due to bulk orders and additional discount for immediate payments.
Above makes them lowest cost producer. This is the reason they became market leader in polymer space in almost all the regions it has plants.
Due to size & design of IBC more quantity can be shipped with standard size containers, saving cost for customers.
Composite cylinders have many benefits such as explosion proof, corrosion proof, light weight etc makes it ideal choice for customers to jump from metal cylinders. There is very less competition in this area as for lower pressure only 2-3 competitors and for higher pressure cylinders TTL is only manufacturer in India and 2nd largest in world, so new market is being created.

Why I’m still holding this stock?

1. Revenue will increase consistently in the future

a) Margin’s of their Industrial packaging business is under pressure due to increasing competition, but it has tailwinds in action because it has plants in various countries who will benefit from china+1.
b) New market being created for composite cylinders(LPG, CNG cascade, CNG onboard, Hydrogen, oxygen etc) which may grow rapidly, Oil marketing companies initiated tenders for composite LGP cylinders (they may replace LPG metal cylinders with composites initially in humid regions as metal catches rust)
CNG cascades are in high demand because gov rapidly increasing CNG stations.
c) IBC in growth stage due to logistics benefit to customers, Tailwind for packaging products due to china+1
d) Infra products expected to grow fast due to gov spending

2. Margin’s expected to increase from hereon
a) Share of high margin value added products increasing
b) Restructuring of overseas business will reduce share of low margin products
c) Mittal’s coming up with large polymer plant in india, which will reduce import cost of raw materials in future

3. RoCE expected to improve
Management has recognised the importance of working capital management, and they have planned to reduce debtor days and inventory days, it will free up lot of cash

4. Debt expected to reduce
Reason: With restructuring of overseas business some portion of received cash will be used to reduce debt

5. Cashflow will increase
a) After restructuring overseas business, cash proceeds will be available for future growth
b) cashflow will increase with improved margin’s
c) cashflow will increase with reduction of debt
d) cashflow will increase with reduction of maintenance capex
e) Cash will free out from working capital

6. Promotors released most of the pledge shares
They have taken their lesson, and now fully focused on business

Company seeing short term headwind of rupee depreciating with respect to dollar as they import around 60% of raw material.
They are able to pass on price increase/decrease with few months delay.

Disc.: Invested since 2019 and holding


The cash flows and ratios became bad.
Is this company’s fortune linked to crude price?
If so, with crude price coming down, will things improve for Vipul organics?
Any idea where this company headed to ?

Vipul Organics

Business is dealing with several macro headwinds at the same time,

  1. Logistics costs gone up after covid, these cost coming down, yet 3x pre-covid rates
  2. Energy cost gone up after Ukraine war
  3. Dye market is down, very weak demand in domestic market
  4. Demand collapsed in China due zero covid tolerance policy of their gov.
  5. Energy crisis in EU zone

Management team has been very capable to handle and grow business in this trying times, hat’s off to them.

What’s happening -
China’s own domestic demand has collapsed due to zero covid policy of their gov., US and EU don’t want to increased chines imports so they have placed ADD, So huge chines capacities dumping wherever they can, so right now they are dumping heavily in Asia & middle east, that is the reason Indian manufacturers are running at reduced volume & lower margin’s.
This is a temp situation and margin’s will be back with china domestic demand improve, this is a matter of few months or Qtrs.

With high energy cost in EU, demand for discretionary products will go down as people will have less money to spend in their wallets.
at the same time EU manufacturers are shutting down due to unsustainable energy cost.
So demand is going down and at the same time supply is also going down, maintaining the balance in EU.
This will make the Indian exporters continue to supply EU, but market may not grow.

I think situation in US is quite good at the moment. they recently appointed new distributor for US and I think they will do quite good over there.

Management trying to grow in domestic market where I don’t think they have any competitive advantage, this business may not be so fruitful.

Many headwinds will go away with time, but as long as EU don’t solve energy crisis, I don’t understand how the growth will come? this is small company and they may grow if hook any large customer, but that will be speculation so I have commenced selling small quantities, as I don’s understand the situation & have no clarity.

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Vipul Organics
Sold entire position.


Goldiam International Ltd

Have been reading about this company recently,

Company is completely backward integrated, manufacturing LGD’s (Lab grown Diamonds) in their own factory.
Lab grown diamonds are in demand in US market because it cost really cheap relative to natural diamonds.
Company is making upto 40-45% EBITDA margin on LGD & 30% on LGD Jewellery whereas Natural Diamond Jewellery makes just 20%.
revenue share of LGD Jewellery is 20% and LGD is 5% rest 75% is natural diamond jewellery. This 25% share will increase rapidly in future to 50%, this will improve margin’s.
Company went to launch its own e-commerce website for US retailers and now 20-25% sales coming from it, management expect it to grow in future.
Company also looking to expand into EU and Australia, also looking to sell in domestic market.

Looks like a very high growth company is trading at market cap of 1550Cr at PE of just 15.

What a great investment opportunity where nothing can go wrong.

But wait,

  1. When their retailer place order for one LGD , it replaces their own order of one Natural diamond, so revenue will decrease and I think it started happening.
  2. LGD manufacturing machine price is just 75Lakhs, so many people will start their own diamond manufacturing, competition is going to be furious few years down the line.
  3. Goldiam’s margin is 40-45% on LGD at the moment, this margin may be going to go to 3-4% range 10 years from now. This is how things always happen in capitalism.
  4. If one performs DCF considering cited points, market cap of 1550cr seems priced to perfect. Things may swing either way in next 2-3 years but for longer term this stock is clear avoid for me.
  5. Big investors would want to exit in next 1-2 years, so surely this stock will be pushed to retailers with great story, keep eyes wide open.

Note : - I have not deep dived in this stock and not expert in diamond and diamond jewellery industry, so take my opinion with pinch of salt. I’m writing this post for my own future reference.


Sir Look for SIS. Company is continuously gaining market share from others and most of its competitors are in big financial mess due to low Op Margin business but inspite of low margin business SIS maintained high ROCE and growth. and they are aiming to gain significant market share by 2025. Currently company is in temporary in pain due to wage hike by govts in Foreign business will will get pass through in next 2 quarters.

Opportunity size is huge as mojority sector is unorganised. They have entered in Facility Management in past and growing very fast. This may be classic low margin boring business but not easy to disrupt it and specially company like SIS.


Thanks for the lead. will check it soon

Would like to share some perspective on some of the points posted here:

The TG for LGD is likely to be different from that for natural diamonds… Today, 4% of Indian customers have purchased diamonds… So it opens up a huge market of potential customers, who are looking to purchase something as special as a diamond at an affordable price point. Lot of aspirational customers and millennials who would want to own / gift a diamond as price is 40 to 50% cheaper than that of natural diamonds.
Its more about where the demand is coming from or what customers ask for that will decide what orders they will place… Leading jewellery chains in US like Signet, De Beers have not only accepted but are now betting big on LGD space; after initial skepticism… Forbes article Link -

More on LGDs in this podcast . Key points

  • Huge acceptance and demand for LGD coming from millenials
  • Same 5 Cs in LGDs as that in natural diamonds – Cut, Carat, clarity , colour, and also conflict free (since not mined). So its identical to natural diamonds. which implies that there are lesser barriers to acceptance
  • Preferred option among millennials – getting to own a bigger size diamond for the same price… eco friendly and pocket friendly as well, than natural diamonds.
  • 4% of Indian customers have purchased diamonds… So opens up a huge market of aspirational customers wanting to own a diamond at a much lower price point

Someone can start their diamond manufacturing but to get the designs, cut, colour, etc in LGD with precision, will take some time – one or two years; and this is the lead time that Goldiam enjoys over competition.

They are the only integrated manufacturer in lab grown diamonds right from growing diamond to cutting lab created diamonds to manufacturing it into jewelry of own designs and distributing it to the end retailers. A key differentiator which protects their margins is technology (significant time spent in R & D to get the right formula) and distribution capabilities (being end to end integrated and selling to their distribution)
Besides 10 years is a long timeframe, very difficult to predict. One must keep monitoring the increase or decrease in margins - underlying reasons for the same.

This is speculation. So no comments.
The management has guided for a modest growth of 5 to 10% for current FY owing to the inflationary pressure; but FY 24 should see the higher growth figures returning…
A key risk in the business is the cyclicality involved as it’s a discretionary spend and a prolonged recessionary phase may result in a slightly longer phase of subdued growth.

Disc: Invested

Thanks for the reply,

Why diamonds hold high value?
Because they are rare and found naturally, right.

Now as humans have found a way to make them on machines, will they hold value in future?
I think it will still be used in jewellery and decoration, in fact its use will only increase but it will cost only fraction of what it is until now.
Rich & elites will abandon it and middle class always follow rich with some time delay.

It is just a matter of few years for it to become commodity.

business may do great for few years but its too risky for me to invest in this business.

Hope this helps!!!


Valiant Organics &
SRG housing finance from proceeds.

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Great finding but I demand greater margin of safely, so staying away for now.

Also look at PCBL. Something structural change is happening and they are doing capex and adding more value added products. After 2-3 years margin will expand and stock may rerate with EPS growth. Look at the attached report.
PCBL Ltd_10_10_2022.pdf (4.3 MB)

There are many ways to make money in investing business but only few ways to make money consistently,

  • Invest in businesses with pricing power, run by rational management & have long growth runway
    There are very few such businesses available and they are overvalued most of the time, so one can invest in them either when they are fairly priced or have a very long time investment horizon(10years+)

  • Invest where downside is protected, upside will take care on its own
    More than 90% of businesses are more or less cyclical, find businesses run by rational management and have large margin of safety in the price and balance sheet is such that it wont go bankrupt in hard time.
    Buy when the business is bleeding and sell whenever price come near to intrinsic value. Ideally fair value acts as a gravitational force, normally prices do come to match intrinsic value in 18-36 months

Calculation of correct range of intrinsic value is a key to success here. Be conservative & realistic.

Be it Warren Buffet, Howard Marks, Joel Greenblatt or Mohnish Pabrai all have made consistent returns by this method, so this is proven & sustainable way to riches.

"To have better future, take rational decisions in present "


I think U summarize the whole investing framework in this para…great…

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Hi @kalpesh4430 any updates in why satia is so weak despite good results. Is there anything to be worried about?