Apcotex Q1-2024-concall
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Grauer and weil
Pragnesh ji, from some of your posts, you have mentioned that you invest in those companies where market capital is less than 5000 cr. But as I see, you are invested in KEI which is 21,000 cr market cap. So do you mean that while entering a company , you have that less than 5000 cr threshold and after that, there is no such condition?
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Exactly
I enter when mcap is less than 5000 cr, preferably less than 1000cr-2000cr. Because such companies remain small even after 10 times.
I dont sell once they become midcap.
I entered kei when its mcap was 4000cr
(Coutsey:book 100 baggers)
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Racl -Future growth(from conall @2024-july+sept)
1…TVS
=Recently the new electric scooter launched by TVS a couple of days back which is an extensive scooter, RACL is the single sole supplier for their entire rear axel assembly and many other things.
2…Super bike
=One more major super bike is being launched maybe in September for which the entire transmission is being supplied by RACL.
3…Cars
=Until FY2020, the company was zero is passenger car vehicle and last year it was 6% and this year it will be more than 10%. RACL is into passenger cars like BMW 7 series, Porsche, Mercedes AMG, BMW X7, Aston Martin. The kind of precautions and stringent requirements are a lot in these segments.
4…Yokes
Developing Yokes for motorcycle. The rear wheel will be driven by the propellers instead of a routine chain
=Bagged order from an European Two Wheeler manufacturer for supplying finishd forgings Yoke’s. This is a new business line. In past, RACL has never supplied parts till Forging stage
=At present none of the Yokes are used in Motorcycles in India. These are very high end Yokes being used in European 2 wheelers
5…ZF
=SOP for two new ZF business for started in June 2023. ZF dedicated plant running at 95% Utilisation. Project volume has peaked 2 years before anticipated projections
6…Company likely to win one big project in a new segment. Details to be known by next Qtr
7…Capex
=New Shakti plant was inaugurated in March 2023. The plant has been commissioned and commercial production has started for few projects
=Capex projection for FY-24 to 27 at 250 cr
= The company has projected capital expenditure of ~Rs.61 crore for FY24 (refers to the period from April 01, 2023 to March 31, 2024) for the purpose of creating capacities for existing products alongside new customers and modernization/upgradation of existing plant and machinery.
=No investment is made by the company unless the company gets a nomination letter from the customer
8…Intend to keep growing the company at > 20 pc CAGR for the foreseeable future
9…Others
=Received best supplier award for 100% Delivery by Kubota India in for CY 22
=Gajraula Plant is TISAX & ISO 27000 certified. Probably one of the first few in India for a company of our size.
=Moving from lose component manufacturer to highly precisioned oriented manufacturer.
-The more complex the part is, the more margin RACL is able to command
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Right now, I m investing in prevest denpro.
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Hi @Pragnesh sir, Could you please share your thought process behind your investment so that we can learn from it? Also, mind sharing your allocation % now?
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@Pragnesh Bhai: What keeps you interested in Paushak ltd since I think that it is neither undervalued nor a 100 to 1 kind of bet due to very-very limited opportunity size?
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1…I bought paushak @25 PE
2…It is already 2 times for me(previously 3 times😀)
3…Very strong moat(huge entry barrier)
4…Big fish in small pond
(Only Atul and paushak for phosgene)
5…At present all chemical companies have worst result. Even such bad time paushak has 25% opm
6…As per me, it is best buy, at this time
I will share moats of paushak…
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Paushak -Moats
1…Backward integration
=Paushak’s strong operating efficiency is aided by its backward integrated operations, which have led to strong operating margins (37.1% in fiscal 2021 and 31.2% in fiscal 2020). Return on capital employed (RoCE) was healthy at 18.7% in fiscal 2021.
=While most of the specialty chemicals industry depends heavily on import for their raw material supplies, the company has a low import bill
2…Strong .Barriers to Entry
=Highly explosive
= further heightened due to stringent government regulation and arduous process in getting licenses (for new entrants and for existing capacity expansions). On an average, any approval takes between 4-5 years.
3…Low-Cost Producer
(however, it is yet to establish itself as ‘the’ Lowest Cost Producer)
Due to .Economies of Scale
4…Large fish in small pond
=The key market of Paushak is the phosgene-based specialty derivatives catering to the Pharmaceutical and Agrochemical industries. These markets contribute to roughly 10% of the entire Phosgene market. Hence, the market may be too small and too specialized (due to high quality requirements) for the larger players to enter. This could be one of the reasons why Paushak has been facing competition from limited players (primarily from China).
5…Technology
=Paushak has also accelerated its efforts to improve the technology while enhancing capabilities and capacities to emerge
as “Technology driven global Specialty Chemical Company”.
=Paushak has been able to develop indigenous technology
for its one of the key product portfolio and would be expanding the capacity to a much larger size with “Make in India”
approach. It will not only result in import substitution in India but will also help Paushak to become a global supplier
while ensuring cost competitiveness
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Hi @Pragnesh sir, did you make any new entry at this time? Could you please share your thesis/rationale?
I will share it within short time
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Sir, Prevest is down by 11%. Is it something to do with preferential treatment to the leadership team who is a kin of promoters? Have you got out of Prevest?
I dont know about preferential allotment.
Please share supporting document
Thanks
Disc…invested
Ganesha eco(nov 2023 ppt)
Anyone interested for long term investment, kindly go through this thread.
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Why do you prefer institutional holding to be less than 10%?
No institutional holding is best
<10% is good
Adding Prevest denpro and paushak ltd.