Universal Autofoundry Ltd sounds very interesting. Would it be possible for you to share your notes or observations ?
@The_Seeker yes sure,
Universal Autofoundry Ltd
Founded by 2 friends, run the business together for many years, one of the founder family exited recently(they had disputes), now current management is in complete control & rationalizing things(at least that’s what I’m expecting)
Reason for being cheap -
- Disputes between founders
- Business/industry in down cycle
Triggers -
- Valuation wise it’s cheap,
- Rationalizing expenses
- Adding value added products/processes, capacity expansion
- Margin/RoCE expansion(in next industry up-cycle) etc.
Thankyou! much appreciated!
One of the famous investors, Ashish Kacholia, has been reducing the stake consistently in Universal Autofoundry. Anything alarming?
Mr. Kacholia bought some 10.3 Lakh shares at Rs161.59 per share.
I think he provided exit to outgoing founder.
I do not have any idea why he is selling.
Finally sold IRM ENERGY and brought INFLAME from the proceeds.
What’s your thesis on Inflame appliances?
Have you looked at Greenchef or Stove Kraft?
hi @Apurva_Dubey ,
Inflame Appliances Ltd
I don’t know much about Stove Kraft & Green chef, I don’t know much about Inflame either because publicly available information is very limited & no con-calls.
from whatever is my limited understanding, I can see that all three are different business models with different focus areas.
Stove Kraft is building a mass market brand whereas Green chef trying to build a premium brand.
whereas focus of Inflame is towards becoming supplier to all brands, and be an alternative to Chinese imports.
Why I’m Investing in Inflame?
If you look at above screenshot, you will realize lot of manufacturing capacity is underutilized.
As per my best estimate they can do 250Cr revenue at near full utilization. that is 135% revenue upside available.
As they are already doing OPM of 16.1% at Panchkula, that conveys that they can do same margins at Hydrabad facility too when they increase capacity utilization (Manufacture same products at both plants).
They can do NPM of 23cr or more at full capacity utilization.
Thats almost 670% upside whenever that happens.
Lots of operating leverage to play out as revenue increase in the future.
Margins can go well beyond 16% at full capacity, so its not expensive at future PE of 7.
Whether they will be able to grow? that’s the big question.
Disc:- Invested, Biased