Nithin's Portfolio

Q&A: Questions & Answers Portfolio Q&A
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Portfolio Updated :

CORE PF : Capital allocated is just 85%

Stock Name Stock Symbol Buy Price CMP Weightage Return
LAURUSLABS Laurus Labs Ltd 337.74 356.05 36% 5.42%
NEULANDLAB Neuland Laboratories Ltd. 2100.01 3508.95 15% 67.09%
SYNGENE Syngene International Ltd 682.35 811.35 11% 18.91%
PRAJIND Praj Industries Ltd 296.41 432.9 5% 46.05%
ORCHIDPHAR ORCHIDPHAR 552.27 583.75 5% 5.70%
HBLPOWER HBL Power Systems Ltd 151.49 192.75 5% 27.24%
SADHNANIQ Sadhana Nitro Chem Ltd 93 93.4 5% 0.43%
SYRMA Syrma SGS Technology Ltd 346.72 514.6 4% 48.42%
AXISCADES Axiscades Technologies Ltd 440.73 500 4% 13.45%
DMCC DMCC Speciality Chemicals Ltd 307.08 339.55 3% 10.57%
NEWGEN Newgen Software Technologies Ltd 499.57 846.85 3% 69.52%
SBCL Shivalik Bimetal Controls Ltd 146.02 675.45 3% 362.57%
KOPRAN Kopran Ltd 121.33 199.15 1% 64.14%
IZMO Izmo Ltd 197.99 190.95 1% -3.56%

ADDED
LAURUS LABS : Q1,2024 was the bad quarter in the history : given the management guidance of positive Q2,2024 things should go well (Am expecting)

  • ARV Sales will add to Q2,2024
  • Got a new Phase 3 molecule from the client
  • CDMO : Still in good traction, shipment issues
  • NON ARV API : Will perform good, Q1,2024 was bad due to shipment issue
  • AGRI : Got new contract for agri and will start on 2025

Don’t take my words - consider this with bucket full of salt.

Exited E2E : Its a good business however its mostly IAAS - This should do well - however there are lot of competition in this space ( I dont like to poke my nose) E2E Networks Ltd - Listed small Cloud computing player - #91 by nithin_Shenoy

IZMO : Planning to exit - as am not much interested in auto sector due to disruption of ev/hydrogen.
Am excited for 2 wheeler space as 2 wheeler i think - ev will do well

SECTORAL PF :

Capital allocated is just 15%

Stock Name Stock Symbol Buy Price CMP Weightage Return
UJJIVANSFB Ujjivan Small Finance Bank Ltd 46.99 50.8 18% 8.11%
REMSONSIND Remsons Industries Ltd 369.29 364.05 17% -1.42%
KAMOPAINTS Kamdhenu Ventures Ltd 343.84 192 14% -44.16%
DYCL Dynamic Cables Ltd 466.5 459 12% -1.61%
REMSONSIND Remsons Industries Ltd 369.29 364.05 17% -1.42%
KIRLOSENG Kirloskar Oil Engines Ltd 463.36 458.85 6% -0.97%
RKFORGE Ramkrishna Forgings Ltd 562.67 566.1 5% 0.61%
GABRIEL Gabriel India Ltd 225.52 230.1 4% 2.03%

Exited : Kokuyo Camlin finding opportunities in Pitti Eng, Sterling Tools
Pitti Eng :
Overall demand outlook for FY24 continues to remain strong railways and power generation. New business opportunities in pumped hydro and automotive will start contributing
Order book forecast stands at Rs. 823 crore.
For the year 2022, sales volume was at 36,297
For the year 2023 expecting to deliver 42,000 metric tons
Maharashtra factories incentive package it comes as distributed
Phase I : 180 crore to receive in 7 years
Quarter 1 incentive : 30 crore to be received

Sterling Tools
Fastener business : Full capacity revenues to be likely INR 800 crores
EV business : ROCE is high and lower margin structure

Fastener : Guidance for this year for this INR 600-odd crores revenue business to grow by 17% to 20%

Motor control unit (Sticky Business) : In a high-speed scooter, the motor control unit basically interfaces with the battery pack and the BMS there. It interfaces with the vehicle control unit. It drives the motor and it interfaces through the vehicle control unit with the instrument cluster
Motor control unit has a large software component to it, both which drives the performance and efficiency of the controller, but also the overall vehicle performance

EV Guidance : To double revenues to INR 170 crores

Cyclicality : Raw material (Steel) prices has gone up from Q3,Q4 : 43% to 46.5% for Fasteners business

4 Likes
43

@nithin_Shenoy Thanks for sharing the update again. Just curious to understand you thoughts on buying RKFORGE (brilliant business) which has run up quite a lot in last few month almost 3x in 6 months.

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@nithin_Shenoy. Can you explain the rationale behind remsons industries and kamdhenu. If you don’t mind, wanted to understand why do you have such high allocation to pharma when the sector is not doing well and low allocation to your existing multibaggers which are still doing well like Negwen, shivalik. Just my thoughts.

45

Let me highlight what SECTORAL PF means according to my framework/structure

Don’t copy my Portfolio - please have your own conviction on stocks that you own. What works for me doesn’t work for you or sometimes doesn’t work for me. Consider this with bucket full of SALT.

  • CORE PF : This is backed by fundamental research which has potential to do well in next 5-10 years.

  • SECTORAL PF : I have made this to learn how sector work, am very bad at sectoral rotation so trying to learn with nimble foot. The capital here is very minimal and this is kind of WIN OR LOSE portfolio.

The investment here are purely to learn about Technical + Little Fundamentals

What I do here?

  • As per Hitesh - I did read snippets of Mark Minervini and William o Neil ideas
    • Firstly in stocks there is stage analysis
      * Stage - 1 : This stage is consolidation
      * Stage - 2 : This stage is big jump about 20%-50%
      * Stage - 3 : This stage is consolidation
      * Stage - 4 : This stage is crucial whether if the business has growth drivers then it will rebound to upper stage or lower stage
      * If Upper Stage : Then follow approach of Stage-2
      * If Lower Stage : Exit based on TA then we are back to Stage - 1 : This stage is consolidation

Here is the snippet :

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High Tight Flag :
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VCP :
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More Ideas Here :

My aim in SECTORAL PF here is to jump on the running tiger (momentum) and make decent 10%-30% returns and exit only money that I make is between what I buy and sell.

This is not a recommendation - am posting this here to learn and be better at things that am doing.

  • Forum members are very knowledgeable and kind - this helps me to cut my ego, remove mental bias and re asses my learning.

@manoopatil : RKFORGE is an excellent company they have become an important part of the global market
Aim to enter two biggest markets of trailer axle and differentials.

Triggers

  • 40% of last year’s what order wins will start from second quarter onwards

Capex :

  • Installed cold forging capability for which they have already received complete sold-out order for seven years, which we’ll start operations from FY '25 first quarter
  • capex of around INR 300 Crores to INR 350 Crores

Order :

  • Total order wins of about INR 7.7 billion, INR 770 Crores in FY '23
  • Company has secured a prestigious order of EUR 4.5 million from a European railway passenger coach manufacturer.
  • On the TWL consortium TWL has signed a significant contract work with Ministry of Railway Government of India under Aatmanirbhar Bharat initiative. This contract entails the supply of Ramkrishna Forgings Limited
  • 1.54 million forged wheels further solidifying our commitment to supporting the growth and modernization of the Indian railway sector.

Capacity

  • Company has commenced commercial production of 13,700 tons per annum of R A shaft press line and 10,100 tons for the 5-inch Upsetter.
  • Due to the extension in production capacity totaling 23,800 tons per annum
    will strengthen our ability to meet the increasing demand for high-quality post components in the automotive industry.
  • Total production capacity now spread 210,900 ton per annum,
  • Year-on-year growth of 28%.
  • EBITDA margin for Q1 FY '24 : 22.4%

Acquisitions :

  • Approved acquisition of Multitech Auto Private Limited and its whollyowned subsidiary Mal Metalliks Private Limited.
    • The company has a capacity to manufacture 21,600 metric ton per annum machine SG & CI castings and bar draw facility of 6,000 metric ton per annum
    • This acquisition will make its presence in the passenger vehicle, light commercial vehicle and heavy commercial vehicle segments.
  • Acquisition of Casting and with the acquisition of Multitech, had helped RKFORGE to be all rounder except the sheet metal, and tyres and engine apart from that they are available across all platforms in any vehicle, which is moving on road

About Rail Wheel Project

❖ Ramkrishna Forgings holds 51% in the Joint Venture and is a lead partner in this railway contract
❖ It will establish a manufacturing plant in India for the production of 200,000 forged wheels per annum
❖ Expected to start operation by end of FY26

India used to import railway wheel from China now since RKFORGE is here to help around, this would be great and Titagarh has order book approx. 10000 crore for wheels.

Now for your question : I agree that there is froth build up in RAILWAY SECTOR, which I did notice later on - so I have exited and tracking for now.

Long Term PF : Exited HBL POWER too - will wait and watch

Now does the correction happen? I dont know - I dont have crystal ball to see the future. I go with parameters like
EV/EBITDA

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MARKETCAP/SALES
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Now people will say - this is incorrect as you are seeing history and bla bla

See for me the main idea seeing history is that - none of the railway companies has started delivering and all stocks have run almost 2x.

  • Some say in bull market no matter how big load you have in the cart - the bull will move.

I honestly dont know anything - will wait to wait and find out.

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1 Like
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My observations

About this company :
The Company’s product portfolio includes Gear Shifters, Control Cables, Flexible Shafts, Jack Kits, Parking Brake Assemblies, Winches, and Pedal Boxes among others

The Company is a supplier to more than 20 OEMs of 2, 3, & 4 wheelers and 250+ dealers in the after-market.
Some major OEMs include names like Maruti Suzuki, Hero MotoCorp, Ashok Leyland, Tata, Mahindra, PSA (Peugeot), Piaggio, etc. from India.

It also supplies to global OEMs like Ford Motor Co., Jaguar Land Rover, Daimler, Aston Martin, Volvo, etc.

The Co have 4 Manufacturing Plants across India and 1 in the UK.
In FY22, Company set up a new greenfield plant in Chakan, Pune : the main reason was to be close to the client

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REMSONS was a pure technical play : Did see a big spike in the candle suddenly there were fire incident on 30th July 2023 - so exited before the fall.

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47

Special Situations
Kamdhenu Ventures: Board Allotment of 45 lakh equity shares on preferential basis to Qualified Institutional Buyers (QIBs)

Secondly they allotted Bonus

Thirdly Uptick in Paint business

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@Sudhanshu_Shekhar

Am biased towards Pharma - Why?

  • Certainty of income - if a new molecule gets launched
  • Certainty of cash flow
  • Certainty of time - able to gauge went wrong and right to take timely decisions of (buy/sell)
  • Diversification - Pharma is more diversified within itself not all molecule, reactors are same.
  • Contractual Obligations
  • Price/Volume : Differentiation of Low Margin/High Volume vice versa

Risks :

  • RM Price
  • Recurring cost pressure
  • Decision Risks - USFDA risks, Molecule not getting cleared through clinical phases, Factory fire,

When it comes to IT

  • TCS, LTI MINDTREE, HCL : all are packing the same boat to head same destination just that some some are big in terms project volumes, cost strategies etc. - at the end they are service based sectors providing services on existing platforms.

When it comes to SAAS companies :

  • They have a product and they can charge the customer with having price elasticity.
  • They are differentiated across the value chain
  • They are disrupting due to products that they offer

IAAS : such as E2E also should do well in India (Domestic)

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@Sudhanshu_Shekhar : I entered LAURUS LABS 280 with 50% allocation on October 2020 and held it for 3 years - had made good profit but didn’t book it - main due to Chava’s guidance to reach 1 billion by 2022-2023.

I was not knowing that the engine room was leaking when the rocket had trajectory to the moon - mainly cost pressure and supply pressure.

So I kept holding it and till Q1,2024 result - then due to bad result I exited with anticipation of further fall.

  • Lost all money - even good profits

I don’t blame the management or anyone, it was my fault of not be biased towards stock - its just that I speak about it - no one else does

With bad result in - stock kept rising and I was sitting on cash of (35%) - so redeployed it .
That’s when you see SBCL, NEWGEN going down the allocation line

I have taken many subscriptions of who so called as educators, mentors, tutors and had paid them huge amount to know the rationale behind what and why they hold.

It seems everyone had a deep cut - we can discuss this offline

Now you ask me again why still am repeating my mistake?

  • One way to know the real truth behind what works and what doesn’t is to try and test it out. But there is a cost factor associated to everything.

  • This was you know how the market works and during what stage of market the trigger happens, what stage of market the trigger is present but the stock is going south etc

  • During bull market : all stocks get carried

  • During no so bull or bear market : all stocks with high tailwinds do well

  • During bear market : almost nothing move except handful of few stocks that give 5-10%.

Now identifying triggers in stocks + Mr Market conditions is needed to know : When you have a kite you can run it and make it fly - but what really takes it to the top is the wind (nature).

@Sudhanshu_Shekhar : mentioned more in your private message

6 Likes
50

Thanks Nithin. I was also invested in Laurus labs back then in 2020 but exited after stock went up 3 times and booked profits. This is why I believe how much strong conviction is, sector + stock allocation matters. Portfolio should be diversified specially when the portfolio is young. I was heavily invested into financials since I saw the recovery happening after covid but have recently reduced sector allocation since the same is linked to Nifty and is high beta. I understand that pharma, chemicals, financials, IT all are good sectors for India but sector rotation happens a lot in the market because no sector is immune. See what is happening in chemicals. Pharma also you have pointed the risks. Market likes certainty of cash flows which is why financials have 40% weightage in Nifty because there is no shortfall of growth or business for efficiently run banks.

However, strong individual company is headwinds keep on coming in the sector. For eg: You might think of increasing allocation to reasonably priced engineering, pumps, capital goods companies. I believe, this can give immunity to the portfolio to some extent and we can get to experience growth across sectors. Objective is making continous CAGR instead of waiting for stocks to perform in a specific sector. This is my outlook. Opinions can be different.

3 Likes
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PORTFOLIO UPDATE

CORE PF

Stock Name Buy Price CMP Weightage Return Holding Days
LAURUSLABS 340.79 387.15 40% 13.60% 3
NEULANDLAB 2100.01 3589.8 14% 70.94% 190
SYNGENE 682.35 805.35 11% 18.03% 162
PRAJIND 296.41 433.45 5% 46.23% 262
ORCHIDPHAR 552.27 575 5% 4.12% 62
SADHNANIQ 93.08 90.2 4% -3.09% 105
SYRMA 346.72 494.65 4% 42.67% 127
AXISCADES 440.73 478.8 4% 8.64% 77
DMCC 307.08 332.8 3% 8.38% 112
NEWGEN 499.57 847.6 3% 69.67% 89
SBCL 146.02 652.3 3% 346.72% 162
FLUOROCHEM 2785.95 2789 2% 0.11% 1
KOPRAN 121.33 181.5 1% 49.59% 112

SECTORAL PF

Stock Name Buy Price CMP Qty Weightage Return Holding Days
CIPLA 1224.01 1222.25 21 19% -0.14% 1
DYCL 509.47 591.45 50 19% 16.09% 1
KAMOPAINTS 343.84 194.4 73 18% -43.46% 3
REMSONSIND 359.8 348.1 46 12% -3.25% 1
SUDARSCHEM 529.63 524.45 27 10% -0.98% 0
UJJIVANSFB 46.99 49.75 250 9% 5.87% 2
SWSOLAR 395.43 396.8 25 7% 0.35% 1
DODLA 763.36 741.4 10 6% -2.88% 3
IBULHSGFIN 152.58 163.9 3 0% 7.42% 3

Added Gujarat Fluorochem

All credits to the FORUM :

• Fluoropolymers are majorly used in very specialized applications which require non adhesive, low friction properties along with extreme heat, corrosion resistance, difficult weather and harsh chemical conditions. FP finds usage in automotive, aerospace, semiconductors, electronics, common household appliances. FPs because of their physical properties are also expected to find increasing usage in EV batteries and 5G where thermal requirements are significantly stringent.

• Fluorospeciality chemicals {FSC) are intermediates used in agrochemical and pharmaceutical industries. Company has commercialized seven molecules and is looking to add more. This segment has large growth opportunities and is a proxy to the growth of pharma, agro chem, electronic and polymer industries. Further, it is planning to incur capex for additional six products and has guided for its commissioning by end FY21. There is also a strategic need of both domestic and overseas customers to de risk from China.

• Refrigerant gases are no longer the focus area for FLUOROCHEM. FLUOROCHEM today majorly manufactures R22 as feedstock for FP. It still continues to sell R22 in retail and also as feedstock to agchem/pharma companies.

• Chloromethanes consists of three products Chloroform, Methylene Dichloride (MDC), Carbon Tetrachloride (CTC), as of now Fluorochem is the only producer of of MDC and CTC in India.

• Caustic Soda : Chloromethanes and caustic soda are in some ways a by product since the entire process of manufacturing FSC/FSP/Refrigerant gases requires significant amounts of Caustic/Chlorine/Chloromethanes. In the rest of the discussion, we will be majorly focusing on FPs and SFCs.

NEW AGE FLUOROPOLYMERS
• Battery chemicals
• Fluoropolymers
• Refrigerant Gas

Battery Chemicals

  • LIPSF6 (Lithium Hexafluorophosphate)
  • LiFSI
  • LiFePO 4 battery (lithium iron phosphate battery)
    or LFP (lithium ferro phosphate)
  • Electrolytes
  • NAF
  • Phosphorous Pentasulfide
  • PEM (Proton Exchange Membrane)

FLUOROCHEM

  • PVDF
  • FKM (Fluor elastomers)
  • PFA
  • FEP
  • PTFE
  • FLUOROPOLYMER ADDITIVES

REFRIGERANT

  • R32
  • HFO Gas

FLOUROPOLYMERS USES/APPLICATION

  • TRANSPORT
  • TELECOMMUNICATION
  • SEMI CONDUCTOR
  • ELECTRONICS
  • RENEWABLE ENERGY
  • MEDICAL
  • CHEMICAL PROCESSING
  • ELECTRICAL APPLIANCES

CAPEX/GROWTH
25 Billion capex for 2 years and 45-50 Billion capex for 3 years (primarily towards battery and PVDF) funded through internal accruals

BATTERIES SECTION :

  • LiPF6
  • PVDF
  • Electronic Grade Anhydrous HF

• PVDF binders for Li- Battery Electrodes – Commercially available
• Indigenous Manufacture of Lithium Hexafluorophosphate LiPF6 required as Electrolyte component in Lithium ion Batteries.
• Manufacture and supply, initially by 2023, customized LiPF6 based Electrolyte formulations as per Customer’s recipe from our state of the art formulation facility, and eventually develop our own proprietary electrolyte formulations as performance products.
• Lithium batteries demand long-term reliability as well as chemical and electrochemical resistance in the specific chemical environment of Lion cells
• PVDF is electrochemically stable in the full range of voltage between 0 and 5 V vs Li+/Li
• PVDF is stable at high temperatures
• Compatible with most cell chemistries – NMC, LFP, LCO etc.
• Excellent solubility in polar solvents like NMP
• GFL has Plan under implementation to set up a scalable plant to produce 1000 TPA Electrolyte grade LiPF6 by end 2022 at Dahej, Gujarat.
• The plant will be scalable to expand to 2000 TPA by end 2024 and further to 4000 TPA if need be.
• GFL has been in Fluorine Chemistry for past three decades and has Technology for making Electronic Grade Anhydrous HF (AHF). Electronic Grade LiF will be made in-house starting from Li2CO3 /LiOH
• A State of the art facility to manufacture about 6000 TPA Electrolyte formulation will be set up in the year 2023 which will enable us to service our Customers with customized formulations as per their needs. This will be fully equipped with Testing facility for stringent Quality Control
New age industry vertical
EV – Expect to commence operations by September 2022
• Products – PVDF electrode binders, battery chemicals, LiPF6, additives, electrolyte formulations, battery casing
• Setting up an integrated battery chemicals complex
• Developed suitable PVDF grades for cathode binder application
Only manufacturer of LiPF6 as of now in India
• Lithium carbonate, phosphorus pentachloride – To make eventually
• Solvents – will be buying initially

Key components of cell:
Anode
Separator
Electrolyte : It is a mixture of lithium salt in an organic solution. The salt used is LiPF6 .
Cathode

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Usage of fluorinated materials in LI-ion batteries:

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RENEWABLE ENERGY

Solar panels – PVDF film plant to be commissioned in FY23
• Products – PVDF film, Back-sheet
• PVDF film – Project expected to be commissioned in FY23, to cater to both domestic and international markets, backward integrated for PVDF
Hydrogen fuel cells/ electrolysers
• Products – Fluoropolymers (FKM, PTFE, FEP), Membranes, Charging Accessories
• Fluoropolymers are integral to the functioning of Electrolysers
• Fluoropolymer based proton exchange membranes (PEM) form the heart of fuel cells and electrolysers
• GFL with its portfolio of major Fluoropolymers is well equipped to cater to the Fluoropolymers required for the hydrogen electrolysers, fuel cells and charging stations
• Proton exchange membrane (PEM) – Taken up R&D to develop indigenous technology, to take 2 years

PVDF is needed in solar cell backsheet
It is needed for UV protection, extreme weathers and paint retention etc.
More the Fluorine content in PVDF, better are the results. Arkema claims 59% F content in their PVDF and hence superiority. We need to ask this question to management.
Better the backsheet, lower the maintenance and higher the RoI. So as solar industry matures in India and worldwide, PVDF film will continue to remain a critical component.

Very first thing is that PVDF is used in the EV battery electrode (PVDF binder) and also in separator coatings. GFL IESA presentation talks about only binder part and not coating part. Most likely, GFL would also have separator coating as well - but better to get this clarified from management.

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All credits to the FORUM MEMBERS : https://forum.valuepickr.com/t/gujarat-fluorochemicals-a-hidden-fluorine-story/

PFA

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PFA can be formed by conventional injection moulding or screw extrusion.
PFA can be molten
Advantages of PFA
• Because PFA can be injection moulded, more complex shapes can be made. This results in better Cv values in flowmeter bodies or the bodies for regulators for example.
• Because it is heat deformable it can be applied more easily as a liner.
• PFA can be heat welded. This property is used in flare and in bond fittings. Both flare and bond fitting provide a leak tight connection with minimal dead volume.
• Oleophobic (it drips off after contact with an oily liquid).
• Hydrophobic (in contact with water or a solution in water, this drips off easily. FPA stays cleaner, which makes cleaning of liquid systems easier).
• More transparent than PTFE and PVDF.
Disadvantages of PFA
• More expensive than PTFE and PVDF
• Absorbs more water
• Less resistant to repeated mechanical strain
• Lower maximum allowable temperature
Typical applications of PFA
• Laboratories, because of the chemical resistance and because of the good transparency of hoses.
• Long piping.
• Gas and liquid cabinets, especially with Ultra Pure Water and corrosive chemicals.
• Coating of chemical equipment, such as thermocouples, heating elements, height sensors and the inside of reactor vessels.
Because PFA can be processed via the injection molding technique, it is relevant to compare PFA to another fluoropolymer that can do the same: PVDF.

PVDF

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PVDF is a commonly used plastic in systems. It has much better chemical resistance than many other plastics and is 30% cheaper than PFA.

This makes it a formidable competitor to PFA. In short, PFA is preferred over PVDF in applications where PVDF is not chemically resistant enough and when transparency is important.

Advantages of PVDF
• Cheaper than PFA (about 30%)
Disadvantages of PVDF
• Not transparent.
• Can discolor under the influence of certain chemicals.
• Not as chemically inert as PFA and PTFE.
• Smaller temperature range, especially less suitable for cold applications.

FKM : Doing more research !!

Govt to Allocate around Rs.6000 crs to each for PLI Scheme for ELECTROLYZERS & GREEN HYDROGEN

PROXY Companies like : GUJARAT FLUOROCHEMICALS(GFL) would be benefitting this

GFL’s FLUOROPOLYMER Products(FKM,PTFE,FEP,PEM) are used in ELECTROLYZERS & HYDROGEN FUEL CELLS

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Hydrogen can be made by following ways :

  • BIOMASS such as producing Methane and then catalyzing it
    • PRAJ : Team is researching for hydrogen & more into bio space : they have partnership with multiple international client to build hydogen facilities and they are conceptualizing within internal R&D team

Abstract Image

Shishir Joshipura, CEO & MD of Praj Industries Explores New Possibilities in Green Hydrogen : Shishir Joshipura, CEO & MD of Praj Industries Explores New Possibilities in Green Hydrogen - YouTube

  • WATER ELECTROLYSIS : This needs electricity either Fossil Fuels or Renewables + this needs Polymers such as (FKM,PTFE,FEP,PEM)
    • RELIANCE via Fossil Fuels
    • ADANI
    • GUJARAT FLUOROCHEM (PROXY)
    • HEG/GRAPHITE (COMMODITY)
    • DMCC (Company is doing R&D on boron compounds, which can store hydrogen)
3 Likes
53

@nithin_Shenoy - I noticed that you took a recent entry in Cipla. Did you find any rationale that why cipla promoters would be thinking of exiting the business?

Source: cipla: Blackstone sets its sights on buying out Hamieds from Cipla - The Economic Times

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@ChotuKatappa Recently started tracking Cipla story

Cipla is into respiratory, ipm, chronic and cardiac profile

Cipla is in rank 1 for respiratory and their strategy of ipm in India is playing out
They have strong foothold in South Africa

Next set of growth : peptide injectable, advair, grevlimid

My triggers for buy

Now as per the concall the management said the recent jump in revenues are due to price conditions and most of the American companies are closing their business due to losses or amalgamation of business with some other to survive.

Second as per multiple sources I heard of us generics market will not do well
It’s just that branded generics will do well in domestic front well Cipla is poised for it

Third opportunities like peptides, grevlimid

Fourth if you look at their ipm market it has substantial grown in chronic portfolio part

Fifth : Cipla’s lead peptide asset Lanreotide injection, launched in Q4FY22, is consistently gaining market share. The product currently has market share of 18%, up from 17% in Q4FY23, 14.1% in Q3FY23, and 9.6% in Q2FY23

Now why in such case promoter sells 33% stake

First reason as per the sources below the promoter doesn’t have children

Second why only sell to black stone only
I don’t know. We have to wait and find out from the management

If I were to think about it - I think big investors could only buyout such big stake now at what % discount don’t ask me…

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Yusuf hameid has Mk hameid too as vice chairman but he is retired on March 2014

Now mk hameid has 3 children among them
2 daughters
1 son

Seems like no one is interested !!

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I further believe Cipla should do well and they are also exploring bio similar opportunities for respiratory side

@ChotuKatappa now can you drill down to check and tell me
how is the Blackstone management
Do they understand the pharma complexities
Did they ever manage pharma companies and if so did they likely succeed

2 Likes
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My rationale was to understand how did you decide to go for a 19% stake in a biz whose promoter might be exiting? Your entry seemed very recent so I assumed you might have had some idea of this news.

Now that I look at your answer and research more on the news, I think maybe I was wrong and the news broke out publicly after your purchase. I should have phrased my original question better.

Second why only sell to black stone only
I don’t know. We have to wait and find out from the management

Given how big Cipla is, there aren’t many organizations that could purchase such a large stake.

@ChotuKatappa now can you drill down to check and tell me
how is the Blackstone management
Do they understand the pharma complexities
Did they ever manage pharma companies and if so did they likely succeed

Blackstone(BS) is a very large asset management firm with multiple businesses under their head.
The management quality is debatable. I have my reasons to have a neutral view of them (maybe even slightly negative). Maybe this is why I was excited to see your 19% stake.

For example: One of the companies I am invested in, was bought by BS and sold within a few years without any significant shareholder value (if I am not mistaken some investors lost wealth). The new management that came in has been able to turn around the business. However, this does not mean that BS is bad - but perhaps my experience hasn’t been very positive

Afaik, they have had held multiple pharma businesses across the entire value chain globally. Even in pharma, there have been cases where BS bought a business and sold it within a few years.
If BS were to buy Cipla, I would hypothesize that at some point BS might exit. However, this news has come out when Cipla is at its peak so I am presently uncertain if my hypothesis is applicable here (or) how should I evaluate this news. Maybe, I am incapable to evaluate this news - certainly I need more time

I am putting an example for you (you might find multiple such examples)

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While some of their pharma businesses have been quite big in size, it’s difficult to comment on their success rate (they have a large no of investments making it difficult to see what %age of their pharma biz turn out to be successful).

Further, “success” is a subjective term (when you say “…did they likely succeed”, I do not know what you do call a success? 10% return in a year? 100% return in a month? 30% CAGR over 3 years? 12% CAGR over a decade?).

While an investment may work or not, over the longer horizon BS usually has made shareholders satisfied. If I were to invest based solely on this news and my past experience, I would prefer to invest in the holding company and not in the company being purchased.

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Thanks @ChotuKatappa to be honest I was not knowing about the new on Blackstone.

My thesis was on peptides, Advair and increase in sales of India and SA business

I heard about blackstone lot many times that I don’t recall off… but what intrigues me is that why did the promoter sold to blackstone at first place… I was waiting to find out from management or newsletter is that because there was no buyers, I have no idea…

It’s hard even for a pharma promoter to run such inherent complex business because if requires stringer quality control, USFDA issue much more.

This is one of the red flag for me for now - exited positions, will enter when sky is clear

SECTORAL PF Update : This constitutes only 15% of my allocation and this is win or loose PF.

SOLD CIPLA
SOLD DYNAMIC CABLE : Will reenter at low entry provided.
SOLD DODLA : Found cable sector doing well
SOLD UJJIVANSFB : Waited for 15+ days no momentum, will come back during triggers
SOLD : UNIVERSAL CABLE made decent 10% - due to the news of optic fiber, however thought that the momentum was strong and continue, will wait and watch
ADDED : RATEGAIN : Great set of results
ADDED INOX WIND
ADDED UGROCAP

SECTORAL PF :

Stock Name Buy Price CMP Weightage Return Holding Days
KAMOPAINTS 183 195.1 11% 6.61% 5
INOXWIND 219.54 218.1 15% -0.66% 5
REMSONSIND 360.23 366 14% 1.60% 7
RATEGAIN 517.13 533.05 14% 3.08% 5
GUFICBIO 264.2 270.1 13% 2.23% 7
GLOBUSSPR 1035.41 1033.6 12% -0.17% 7
EQUITASBNK 88.04 87.9 8% -0.16% 6
UGROCAP 301.01 298.65 7% -0.78% 4
SAKAR 347.51 348.4 6% 0.26% 7

CORE PF

Stock Name Buy Price CMP Weightage Return Holding Days
Laurus Labs Ltd 342.18 406.5 43% 18.80% 7
Neuland Laboratories Ltd. 2100.01 3819.25 14% 81.87% 194
Syngene International Ltd 682.35 837.25 11% 22.70% 166
Praj Industries Ltd 296.41 444.35 5% 49.91% 266
ORCHIDPHAR 552.27 599.9 5% 8.62% 66
Sadhana Nitro Chem Ltd 93.08 90.15 4% -3.15% 109
Syrma SGS Technology Ltd 346.72 477.35 4% 37.68% 131
Axiscades Technologies Ltd 440.73 516 4% 17.08% 81
DMCC Speciality Chemicals Ltd 307.08 355.5 3% 15.77% 116
Newgen Software Technologies Ltd 499.57 864.2 3% 72.99% 93
Shivalik Bimetal Controls Ltd 146.02 585.5 3% 300.97% 166
Kopran Ltd 121.33 184 1% 51.65% 116
Gujarat Fluorochemicals Ltd 2828.91 2732.55 0% -3.41% 5
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Tata Communications :

Summary of Q1 FY24 Earnings Call:

Strategy & Future Plans :

  • The company’s Reimagine strategy is being executed effectively, reflecting in financial results.
  • Focus on data revenue growth momentum and enhancing customer relevance.
  • Investments made may impact short-term margins but aiming for ROCE above 25%.
  • Unique strengths recognized by customers for addressing cost and revenue outcomes.
  • Emphasis on pivoting the collaboration portfolio to stabilize growth.
  • Focus on strengthening customer experience journey for enterprises.
  • Cloud and security offerings globally and in India.
  • Continued investment in AI, ML, video, and storage capabilities.
  • Emphasis on strategic M&A for growth and value creation.
  • Emphasis on transforming the collaboration portfolio by introducing products like Tata Communications GlobalRapide.
  • Strategic focus on stabilizing the degrowth in collaboration by pivoting from usage-based to product and services model.
  • Expansion of offerings like Tata Communications DIGO and InstaCC to fuel growth in the collaboration and managed CPaaS segment.
  • Aim to strengthen the customer experience journey for enterprises through strategic investments and partnerships.
  • Positive outlook for growth in the media segment, with deepening customer engagement and potential synergies from the Switch integration.
  • Continued investment in cloud and security offerings, with a strong emphasis on India’s IZO Cloud proposition and global security solutions.
  • Confident in the growth potential of all Digital Portfolio offerings.
  • Planned enhancements to cloud capabilities, including AI, ML, video, and storage features.
  • Strong demand drivers in cloud, multi-cloud, connectivity, and customer experience.
  • Acquisitions like Switch and Kaleyra to contribute to growth in international markets.

Financial Performance:

  • Q1 reported revenue: INR 4,771 Crores, up 10.7% YoY and 4.4% QoQ.
  • Data business revenues: INR 3,912 Crores, up 17.1% YoY and 6.6% sequentially.
  • Digital Portfolio (DPS and incubation combined) revenues: INR 1,415 Crores, up 37.5% YoY and 16.6% QoQ.
  • EBITDA: INR 1,024 Crores, 21.5% margin.
  • PAT: INR 382 Crores. ROCE: 26.3%.

Business Segment Performance:

  • Core Connectivity business revenues grew 8.1% YoY and 1.6% QoQ.
  • Collaboration Portfolio grew 13.4% QoQ and 19.4% YoY.
  • Media business revenues increased 103.9% sequentially and 108.7% YoY.
  • Next-Gen connectivity offerings revenues up 14.9% QoQ and 46.6% YoY.
  • Cloud, Hosting, and Security grew 23.9% YoY.

Subsidiaries Performance:

  • TCTS (telecom market-focused) and TCPSL (franchise model) showed stabilization and turnaround strategies.
  • Subsidiaries have been very volatile and struggling. Haven’t seen a sustained turnaround.
    TCTS is addressing telcom markets, they have the core competency and a very strong domain knowledge of telecom. And that combined with the technology expertise and
    service expertise they bring; it is attractive to the telecom companies out there who is investing in fiber to have a lot of legacy technologies and processes and would want to transform. That’s the real value proposition of TCTS and is still attractive.
  • There is some softness in the market today, globally, telecom companies and others are soft.
  • It takes time to convert opportunities and win those deals. From a profitability point of view, they are turning around, making careful selection of bids, and making sure that the mix is more skewed towards international.
    TCPSL The company suffered through a lot of macro changes imposed by various things, one of that being COVID.
  • Management had pivoted that business too, from being a fully company owned company operated model to a franchisee model and that changing to that franchise model is beginning to show results.
  • Part of TCPSL is showing results, the management had completely pivoted to the
    franchise model.

Core Connectivity business

  • Key drivers for growth this quarter was demand seen in the APAC market.

UCAAS : Unified Communications (Current Growth Driver)

The recent acquisition of Kaleyra & Switch together named as Digital Portfolio and Growth:

Digital Portfolio and Growth:

  • Collaboration portfolio of (Kaleyra & Switch) helped in transitioning from usage-based to product and services portfolio

  • Stabilization of degrowth in collaboration portfolio.

  • Introduction of Tata Communications GlobalRapide stabilized degrowth.

  • Growth driven by products like Tata Communications DIGO and InstaCC.

  • Emphasis on becoming relevant to enterprise customers’ digital transformation.

  • Robust growth observed in the digital portfolio, showcasing the effectiveness of the product and services approach.

    Tata Communications DIGO

    • Continues to grow in capability as a Customer Interaction Suite, where it focuses to unify all customer interactions and benefited from addition of new logos and higher traffic revenues.
    • Recently, one of the India’s leading Passenger Car Manufacturer has trusted Tata Communications DIGO to transform Broker and Customer experience of its Car Insurance venture. The project covers the CX transformation of all the phases of customer journey – Attract, Acquire, Transact and Retain.
    • Tata Communications DIGO won the MEFFYS AWARD 2023 in the “Personal Data & Identity” category for the Best Innovation in the field of authentication.

    InstaCC

    • This portfolio grew by very healthy double digit this quarter and more
    • Having robust deals in the delivery pipeline as well.
    • InstaCC benefited from increased usage and the addition of new logos in the Middle East and deal wins in the healthcare segment.

    Media Business

    • Media business revenues including revenues from Switch were sequentially up by 103.9% and 108.7% YoY.
    • Excluding Switch, media business revenues were up 36.5% QoQ and 39.7% YoY.
    • Seeing rapid expansion in Japan and Nordic markets with more in region demand for global content.
    • Media Edge is acting as a strong technology differentiator for all three segments content transport, processing, and production.
    • With the integration of Switch, both teams are driving synergies by taking up joined up conversations to strategic customers in Europe and the US.
    • The global presence of Tata Communications and strong broadcast experience with production capabilities of Switch has helped elevate conversations across customers.
    • Seeing this translating to a good order pipeline, higher ACV deals and possibly better revenue conversions going forward.
    • Media segment growing well, boosted by media EDGE capabilities.

Cloud & Network Business
Next-Gen connectivity offerings

  • Revenues increased by 14.9% QoQ and 46.6% YoY.

  • Unique IZO WAN proposition offers an end-to-end managed predictable and performant business grade internet to customers.

  • This serves as a major catalyst driving deal wins.

  • With customers moving to Multi Cloud Interconnect, management sees an opportunity to address this growing market opportunity.

  • Soon to launch the IZO Software defined Multi Cloud Connect to provide on-demand, self -serve capability for customers to manage and address their connectivity to cloud, multicloud, and between clouds.

  • Cloud and Security offerings also showing growth potential.

  • Focus on IZO Cloud in India.

  • IZO Private Cloud launched due to specific solutions for the government community

  • Serving very prestigious government institutions with cloud solutions

  • Launched a FIN cloud that addresses financial services companies that specifically
    with specific compliances. and other latency requirements.

  • IZO cloud that is running for other enterprises as well, they are running variety of workloads on the cloud, and it has scaled very well.

  • Private cloud’s unique value proposition.

  • Global security offerings with strong growth potential.

  • Strategic focus on IZO Cloud in India and global security offerings.

  • Emphasis on private cloud’s unique value proposition.

  • Plans for incorporating AI, ML, video, and storage capabilities into cloud offerings.

  • Competing strongly with public cloud players because of its very unique, very differentiated and gives the customers the level of flexibility and cost savings and more predictable cost that the customers are now beginning to
    look for.

  • Largely targeted towards India market now for public cloud.

    • As far as security is concerned, that’s more of a global offering.

  • Managed Security Service business

  • Variety of offerings in MSS security.

  • One is largely about network security - global offer they use for customers.

  • Cloud SOC which is essentially to build a SOC customer to deliver managed detection and response capability

  • Cloud SOC was launched in India a year and a half ago, and it’s seen a very rapid growth. And have taken this capability selectively to other markets.

  • Launched SOC in the UAE and while they have not officially launched it in the European markets, there are already 2-3 customers in Europe who are using cloud SOC
    capability. - security offerings are more global.

  • Cloud capability, at the moment is largely in India.

  • Continues to grow at a healthy double digit run rate.

  • Tata Communications Cloud SOC Managed Detection and Response platform is well positioned to address market opportunities.

  • Recently signed a large Cloud SOC contract with a leading life and general insurance group to protect them against cyber-attacks.

  • This is completely a cloud delivered solution from platform.

Connected Solutions
Tata Communications MOVE Platform:

  • After gaining wins in the domestic market, now looking at expanding to international geographies.
  • Softness observed in MOVE platform.
  • Platform addresses different segments including auto connectivity.
  • Temporary softness observed in the Tata Communications MOVE platform’s growth.
  • Acknowledgment of various segments in the MOVE platform’s target audience, including auto connectivity.

Carrier Services

  • This portfolio registered a growth of 23.9% YoY and has seen some softness on a sequential basis.
  • Enterprises continue to look for seamless integration across multiple clouds with the flexibility to leverage both private and public clouds with better and transparent FinOps to track cloud consumption.

Subsidiaries

  • TCTS and TCPSL revenues remained flat sequentially.
  • Payment business continues to make positive shifts as we expand portfolio under the Franchise model.
  • Added close to ~3800 Franchise ATMs to portfolio and are working steadily on increasing this further.
  • Continue to strengthen governance rigor and agility in TCTSL.
  • Holistic delivery across financial KPIs is laying path to capture the tailwinds and market opportunities

Q&A Highlights:

  • Clarified sustainable growth in data business, no impact from semiconductor issues.
  • Core Connectivity growth due to investment in capabilities and APAC market demand.
  • Potential turnaround strategies for subsidiaries TCTS and TCPSL.
  • Cloud and Security offerings targeted for India and global markets.
  • Ambition to achieve EBITDA margins of 23-25% despite acquisitions.

Employee Count, Margins, and M&A:

  • Employee count increased due to Switch acquisition and other offers.
  • 128 employees added due to Switch acquisition.
  • EBITDA margins declined due to mix effect, added people costs, M&A-related expenses.

Future Margin Expectations:

  • Margin targets set between 23-25%.
  • Acknowledgment of potential margin impact due to acquisitions.
  • Return on capital employed and return on investment emphasized.
  • Margin targets set between 23-25%, with flexibility based on strategic reasons.
  • Emphasis on maintaining a robust return on capital employed and return on investment.

Aspirations for Revenue and Revenue Mix:

  • Goal to double data revenues in four years.
  • Emphasis on data business growth.
  • Long-term focus on digital portfolio and growth in data business.
  • Ambition to double data revenues in four years.
  • Acknowledgment of the gradual decline of voice business in the overall revenue mix.
  • Future growth primarily focused on the data business.

Sentiment Analysis:

  • Management’s sentiment is optimistic and enthusiastic about the growth and positive performance.
  • Clear confidence in strategic initiatives, especially in the digital portfolio and collaboration segments.
  • Acknowledgment of challenges and softness in certain segments, but with a focus on transient nature and future scaling.
  • The management views M&A as a significant driver of growth and value creation.
  • The tone is proactive, with a strong focus on capitalizing on market trends and opportunities.

Margins and Profitability:

  • Despite acquisition impact, aim to maintain EBITDA margins in the range of 23-25%.
  • Kaleyra acquisition may have short-term margin dilution, but synergy benefits expected.

My views : This business has inter links between them as in like if someone needs cloud, they also need security, they also need network facilities like WAN, WIFI, Multi connect and if there is a old business and wants to move to cloud then tata can help them leveraging firstly in areas of bringing them up to speed using fiber optics (subsidiary company which is in loss stage) then provide cloud solutions either its hybrid, on premise of cloud cloud etc.

Tata Communications have merged value proposition acquisition such as Kalyera & Switch

In simple words Kalyera is a communication platform like Twilio - as you get text message in whatsapp regarding promotional offers or much more that is what kalyera is focused

Switch : They deliver OTT content like LIVE shows, sports, content delivery much more.

Given this acquisition now into both PLATFORM & DIGITAL there will be growth as they can cross sell many products

Present in 190+ countries around the world
Worldwide Operates the largest and most advanced subsea fiber network which underpins the internet backbone, where its network carries around 30% of the world’s Internet
15% of all International Voice traffic runs on Tata Communications’ network
Largest Owner of Subsea Fiber Network of Cables : 2.4 Lakh Kilometer

Cable Map

image

Guidance

Ambitious growth plans—doubling revenue in four years—is certain to weigh on its profitability. https://twitter.com/i/broadcasts/1YqKDoEBAwQxV

Datacenter are the heart of the internet.
They directly offer managed services for 20 data centers across the globe see here : Tata Communications Data Centers

Disc : Studying

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Tata Communication Subsidiaries :

Kaleyra appears to be a global cloud communication platform that offers a range of communication services for businesses. They focus on enabling real-time communication between businesses and their customers through various channels. Here are some of the services and solutions they offer:

SMS Services: Kaleyra offers SMS services that allow businesses to send transactional and promotional messages to their customers. This can include alerts, notifications, marketing messages, and more.

Voice Services: They provide voice communication solutions, including interactive voice response (IVR) systems, voice broadcasting, and voice notifications.

WhatsApp Business API: Kaleyra helps businesses integrate with the WhatsApp Business API, enabling them to communicate with customers on the popular messaging platform.

OTT Messaging: They offer solutions for connecting with customers on over-the-top (OTT) messaging platforms such as Facebook Messenger, Viber, and WeChat.

Two-Way Communication: Kaleyra enables businesses to engage in two-way conversations with customers, allowing for feedback collection, customer support, and interactive communication.

Transactional Email: They provide tools for sending transactional emails, which are important for sending receipts, invoices, order confirmations, and other essential communication.

Rich Communication Services (RCS): RCS is a more advanced form of messaging that allows for interactive and media-rich communication. Kaleyra supports RCS messaging for businesses.

Global Reach: Kaleyra’s platform is designed to reach customers around the world, offering connectivity to various mobile networks and messaging platforms.

It seems that Kaleyra focuses on facilitating seamless and effective communication between businesses and their customers using various communication channels. Their services are geared towards enhancing customer engagement, enabling real-time interactions, and streamlining business communication processes. For the most accurate and up-to-date information about Kaleyra’s offerings https://www.kaleyra.com/

The Switch: The Switch offers a range of services and technologies designed to facilitate the production, management, and distribution of live video content. They cater to various industries, including broadcast media, sports, entertainment, news, and events. Some of their key offerings include:

Live Video Production Services: The Switch provides services that allow broadcasters, content creators, and event organizers to capture and produce live video content. This can include multi-camera setups, graphics integration, and other production elements.

Video Transmission Services: The company offers reliable and secure video transmission solutions that enable the seamless delivery of live video feeds from different locations to broadcasting networks, streaming platforms, and other distribution points.

Remote Production: The Switch specializes in remote production solutions, which allow broadcasters and content creators to produce live events without the need for large on-site production teams. This can lead to cost savings and increased flexibility.

Content Distribution: The Switch facilitates the distribution of live video content to various platforms, including traditional broadcasters, cable networks, streaming services, and social media platforms.

Sports and Events: They provide services specifically tailored to cover live sports events, concerts, conferences, and other major gatherings, ensuring that the content reaches audiences globally.

Broadcast Facilities: The company operates network operations centers (NOCs) and other facilities that help manage and monitor live video feeds, ensuring a smooth and high-quality viewing experience.

Global Network: The Switch maintains a network infrastructure that spans multiple regions, allowing them to offer international video transmission and distribution services.

Their services are designed to support real-time, high-quality video experiences for audiences around the world, making them a crucial partner for organizations that require reliable live video production and distribution solutions.
For the most accurate and detailed information about The Switch’s offerings and services, I recommend visiting their official website at https://www.theswitch.tv/.

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There is a change in my PF

As its over a 2-3 month journey to really test my hypothesis of sectoral rotation with 15% of capital - I fairly do understand this is not my cup of tea or I would need to be better at it (Mentally).

Here are the key mistake

  • Macro factors contribute much to sector - its not just companies, even if the company gives excellent result, there needs to a good background music for the stocks to dance
  • You need to know fundamental, triggers, technical, momentum across multiple sectors & companies and be on toes to find out what’s the driving triggers - well this is not my cup of tea.
  • I did wait for as long as 1-2 months in SECTORAL PF just to see that my CORE PF is risen about 30% and I could not just wait to sit in SECTORAL PF to just throw pebble in the pond and wait for something to happen.
  • There will be a inverse ratio between the sectors too my observation when Chemicals/Pharma are at all time High the Banks would be on the opposite end now since my CORE PF is more inclined towards sunrise sector (Chemical/Pharma) in next 2-3 quarters making new moves is not advisable.
  • Now if you find the running tiger you can invest big and make handsome returns in short term - and your PF may look temporarily well : but this is just a mental tickle for short term, what people miss the most is long term compounding. For example short term noise such as HPL Power, BIRLA Cable, APAR had made good returns however if I had been in that area of noise then I would miss NEULAND
  • Now why emphasize long term compounding? has this happen before? will this happen going ahead? how sure are we on the right boat?
    From most of the interview example : https://www.youtube.com/watch?v=8Y7BqPMIbA4 Uthpal & Ramesh Damani who are market veteran - their experience tells us that investing should be long term & secondly allocation.
  • Why I did not invest in Banks?
    • Honest : I did not knew what was happening there

What did I Miss?

  • Capital Goods
  • Industry tools especially Mining

What I cannot afford to Miss?

  • Pharma : Contract Manufacturing Opportunities
  • Chemical - Specialty Chemical Opportunities mainly in Sulphur, Flavors & Fragrance, Agrochemical, Nutrition
  • Banks especially - Small Finance Banks
  • Consumption : Staple & Discretionary
  • Telecommunication : Cloud | 5G
  • Energy : Bio | Green Energy via Fluorination proxy
  • Defense : Drone, Radar & Sonar
  • IT sector : SAAS, Data Engineering especially Cloud, ERP Solutions on Cloud.
  • Finance : I don’t know who are good here
  • Railway : Exited HBL Power due to valuation :
  • Fluorochem : Multiple applications
  • Real Estate theme via - Home Improvement

Any themes that am missing here?

Here is the current snapshot of my PF

Serial Stock Name Buy Price CMP Weightage Return Holding Days
1 LAURUSLABS 344.2 387.75 43% 12.65% 15
2 NEULANDLAB 2100.01 4082.65 14% 94.41% 202
3 SYNGENE 682.35 799.5 11% 17.17% 174
4 PRAJIND 296.41 465.5 5% 57.05% 274
5 AXISCADES 452.44 579.7 4% 28.13% 89
6 SYRMA 346.72 455.95 4% 31.50% 139
7 NEWGEN 499.57 918.2 3% 83.80% 101
8 SBCL 146.02 537.15 3% 267.86% 174
9 MASTEK 2156.36 2173.1 2% 0.78% 0
10 ORCHIDPHAR 592.57 544 2% -8.20% 74
11 DMCC 308.19 308.6 2% 0.13% 124
12 FLUOROCHEM 2838.79 2825 2% -0.49% 13
13 PATANJALI 1306.83 1303.1 1% -0.29% 0
14 SADHNANIQ 85.47 85.15 1% -0.37% 117
15 SIRCA 365.31 404.5 1% 10.73% 97
16 KAMOPAINTS 175.25 174 1% -0.71% 0
17 GUFICBIO 274.08 280.1 1% 2.20% 15
18 UJJIVAN 517.1 514 1% -0.60% 15
19 EQUITASBNK 87.86 85 1% -3.26% 15
20 JUBLPHARMA 432.33 455.5 1% 5.36% 13
21 TATACOMM 1691.95 1698.8 1% 0.40% 0

Owning in Family PF :

Story Stock Name Buy Price CMP Weightage Return
Banks IDFCFIRSTB 36 88 1% 144%
Consumer Discretionary TATACONSUMER 330 838.1 1% 154%

Sectoral Weights

image

Next Planned Move : This will be not like a slice of cake - It can never be the case that as I mention so shall that it will happen but am keeping my mental notes here :

  • I have allocated high towards Pharma as the total Pharma Index is on move, with LAURUS being on 43% weightage on my Portfolio - expecting the next quarter to be slightly better - if price takes off to about 70-80% from the current holding levels, I will gradually reduce it to 20%
  • Expecting Fluorination & Specialty to do well after that - so will allocate more to it later on the run
  • Banks usually one needs to concise about current NPA and needs a careful watch

Planning for SIP :

Consumption Staple :

  • Patanjali

Fluorination :

  • Fluorochem

Energy :

  • Praj

Pharma :

  • Syngene

5G Telecommunication | Cloud | Datacenter :

  • Tatacommunication

Banks

  • Equites | IDFC

Consumption Discretionary

  • Tata Consumer

Things that am interested

Consumer Discretionary :

  • Titan : Brand exclusivity
  • Manorama for Shea Butter
  • Tata Consumer
  • Metro Brands
  • Brand Concepts

Speciality Chemicals

  • Aether
  • Privi
  • Fairchem

Large Banks

  • HDFC

Insurance

  • Star Health
  • PBFintech

Disclosure : These are not stock recommendation, Please do your own research before investing. Am just sharing and seeking the knowledge for education purpose.

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Any reason why you have gone overweight in Pharma and Laurus Labs in particular. Do you think bottom is in place for both Pharma and Laurus?

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I don’t know if this is the bottom or not
What I hear from most of the api companies that the raw material price pressure has eased out
Laurus had shipment issue and expected to see Q2,2024 to be better… this quarter was the worst and it’s already priced in and one needs to match the narrative with respect to what management is saying and doing… I expect arv sales to come back, CDMO to gain traction, h2 will better than h1

After pharma it will be speciality chemicals and fluorination : need not all be in line but the stories across all companies is h2 ke bad sab kuch…

Disclosure : These are not stock recommendation, Please do your own research before investing. Am just sharing and seeking the knowledge for education purpose.

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POKARNA Concall Snippets

Current Landscape of the Engineered Stone Industry:

  • The global environment for the engineered stone industry remains challenging.
  • Slowdown in U.S. home sales and project delays have impacted residential remodeling.
  • Increased competition from manufacturers in India and Southeast Asia using Chinese technologies.
  • Channel excess inventories have not fully depleted, indicating potential further challenges.
  • A cautious approach is emphasized, focusing on balancing efforts and exercising patience

Performance and Outlook:

  • Efforts to improve efficiency, explore new markets, and expand the distribution network.
  • Robust gross and EBITDA margins reflect productivity enhancements and cost management.
  • EBITDA margins target maintained between 25% to 30%.
  • No client loss encountered; customer base expanded compared to the previous year.
  • Advancements in markets such as Canada, France, Mexico, and Russia are noted.
  • Focus on diversification and exploring opportunities in India’s market.

Challenges and Strategies:

  • The uncertainty of the near-to-medium term outlook due to the dynamic environment.
  • Focus on improving efficiency, exploring new markets, and expanding distribution.
  • Developing alternative product formulations to meet evolving market needs.
  • The strategy of maintaining a balance between being cautious and optimistic.

Gross Margins and Profitability:

  • The management highlighted that the benefit of margin improvement primarily came from new design introductions.
  • They mentioned that some portion of margin improvement was attributed to cost initiatives, but it was not a significant factor.
  • The management reiterated their conservative approach to maintaining EBITDA margins between 25% to 30% due to uncertain market conditions.
  • The management addressed the one-off situation in Q4 and expressed that such situations were not likely to occur frequently in the business.

Market Dynamics and Demand:

  • In response to questions about the lag time in the U.S. housing market, the management indicated that the countertop installation process typically takes 12 to 15 months, suggesting a potential pickup in demand by the end of the financial year.
  • They noted that inquiries from the hospitality industry were increasing, and though it was not yet at pre-COVID levels, improvements were visible. They mentioned that the hospitality segment historically contributed around 10% of business volume during good times.
  • The management shared that new markets and product designs typically take 12 to 18 months to stabilize, depending on the market and distribution channels.

Domestic Market and Expansion:

  • The management discussed their strategy for the Indian market, focusing on building distribution channels and tapping into the kitchen and bath segment.
  • They clarified that the company did not currently have any company-owned stores in India, and around 110 stores carried their products through dealers across the country.

Competition and Pricing:

  • The management clarified that they compete with a variety of players, including those using Chinese technology, across different price brackets.
  • They emphasized the importance of differentiation and creating temporary monopolies to maintain a competitive edge.

Financials and Debt:

  • They clarified that the company’s debt position was manageable and that they were open to prudent capital expenditures if needed for business growth.

Disc : Have 1 single quantity for tracking, there are headwinds ahead.

Disclosure : These are not stock recommendation, Please do your own research before investing. Am just sharing and seeking the knowledge for education purpose.

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