ValuePickr Forum

Raghav Productivity Enhancers

RPEL has these website domains

Is it wise for a 60-70 Cr turnover company to spend so much on websites?

These are very basic websites.
It wouldn’t cost more than Rs 20k to 25k per year to maintain all of the above websites combined.

What I understood looking at 3 websites… appears to be their main website, as they are putting up all the updated investor information in this website, which is needed for any listed companies.

Rest of the sites looks either old ones or the ones kept for e-commerce purpose.

A nice and crisp presentation by company

Company is getting future ready more product more moat more revenue more margin…etc.
Disc: Not holding but tracking

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Some further updates on the company from FY 21 AR and AGM:

  1. The company has collected data on various data points/parameters of hundreds of steel
    plants. Based on this data, they are able to provide customised solutions to each steel
    company ( ; “Data-scientists were brought on board to
    help with high-end data analytics to enable deeper insights” -FY21 annual report
  2. RPEL has filed for a patent and is awaiting the same
  3. The upcoming capex will take total capacity to 288000 TPA and is expected to be completed by Feb 2023
  4. They have confirmed that charge of 19.26 Cr for motor vehicle is not existing as on date
  5. They have several very basic websites for search engine optimisation
  6. They are shifting towards higher value added products: launched a new high margin high value-add boron oxide product towards end of CY 2020
  7. The large write-offs on doubtful debts were receivables that had accumulated over many years, and the company decided to write them off
  8. They are gradually reducing debtor days
  9. They said they are NOT supplying to Tata, SAIL, JSW

Disc: invested


One query I have:
As per the data given in the presentation of AGM (, sales volume has grown at 26.54% CAGR from 45308 MT to 116187 MT. However, sales amount (in Rs Cr) has grown at only 11.58% CAGR from 41.6 Cr to 64.5 Cr
This indicates that price cuts have been taken by the company. What is the reason for the same?

Please do let me know if anyone is aware of the reason for the same.

Disc: invested

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Hello everyone. I got the answer from the CS, hence sharing the same. The company earlier also had ramming mass trading activities which have now been stopped. However, the volumes shown are of only manufacturing. Hence, the sales volumes reported in the presentation have grown faster than sales amount.

Disc: invested

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@Malhar_Manek please share your views on Q1 results.

Big update from the company.
Disc: invested

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Very big update
Shri Rakesh Jhunjhunwala investing up to 30.9 Cr through compulsorily convertible debentures at 515 per share

Interest rate is 15% per annum and conversion is after 18 months.
Hence, 0.15 * 1.5 * 30.9=6.9525 Cr will be the interest payment
Assuming zero time value of money, invested amount net of interest income will be 30.9-6.9525=23.9475 Cr
Number of CCDs=6 Lakh
Hence, price of allotment adjusted for interest is 239475000/600000= Rs 399.125 per share

Dilution is 600000 / 10876300 (current number of shares) is approximately= 5.5%
Hence promoter holding will come down to 65.77% if promoters do not buy more shares themselves

Disc: invested


This is Buffett-esque

He’s buying only a 5% stake in the company at a 20% discount to current share price and gets paid 22.5% over next 18 months. It’s like buying warrants at this point - huge advantage for him and not sure why the company would do this for when there’s no need to.

The only reason I can think of is that they are looking at an even larger capex than they mentioned in the AR.The steel sector in India has been doing very well & is expected to continue doing well given export restrictions by China.If you look at Q1 nos. for RPEL it was very similar to Q4 which is amazing given the severe restrictions in the April-Jun quarter.So strong demand could’ve prompted another raise.RJ on-board also gives more visibility to the company.


Agree. One more reason I can think of is that it is very unlikely Rakesh Ji would have got 30 Cr worth of shares from open market.

Disc: invested

I have two queries on this CCD allotment.

  1. Where is this money going to be utilised? As a very large capex is already announced- is this being increased? If so, that could mean that the company is seeing very strong demand.
  2. On 30.9 Cr, 15% interest= 4.635 Cr interest payment per annum. FY 21 net profit was 9 Cr- so how will they pay the interest? Halving of net profit does not seem logical to me. From what I am guessing, they may issue shares worth the interest payment amount too i.e. instead of paying 4.635 Cr cash amount as interest, they may issue additional shares worth that amount- this seems more logical to me. Or perhaps it may be a bullet repayment at time of conversion.

Disc: invested

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The conversion price is already 25% lower than the CMP. On top of that 15% interest? Why does the company need to offer such a preferential deal to one big investor?

  1. Although the dilution is not much, this deal does not appear friendly to the minority shareholders.
  2. The urgency of such a deal is unclear.

Disclosure: Invested

No one is talking about valuation? My only concern was valuations it is still is. How much topline growth and bottomline growth it can produce to justify all the future valuation it will get with this news?

Valuations are definitely not cheap for a company in steel sector as it trades PE multiples of 60 plus.

The company helps increase productivity, which means it is Green. Valuations don’t matter for Green companies these days as Green is the Future.

Jokes apart, yes, the company is definitely expensive. High valuation at the time of buying is the reason I don’t have a large holding. The past performance of the company and the management are top notch, and the company appears to be at an inflection point with a mature product and the huge turnaround of the steel industry. It is possible that the future performance may justify the current valuation.

What do we do when a stock we do not want to sell gets too expensive? No idea.

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Good point. Personally, I am slightly on the Marcellus philosophy- PE is not the best indicator of valuation; a DCF is. Same point is made by Shri Bharat Shah here. In the now-famous debate on relevance of PE, Mr Mukherjea says that not all earnings are equal- with respect to accounting quality, capital intensity etc.
I do get some comfort on valuations seeing the other marquee investors- Shri Rakesh Ji has famously said ‘it is important what you buy, it is more important at what price you buy.’ If he is investing at 515, we can assume he would have found 515 to be at least moderately cheap. Now is the difference between cheap and expensive 70% (515 to 871)? I personally think the gap between cheap and expensive must be higher (views may differ for others).

@sameernics I would politely disagree. RPEL does not make steel; it makes silica ramming mass which it supplies to steel companies. In fact, I have specifically written about second-level thinking for RPEL. Even if RPEL was a steel company, in that case in fact a 60 PE would be cheap- as in cyclicals, the saying is-‘buy at high PE, sell at low PE’. As high PE is more often than not due to depressed earnings which is normally the bottom of a cycle.

However, I do believe that the market will generally view it as a steel company, and I believe there will be a good opportunity to buy in a steel downturn, wherein most likely RPEL’s performance will remain steady, but the price will still correct due to market irrationality. This is like Mr Mohnish Pabrai’s bet on Stewart Enterprises- a funeral company. After 9/11 attacks, the stock crashed, even though if at all there was any impact of the event on the company, it was on the positive side. Disclaimer: not criticizing in any way, merely stating my opinions, opposing views are invited.

Disc: invested