hello guys, this is my first thread. it wont be long and i just want to bring to light the changes that MUKAND is going through.
Checking this company from the surface, Mukand seems to be doing some pretty interesting things which may aid in their future growth.
The company has sold 45.94 acres of land in Thane, the amount realized (543 crores) was mainly utilized to repay debt and bring it down to 1505 crores from 2037 crores, this will cause a substantial reduction in interest costs. The balance sheet should get a lot lighter with this action.
The interest costs were very high and were hitting the P&L very significantly. Now with the debt being repaid these costs should reduce and therefore the profitability should increase.
The promoter has been increasing his stake from December 2021 according to trendlyne (screener is not showing the correct data).
The management is optimistic that their Machine Building Division which has performed consistently and delivered high-performance equipment that enables their customers to enhance productivity and achieve their operational goals, will witness even greater growth and reach new heights.
They are actively exploring the integration of renewable energy sources to fuel their manufacturing operations.
although an interesting to thing to note is that according to the last agm conducted, the revenues from the machine building division was just 100 crores, while the company’s total revenues were at close to 4600 cr. the rest of their business is related to manufacturing steel, alloys, etc (basically commodity).
The inventories and trade receivables have come down significantly thereby reducing the working capital, leading to a faster cash conversion.
Cash flow from operations has improved significantly and turned positive, which was previously negative.
RISKS
Although they have introduced new innovative products in these industries- Fastener manufacturing, Valve application, Boiler applications, Hypoid ring & Pinion gear manufacturing, and Bracket applications etc. It needs to be seen what is the demand and feedback for their product and what is the margin they earn on these products.
Now the remaining debt is at 1505 crores, management hasn’t said anything about their plans (if any) to repay this.
As the products sold are of commodity nature and go through cycles, the margins are very volatile and also very low as the products aren’t high value. The proof of the pie is in this quarter (Q4 FY23) the gross margins crashed by 24% as raw material costs increased from 62% to 86%.
I haven’t studied the company in deep but it can be interesting.
we need to wait and watch how the machine building and the new product division progresses and grows, as the rest of the business is commodity in my opinion.
neither invested and nor plan to, until something changes regarding the product mix.
people who are well versed with the company can maybe help people like me to understand more about the company and if there is a chance of new products reaching significant portion of the current revenue.
thank you for reading