‘Intimation’ letters using cheesy words like ‘Record Monthly Sales’, ‘bagged some new Export orders’ (without sharing the exact numbers), ‘greater heights in the times to come’ etc definitely raises eyebrows!
I get little worried when promoters are so much interested in ‘stock-price’ and ‘investor sentiment boosting’, that too when the price is already hitting 52 week high.
If such things are happening in a 133cr micro-cap already trading at 52week high - that’s enough hint for me to stay away.
I was also a little skeptical/surprised to see the boastful message. But imho one cannot judge these microcaps very harshly for these things, they are on a learning curve as well.
I think we are reading too much into things here. Couple of weeks back, Titan did the same thing where they reported 15% growth in jewelry segment due to festive season. 2 wheeler auto stocks were in the news a few weeks back because of delta in recording sales at company level vs actual sale at dealer level.
Like Sahil mentioned, it is a learning curve for the management as well and they seem to be a bit too eager to share the news.
Good to know about your investment in RACL, @DEBASHISH. Recently we had introduced performance tab in Screener.in and the following shows the trend beautifully:
There has been strong improvement in margins in recent years with the growth in the company. The Gross margins are excellent and I’m not sure if other cos in this area have such gross margins. This probably indicates the high value-addition involved.
If the company can continue with healthy margins of recent years along with growth ambition that they have, it could create lot of value. Lets see how they execute with the new growth plans they have.
Regards,
Ayush
Disc: Invested in family accounts and client accounts via PMS.
Hi Ayush , You and your family are making a significant contribution to the investor community thru Screener -frankly speaking the “need gap” of investors are being beautifully met by Screener in a simple one page scroller where almost everything is available free .With the free + premium features, Screener is one of the best “value” investment one can have on capability development in this space . I remember in 90’s after college I used to struggle to get basic information for my investment research -today you have screener ,valuepickr and many other useful sites .I am sure your PMS clients will do wonder not only thru RACL Geartech but wherever you would have invested their money .
Looking at key financial ratio in the annual report.
Annual Report 2018-19
Debt Equity Ratio is 1.27 for 2018-19
Debt Equity Ratio is 1.20 for 2017-18
Annual Report 2019-20
Debt Equity Ratio is 0.47 for 2018-19
Debt Equity Ratio is 0.36 for 2019-20
while screener.in shows : Debt to equity 0.84
Why this discrepancy within the annual report from the company. Also how screener.in calculated a different number. If anyone explain this it will help understand the numbers
“RACL Geartech Limited has once again achieved historically high Monthly Sales of INR 24.28 Crore in the month of December, 2020, surpassing the highest monthly sales of INR 22.27 Crore achieved in the month of November, 2020.”
How does view EV disruption in RACL : no of components that EV requires is far less than Traditional vehicle
"An electric car doesn’t need a clutch, it also doesn’t require gears. Electric vehicles don’t feature a multi-speed gearbox like conventional petrol or diesel vehicles. Instead, they have just one gear. This is because they can achieve much higher revs than a standard fuel engine. A conventional car can usually reach around 4,000-6,000 revs per minute (rpm), whereas an electric motor can achieve up to 20,000 rpm.
In a combustion engine, the engine generates torque, which is used for acceleration, and power in a narrow band of engine speeds, or gears. In order to accelerate, the rpm must be kept relatively high to gain the necessary torque and power that’s required. The gears allow you to keep the power between a set amount so that you can gradually speed up and slow down while still having enough torque to do so. First gear can only get you up to a certain speed before the amount of rpm becomes too much and you need to move up to second gear.
In contrast, electric motors generate 100 per cent of their torque at very low speeds (under 1,000 rpm). The more the rpms increase, the less torque is generated therefore it’s actually more beneficial to stick to a low rpm of around 2,000.
It doesn’t mean that electric cars can’t have gears, but they aren’t necessary to make the car run."
Any estimation of how much volume/ value loss per bike / tractor RACL will incur in EV version
If you refer to the research report in the mentioned post on EV “RACL is technologically ready for EV disruption in future. Gear components will be used in Electric Vehicles. The main components used in EV will be gear components & shafts, RACL is installing required machinery & required technology for the same”
1)RACL is NOT mainly in cars but 2 Wheelers (premium bikes )+ tractor contributes more than 60% 2)Their main 4 clients revenue (put together ) is close to USD 200 billion (RACL market cap is only 200 cr -imagine its importance to these companies inspite of being small ) .
3)Their customers are under long term contract and also exclusive supplier to these premium brands for that particular model .
Discl: Because of my holding I may be positively biased and blinded ,PLEASE DO YOUR OWN RESEARCH
It is not about car vs bikes or tractors , but when one shifts from ICE to EV significant changes happen to power transmission . Pl understand the technology
In EV no of components reduces esp in power transmission , that means lower volume of business for respective auto ancillaries . It can make part of it through price increases , but one need to understand what will be volume loss .
That is question I raised , I wanted if some one has researched this companies in past and queried the company in AGM to state what will be value / volume per bike in EV vs ICE bikes . That gives one idea what is loss to terminal value if EV takes off …
Disc : Planning to Invest and hence curious to know downside risk
My assumption is cars will get impacted more ( I may be completley wrong )because of EV ,in 2 wheelers /tractors the risk is there but little lesser .I think we as investors have to ride the “strategic intent +execution” skills of the promoters who run the business .RACL promoter took the company out of BIFR ,took stake in the company ,made technology (right quality )an edge with premium companies ,we need to believe him that when he is saying EV will not disrupt them till 2030 and they are EV ready .Our stake is just some x % of our portfolio ,but in his case 99% stake is in the success or failure of his company .
Does that mean we believe him blindly ,offcourse not ,we do our respective due diligence and basis our comfort decide to invest or not !
We cannot say EV revolution in super bike and tractor will not happen . Actually since India has largest market for bikes and tractor … It can happen faster
If someone can throw light on how much volume / value impact of EV vs ICE will be on RACL gear tech … I can plot downside also …as upside is known and visible
@kb_snn was thinking of no cons at all till you said this… After a bit of googling, it seems like there will a loss in the volume like u mentioned for the company if product mix is same…bcoz most articles explain that, the gear components are less in EVs… Would be eager to know the views of @ayushmit on this…
