Ranvir's Portfolio

Q&A: Questions & Answers Portfolio Q&A
608

Metropolis AR 2020-21 notes -

  1. Incepted in 1980, one of the largest diagnostic player in South and West India. Present in 19 states and 210 cities. Total clinical labs - 125, Patient service centers - 2555

  2. FY 21 Sales at 998 cr vs 856 cr. Non COVID sales at 77 pc of the total. EBITDA at 301 cr vs 233 cr. EBITDA margins up 290 bps at 30.2 pc. Contribution of specialty tests among Non - Covid tests at 42 pc vs 37 pc …showing encouraging signs. Specialty tests command better margins and realizations. Company seeing continuous increase in home care revenues

  3. Company revamped its website, app, digital presence and marketing efforts. Website traffic up 15X, Call volumes up 10X, greater growth in revenues from home visits. Added 8 lakh new customers via Covid tests. Out of them, 10 pc have already come back to Metropolis for non Covid tests

  4. Company keeps acquiring unorganized players as a part of its inorganic growth strategy. Company intends to go to tier -2/3 towns in states of Maharashtra and Gujarat where Metropolis already has descent brand equity. Plan to increase own presence in UP, MP, Jharkhand, Odisha, Telangana, AP where-in the company currently operates via franchise model.

  5. Growth drivers - intend to add 90 more labs and 1800 service collection centers in the next 3 yrs. Looking to expand into 150 new cities within next 3 yrs. Company also setting up third party patient service centers in India, Africa and Middle East

  6. Last 3yr stats -

                   FY 19   FY 20   FY 21

Tests ( mil ) 17 19.6 19
Rev/ Test (rs) 447 436 524
EBITDA ( cr) 200 232 288
PAT (cr) 124 128 196
Cash held (cr) 111 223 421

  1. Breakdown of tests -

Routine tests - blood chemistry, urine examination, blood cell counts. rrent volume contribution - 41 pc, **Revenue contribution - 13 pc

Semi Specialised - thyroid, viral and bacterial cultures, histology ( study of tissues and their structures ), cytology ( study of single cells - primarily used for cancer diagnosis ) , infectious disease tests. Current volume/revenue contribution - 36/26 pc

Specialised tests - cogulation studies, autoimmunity tests, cytogenetics, molecular diagnostics. Current volume/revenue contribution - 22/56 pc

Wellness - current volume/revenue contribution - 01/06 pc

  1. Digital initiatives -

Mobile app launched. Key functions - customized checkups, booking appointments, sharing and storing reports, fitness tracker, inner health tracker, medication tracker

Investing heavily in IT to integrate and automate processes ranging from registration, bar coding, billing of specimens, reporting of test results. These things help achieve standardization across operations, reduce errors due human interventions, track company’s key monitorables, provide convenience to customers to book appts track and access reports online

  1. Domestic Diagnostics Industry - Size @ 67000 cr. Likely to grow at 10 pc CAGR over next 5 yrs. Key drivers - preventive testing, lifestyle disease, higher per capita, deeper penetration, spread of healthcare, asset light expansion, insurance penetration. Industry divided into 2 segments - pathology testing ( in vitro ) and imaging - primarily CT scans ( computerized tomography ) , MRI ( magnetic resonance imaging ) and PET- CT scans ( positron emission tomography ). Pathology is 58 pc of the mkt by revenues.

Market shares of diagnostic industry participants -

Hospitals - 37 pc
Standalone centers - 47 pc
Diagnostic chains - 16 pc out of which - regional chains - 11 pc, Pan India chains - 5 pc

Urban / Rural divide - 65 pc vs 35 pc

Industry tailwind factors -

Ageing population
Corporate packages and preventive screening
Rising income levels
Convivence - via in house sample collections
Increased govt outlays for health
PPP models taking help of private players for better healthcare access for rural areas
Govt regulations - ensuring min std criteria for tests

Disc : Holding hence biased. Recent purchase

2 Likes
609

Notes from Saregama India’s AR - 2020-21 -

  1. Present across 4 verticals -

Music - owns a music library of over 1.3 lakh songs
Films - owns content IP rights of 61 films
Retail business - Music Bar, Carvaan - has a reach of aprox 30k retailers
TV series - has IP content rights of 6k+ hrs of tv series

  1. Growth plans -

Monetisation of existing IP through every third party digital and TV platform

Transition Carvaan from a product to a platform with recurring advt and subs revenues

Cementing leadership with new film and non film music acquisition across Hindi, Punjabi, Gujarati, Telugu and other regional languages

Producing thematic series and films with strong Story Lines - targeted at the youth. Revenues here are only from licensing to digital platforms. Scale should enable lower cost of production.

  1. Next 3 yr plans -

Aim to garner 20-25 mkt share in new music launch over next 3 yrs

Produce 50 new Web Series and Films

Produce 1200-1500 hrs of new TV serial content

Transition Carvaan from a product to a platform by offering customized audio podcasts ( with daily updates ) covering topics as wide as possible. Also plan to offer 3rd party owned music on Carvaan

  1. Yoodlee Films - creating content for third patry platforms. Has released 16 films in last 44 months on - Netflix ( 3 films ), Hotstar ( 4 films ) and Zee5 ( 2 movies ). Some popular films include - Collar Bomb, Comedy couple, Jhombivali .

Next set of digital customers coming from smaller towns. Company has also started focusing on regional movies in Punjabi, Gujarati, Marathi, Tamil, Malyalam.

Company lays great focus on cost control. Company also hedges its risk by keeping talent costs low by offering profit sharing to artists

  1. Tamil TV serials - Over last 20 yrs, Saregama has created over 6000 hrs of content for Sun TV

  2. Open Magazine - initially launched in 2009, was avlb in 12 cities. Targeted at upper strata of the society / intellectual readers. Currently avlb as e-magazine to enhance its reach beyond boundaries.

  3. 2011 vs 2021 daily per capita media consumption trends in India -

Magazines - Down 50 pc
Radio - Down 10 pc
TV - Down 24 pc
Desktop - Up 25 pc
Mobile - Up 460 pc

  1. Industry trends - Over next decade or two, over 2 dozen well funded video and OTT platforms will fight with all the existing TV and radio channels. And the weapon of choice in this war would be content !!!

Theoretically, platforms can create their own content but in reality, the sheer volume and quality requirement of content will ensure that most platforms work with high quality content creators

Saregama smartly positioned due - century old music experience, twenty yr experience of creating TV series, good track record of making good concept and tight budgeted films

  1. Saregama not only has a rich library of 1.3 lakh digital songs but has also painstakingly built rich meta behind it to stop piracy. It has also on-boarded its songs on every music platform in the world

Has also built rich data analytics to track data points of 100 Billion songs / yr

Streaming growing at a rapid pace. Savan and Gaana now have 15-20 cr active subscribers. Currently Saregama charges platforms on a per stream basis plus a share of Adv revenues. As the space grows, consumers likely to switch from free to Adv free premium but paid services. This can be a huge growth opportunity for the company as the company also gets a share of subscription revenues for premium services like Youtube premium etc. Currently only 2 pc of users use the paid versions of these apps.

  1. Another fast growth area - music publishing wherein licenses are given out to use its music to social media platforms like - facebook, Instagram reels, TV channels, 5 star hotel events etc

  2. After a long break, company has started acquiring new Hindi / Tamil film music. Among non film music, company continues to acquire Hindi, Gujarati, Punjabi, Bhojpri music. In 2020-21 company acquired rights of 162 new film / non film songs

Disc : holding, biased.

3 Likes
610

Notes from Thyrocare Technologies AR 2020-21 -

  1. Consolidated topline grew by 14 pc to Rs 494 cr in the FY. EBITDA margins at 35.5 pc ( Ex - radiology ) despite normal business facing acute headwinds in Q1 and Q2. Also the COVID business faced some problems due price controls in many states. Radiology business operated by Nuclear Healthcare suffered major setbacks due COVID. There was descent recovery in Radiology business towards the end of the year. At present, the company operates 8 radio diagnostic centers for early and effective cancer monitoring

  2. Current focus areas -

Add 500 additional franchisee to take total strength to 2000 franchisees

To work with healthcare start ups and online pharmacies to take online orders to 5000/day from 2000/day at present

To focus on TB segment due to its endemic nature. The price / volume opportunity in TB gene sequencing is attractive

  1. At present, company operates through a network of Central processing and Regional processing labs. Total RPLs at present stand at 14. Company intends to expand to 25 RPLs in near future. CPL is at Mumbai. Company has also st up Zonal processing labs in 2021 at Delhi and Bangaluru. Next ZPL to be set up at Kolkata. ZPLs will be at par with the CPL at Mumbai. Will be able to perform all complex and advanced tests at par with CPL Mumbai. ZPLs to reduce the turnaround time for advanced testing.

Company collects samples through a network of authorized service providers comprising of - thyrocare service providers, thyrocare aggregators and online clients. At present, company has 4500 service providers spread across 250 districts.

  1. Company aggressively focusing on wellness and preventive testing through its Aarogyam Brand packages. Company is a market leader in this segment. Significant marketing efforts are focused on the wellness and preventive testing. Company continues to acquire new technologies, processes and instruments to keep expanding its diagnostic offerings. Also focusing on TB testing through the FOCUS TB plan.

Disc : initiated a tracking position

2 Likes
611

Notes from AR - 2020-21 iro Welspun India -

  1. Capex on at both Vapi and Anjar. Both plants operated at peak capacities in FY 21. Benifits to be visible by 2nd qtr of FY 22. Revenue potential from expanded capacity at Rs 1200 cr. Current capacities -
    Bath linen - 80,000 mt
    Bed linen - 90 mn mtrs
    Rugs and Carpets - 10 mn sq mtrs
    Wet Wipes - 75 mn packs
    Sunplace ( advanced textiles ) - 10,000 mt - further capex to commence in Q2 FY 22. Has a potential to do a topline of 600cr by FY 23
    Needle Punched fabric - 3000 mt
    Flooring - 12.9 mn sq mtrs - to go upto 27 mn sq mtrs by end of Q2 FY 22

Extensive distribution in 50 + countries. Warehouses in key markets ensure seamless distribution to key retailers and retail customers

  1. Company exports 94 pc of its home textiles. Area wise share - US - 65 pc, Europe - 25 pc, Rest - ME, Aust and Japan. In the domestic mkt, company investing behind its value brand - Welspun. Signed up Scott Living brand in Q4 FY 21. Expect revenues from Scott Living to cross 700 cr in 2-3 yrs. Martha brand is also seeing nice expansion in online and offline channels
  2. Company really optimistic about its flooring solutions. Entered into a long term supply arrangements with one of the largest US distributors. Export contribution in flooring business stands at 50 pc. Domestic flooring business seeing descent pick up. Added business from marquee brands across both commercial and hospitality channels in domestic mkt. Expect flooring to break even at EBITDA level in FY 22.
  3. Advanced textile division manufactures disposable Wet wipes and Disposable towels using three major technologies - sunplace, needle punch and thermobond. Advanced textiles business grew by 23 pc YoY in FY 21. Aim to clock a growth of 25 pc in FY 22.
    Needle Punch textiles find applications in - Industrial Air and Liquid filtration, Cabin Filters, Engine Filters, Sound insulation in cars, Thermal liners, moisture barriers, fire blockers, fire blankets, composites for wind mills, carpet underlays. Company supplying Wet Wipes to the Japanese Baby care giant - Unicharm. Sunplace textiles - cater to medical disposable items, hygiene and cosmetic industries
  4. Company owned Brands -

In India - Welspun, Spaces, Welspun Flooring

Global - Christy, Living by Christy, Kingsley , Welhome, Welspun basics

Licensed brands -

In India - The championships, Wimbeldon, Despicable Me, Marvel, Disney

Global - Martha Stewart, Scott Living, Stay Well, American Cotton, Wimbeldon

  1. Domestic home textiles mkt currently at 12000 cr. Expected to go upto 23000 cr by 2025. Most of the mkt is un organised and unbranded. Company aims to do a branded business of 1000 cr by 2025. Mass mkt brand - Welspun. Premium brand - Spaces.
  2. Project Wave - Welspun achieving value through E-commerce. Aim to improve company’s B2C offerings through the E com channels. Laying foundation for future growth by building next gen technology stack for the E com business
  3. Key innovations -

Hygrocotton - Patented spinning technology that produces softer, loftier and more absorbent towels and bed sheets that provide temperature regulation all through the year

Wel-track - Patented traceability solutions tracing fiber from source to finished product. This builds trust and enhances transparency

Charcoal - charcoal is infused into special line of textiles that make them soft, breathable and hygienic. Also have anti odour properties

Dryon - textiles infused with this technology are easy to dry and soft to touch

ResilonX - derived from re cycled polyester yarn. Helps maintain shape and texture of carpets

Disc - Holding, Tracking position, Biased

612

Which company is this?

1 Like
613

Sorry …

Amended it…Its Welspun India

614

Notes from latest AR 2020-21 iro BSE India -

  1. BSE is world’s fastest and largest exchange in terms of number of companies listed. In terms of mkt cap, it is ranked number at number 9. Total listed companies at BSE at 5477 vs 5377 in Mar 20.
  2. Total money raised via IPO proceeds in 2020-21 at Rs 45,800 cr vs 20,800 cr in FY 19-20. A total of 30 companies listed on BSE in the entire FY. Total money raised via private placed debt instruments at 5.5 lakh cr vs 4.7 lakh cr in previous FY. In FY 20-21, there were 18 public issue of Bonds raising 10,588 cr vs 15,068 cr in previous FY. Out of the 18 public issues, 17 public issues were listed exclusively on BSE. Total money raised via issuance of commercial paper at BSE in FY 20-21 was 10,52,952 cr.
  3. BSE Star MF - India’s largest mutual fund distribution infrastructure with 82 pc mkt share. Total yearly transactions at 9.38 cr vs 5.75 cr in previous FY witnessing a growth of 63 pc. Platform registered 42k new members taking total number of members to 69k. BSE Star MF app has processed over 19.28 lakh transactions since launch amounting to Rs 11,000 cr till Mar 21. All 43 AMCs in India pay a service charge on a per transaction basis processed at BSE’s Star MF platform. It is the only only platform in the Indian MF industry that supports all modes of payments such as regular as well as direct MF schemes, Demat as well as non Demat mode of holding of MFs, MF unit settlements via broker pool as well as direct with investors for MF distributors
  4. Secondary market - Daily value of equity turnover on BSE in FY 2020-21 vs 19-20 was 4197 cr vs 2676 cr. Equity derivative segment daily turnover was 1.4 lakh cr vs 1000 cr in previous FY. BSE has launched Futures / Options on Sensex 50 with unique Friday expiry in Nov 2020. Current market share of Sensex 50 contracts at 13.5 pc vs comparable Index derivative contract.
    In currency derivatives, BSEs mkt share dipped to 29 pc vs 41 pc in previous FY
    In Interest rate derivatives, BSEs mkt share increased from 21 pc in PY to 31 pc in CY
  5. Commodity Derivatives - BSE only Equity/Debt mkt exchange in India to offer commodity derivatives since Oct 2018. Total commodities offered -13. Includes - Gold , Silver, Steel, Copper, Zinc, Aluminium, Guargum, Guarseed, Cotton, Turmeric, Almond, Brebt crude and Oman crude. Beacme first exchange to offer Options in Goods by offering options contracts on spot prices of Gold and Silver in Jun 20. BSE - only exchange in the world to offer Almond futures

BSE offering delivery of various commodities like Gold, Silver, Guargum, Guarseed, Cotton, Turmeric, Almond

  1. Debt Mkt - Executed trades worth 6.6 lakh cr vs 7.04 lakh cr in PY in corporate bonds. BSE’s mkt share in Corporate bonds at 34 pc. BSE executed trades worth 3.75 lakh cr in Govt Secs and T Bills vs 3.44 lakh cr in PY. BSE’s mkt share in Govt Secs increased to 60 pc vs 49 pc in PY
  2. NCB - G Secs - BSE has launched Non Competitive bidding in G-secs, State development loans and T-Bills which allows retail investors to buy them. BSE launched mobile app called BSEdirect for Individual investors to participate directly in auction of G Secs, SDLs and T Bills. BSE recieved bids worth Rs 327 cr this FY vs 24 cr in PY
  3. ETFs - BSE has 73 ETFs listed vs 64 in PY. Avg daily turnover was at 20 cr vs 23 cr in PY
  4. Online platform for retail investors for bidding in Public Debt - enabled the same via BSE direct with a facility to block funds through UPI mechanism for application value upto Rs 2 lakh
  5. India INX and India ICC - BSE has made strategic investments in India international exchange and India clearing corporation to the tune of Rs 145 cr and Rs 80 cr. ICICI and DCB have joined as strategic partners in these ventures. Discussions are on with other potential strategic investors. India INX positioning itself as preferred offshore platform, open 22 hrs a day for trading. Avg daily turnover in Mar 21 was $ 13 billion - up 1000 times vs Mar 2020. India INX successfully competing with Singapore exchange and Dubai Gold and commodity exchange in some of the India dedicated products such as Index and currencies. One of the primary aims of India INX is to help companies raise funds from capital markets which can be deployed for growth and development of the companies. The platform offers Debt listing framework at par with London, Luxemberg, Singapore etc. Avg daily trading value of INX’s derivatives at $ 6.9 billion. Peak volume was acheved on 10 Mar 21 at $ 30 billion. INX’s mkt share in GIFT city currently at a whopping 97 pc !!!
  6. Major future opportunities -

Gold Spot Exchange - Govt of India intends to set up an international bullion exchange at IFSC, GIFT city which would lead to better price discovery. In Dec 20, notified bullion exchange regulations paving the way for setting up entire eco system for bullion trading. BSE operates in GIFT city IFSC zone via its Subsidary India INX which is a part of discussions with GoI to set up an Intl bullion exchange in the GIFT city

Insurance Distribution platform - BSE and Ebix Inc ( largest insurance exchange in the world ) have formed a JV and has commenced operations for Insurance distribution. Products include - Auto, Health, Life and Endowment Insurance

Spot platform for Agri Commodities - BSE has set up ENAM ( E- national agri market ) post the Agri sector reforms. Frontier agri platforms ltd ( FAPL ) a company with expertise in Agri mkts acquired 40 pc in BSE-ENAM in Mar 21

Disc : not invested. Studying

5 Likes
615

Disc : resorted to mild trimming in HDFC Bank and Kotak Mahindra Bank

Added - Century Ply and Greenlam Industries

Not a buy / rec. Just a Disclosure.

616

Biocon - Notes from AR 2020-21 -

  1. Total sales - 7360 cr, up 14 pc.
    Break up -
    Generics - 2335 cr - grew by 6 pc
    Biosimilars - 2800 cr - grew by 21 pc
    Research services - 2184 cr - grew by 9 pc

Domestic sales of total - 19 pc
Intl Sales of total - 81 pc

R&D spending at 627 cr, up 19 pc ( at 13 pc of revenues Ex - Syngene ie Research services ). This is expected to remain in the 12-15 pc band in near future
EBITDA at 1907 cr, up 8 pc
EBITDA margins at 26 pc
PAT - 740 cr, down 3 pc

Adjusted for exceptional items ( a gain of Rs 159 cr on account of ceding control in Bicara ), NP would have been at 594 cr

  1. Biosimilars - One of the select few companies globally to have co-developed 05 biosimilars. These are -

bTrastuzumab ( used to treat breast cancer ) - named Ogivri
bPegfilgrastim ( to reduce infections in patients receiving chemotherapy ) - named Fulphila
bBevacizumab ( used to treat a number of Cancers ) - named Abevmy
bGlargine ( long acting manmade version of human insulin ) - named Semglee
bAspart ( short acting manmade version of human insulin )

Company has also commercialised rh-Insulin ( recombinant human insulin ) in many developing markets
Company commercialised third Biosimilar in US - Insulin Glargine. Only company from India to have 3 commercial biosimilars in US markets
Obtained regulatory approvals for Biosimilars - Bevacizumab and Insulin Aspart in EU Biocon is among a select few companies to have 5 biosimialrs approved in EU
Commercialised Pegfilgrastim ( Fulphila ) in Australia and Canada.
Company saw fund infusion totalling $ 330 million by funds such as - Tata Capital, Glodman Sachs and Abu Dabhi based ADQ - valuing Biocon Biologics at $ 4.2 billion. Funds being used for Capex, R&D and Opex and to redeem Biocon ltd’s preference shares in Biocon Biologics which will further be used for Capex in generics business. For now, company is adequately funded for near term capex requirements
Mkt opportunity in biosimilars remains strong as biosimialrs worth $ 90 billion are set to lose exclusivity over the next decade
Total capex for the FY in the Biologics business - $ 125 million primarily for expansion of production capacity for monoclonal anti bodies. Additional capex lined up for FY 22 at $ 100 million. Company’s new facility for monoclonal antibodies, largest in India is awaiting commercialisation
Company continuously investing in R&D in biologics space. Will continue to do the same to commercialise second wave to Biosimilars in second half of the decade

  1. Generics - Company supplies Statins ( family of drugs used to lower cholesterol ), immunosuppressants, narrow spectrum antibiotics and other APIs to over 100 countries. Company is one of the largest manufacturer of Statins and Immunosuppressants globally. Company is a late entrant in formulations business and aims to replicate the success of its API growth story into formulations by successfully forward integrating in nice , difficult to make APIs. APIs continue to remain biggest contributors in the company’s generics business. Key highlights in generics business include - launch of Tacrolimus capsules ( used as an immunosuppressant during organ transplants ) in US , approval for Everolimus ( generic to Afinitor - immunosuppressant used to treat cancer ) , DMF approval for Sitagliptin API in China and company’s new tie ups in Brazil, Singapore and Thailand. Company aims to enter Japan and Russian markets in FY 22
    Statin formulations continue to hold mid teens mkt share in US
    Continue to witness intense pricing pressures in APIs and formulations particularly in competitive markets like US. Stockpiling of medicines in the first half led to demand slowdown in the second half.
    Filed for 33 APIs globally and got approvals for 14 APIs during the year
    Also filed for 09 formulations - globally
    API capex projects are in various stages of execution. Experiencing some delays in Greenfield capex at Vizag ( immunosuppressants APIs facility ) due COVID. This facility is expected to go commercial in FY 22. Various cost saving programs are also under implementation. Company working towards reducing single vendor / single geography dependence for key materials for API manufacturing

  2. Novel Biologics business - Company’s portfolio of novel biological assets comprise therapeutics for diabetes, autoimmune disease and cancer. Itolizumab - initially launched in India for treatment of plaque psoriasis in 2013. In Sep 20, Itolizumab approved by DGCI for treatment of Cytokine release syndrome in moderate to severe ARDS ( acute respiratory distress syndrome )
    Also out licensed Itolizumab to their US biotech partner - Equillium Inc in 2017. Equillium is developing Itolizumab for multiple severe immune-inflammatory disease including acute graft vs host disease, lupus and lupus nephritis and uncontrolled asthma. Company is expecting clinical data from these studies in 2021
    Insulin - Tregopil ( a first in class oral insulin molecule ) - Phase 2 studies have been submitted to DCGI and USFDA. Data from type - 2 diabetes studies has been encouraging, marketing authorisation applications were delayed in wake of the pandemic. In FY 20, company had also commenced studies for Type 1 Diabetes in Germany. Expected to be completed by FY 22
    Bicara - Its lead program - BCA 101 entered phase -1/2 studies at leading US and Canadian cancer centres in Jul 20. Biocon ceded control over the board of Bicara. Biocon now classifies Bicara as an associate company now from being a subsidiary

  3. **Total Capex guidance - For FY 22, expected to be in the range of $ 300-320 million. $ 100 million each for Biosimilars, Generics and $ 120 million for contract research.**Funds already raised via PE placement in FY 21 and the rest would be made up via internal accruals

I ve deliberately not covered the CRO business here. One can get notes on the same from the thread on Syngene International as the same is separately listed

Disc : Invested, Biased

5 Likes
618

Hi Ranvir,
Lokking at the way you have classified your portfolio, does your investment thesis anchor to sector/industry and then you select stocks ?

619

Hi…

Thats right for 80 pc of the stocks

However, there r exceptions like - Welspun India , Gabriel India, Saregama India etc where I have not studied other textile/ auto ancillary business in any detail. I just liked these businesses, thought that their products were good, managements were trustworthy and were running a tight ship. So…ended up buying small positions.

In most other cases, I generally select the sector first and then select stocks using the usual criteria

2 Likes
620

Notes from AR 2020-21 - Greenlam Industries -

  1. Largest laminate manufacturer in Asia. Among the top 3 in the world. India’s largest laminate exporter for 10 consecutive yrs. India’s only engineered wooden flooring manufacturer

  2. Manufacturing facilities - 02 state of the art facilities at Behror, Rajasthan and Baddi, HP. Total capacity at 15.62 laminate sheets / yr. Bahror plant also makes melamine faced chip boards, decorative veneers, engineered wooden flooring and engineered wooden doors.

  3. Total revenues from exports at 52 pc. Total revenues from non-laminates at 12 pc. Products marketed in over 100 countries supported by 8 overseas subsidiaries. India distribution network comprises of - 9 regional distribution centres, 05 ware houses, 1400+ distributors

  4. FY 21 numbers -

Laminate sales at 1065 cr, down 5.1 pc
Decorative veneer sales at 79 cr, down 30 pc
Engineered wood sales at 32 cr, down 38 pc
Engineered door sales at 24 cr, down 30 pc

Total sales at 1200 cr vs 1320 cr LY
EBITDA at 173 cr vs 178 cr LY, margins at 14.4 pc vs 13.5 pc LY. Working capital cycle declined to 88 days vs 95 days in LY
PAT at 73 cr vs 86 cr LY

  1. Highlights from management commentary -

Seeing greater shift from unorganised to organised players due better handling of disruptions caused by the pandemic. The same was hoped for post GST but the unorganised players were holding up well. Pandemic has really made things difficult for them. Because of this, Greenlam is seeing great opportunity to grow in the relatively lower priced mass premium and commodity segments. Entering commodity segment is a deliberate decision by the company. Aim is to widen the addressable mkt when the unorganised sector is under stress. The resultant drop in avg realisation likely to be more than offset by volume growth in the commodity segment. This can help us better absorb our fixed costs, strengthening our overall profitability

Work from home is fueling demand for Interior infra products and company is a direct beneficiary

Launched new subsidiaries to grow its business in Russia, Poland and Indonesia

Commenced greenfiled expansion in FY 20-21. Expected to be operational in FY 23

Intend to sustain brand investments during the current FY. Aim to widen the distribution network and marketing presence down to smallest population clusters across the country. Also aim to strengthen focus on non laminate categories broad basing the revenue pyramid

Company proceeding towards end to end solutions across various categories like - Kitchen surface solutions, Restroom cubicles, Lockers, Facades, engineered wooden flooring and doors…all these replacing conventional materials like bricks, mortar and natural stones

Total spending on brand building in FY 21 at 38 cr @ 3.2 pc of sales. Total spending in last 5 yrs at 233 cr

  1. Exports - Company is present across Asia, Africa and Europe in the international markets. International share of revenues up at 52 pc vs 46 pc in FY 19-20. Intl revenues grew by 1.5 pc during the current FY. Company deepened its presence in UK and Egypt ( its 02 key mkts ) besides expansion of new global subsidiaries in Indonesia, Poland and Russia. Whereas most Indian players focus on exports after their domestic aspirations are met, Greenlam has always focussed on building its global markets as its principal priority. Similarly, Greenlam has patiently built up a portfolio of premium products in the International markets vs other Indian players that seek an easy entry via commodity product route

Disc : invested, tracking position

4 Likes
621

Hi…

Sorry…have not been active for some time now.

Just wanted to update my portfolio changes over the last 01 week …including today. ( basically during the market correction )

Sold the following over the last 01 week -

HDFC Bank ( sure of how the finch disruption would play out )
Kotak Bank ( unsure of how the finch disruption would play out )
Dabur ( exiting defensives )
Marico ( exiting defensives )
Tata Global ( exiting defensives )
Godrej Consumer ( exiting defensives )
Laurus labs ( unsure of the Cabotegravir issue )

Added the following -

CG consumer electrical ( building material theme )
Kajaria ceramics ( building materials theme )
Hikal ( added to existing position)
V Guard ( building material theme )
UPL ( in expensive valuations )
Indoco remedies ( domestic formulations play )
Ajanta Pharma ( domestic formulations play )
JB Chemicals ( domestic formulations play )
Narayan Hrydayalya
Aster DM ( potential turnaround candidate )
KIMS ( added to existing position )

I know…thats a lot of churn…to the tune of 35 pc of my portfolio. But, I thought that it was the right thing to do. Rest…time will tell.

Hoping for the best!!!

Regards,
Ranvir Dehal

7 Likes
622

In the last 3-4 months, I ve done a lot of re-adjustments in my portfolio. Sharing the latest portfolio with entry prices -

Gabriel India @ 141 - 1.2 pc

Bajaj Finserv @ 9800 - 5.6 pc ( it had reached 10 pc of portfolio a few days back. I thought the valuations were stretched. So …locked in some profits )

Icici Bank @ 722 - 2.7 pc ( new entry…due improved asset quality and excellent tech platform that the bank and its subsidiaries offer )

Kajaria Ceramics @ 990 - 5.3 pc ( RE proxy )

TTK prestige @ 720 - 4.2 pc

Aster DM @ 190 - 0.9 pc ( a potential turnaround bet )

UPL @ 720 - 1.9 pc

United spirits @ 910 - 2.3 pc

Pratap snacks @ 820 - 0.5 pc ( tracking position )

Radico Khaitan @ 700 - 4.2 pc

Saregama @ 3300 - 2.6 pc

CG Consumer @ 451 - 3.5 pc ( RE proxy )

Garware Technical @ 3250 - 2.4 pc

Lux Industries @ 3800 - 2.9 pc

Mayur Uniquoters @ 520 - 0.8 pc ( tracking position )

Welspun India @ 140 - 1.1 pc

Century Ply @ 510 - 3.9 pc ( RE proxy )

Greenlam @ 1390 - 1.9 pc ( RE proxy )

V Guard @ 210 - 2.9 pc ( RE Proxy )

Prince pipes @ 710 - 1.8 pc ( RE Proxy )

India Pesticides @ 320 - 0.8 pc ( tracking position )

PHARMA PACK -

Amrutanjan @ 780 - 0.8 pc ( tracking position )
Aarti Drugs @ 500 - 0.6 pc ( tracking position )
Ajajnta Pharma @ 2100 - 2.6 pc
Biocon @ 390 - 1.1 pc
Cadila @ 530 - 1.1 pc
Divis @ 2900 - 3.4 pc
Granules @ 300 - 1.2 pc
Hikal @ 405 - 3.1 pc
Ipca @ 2050 - 2.4 pc
Indoco @ 404 - 2.9 pc
JB Chemicals @ 1600 - 4.2 pc
Neuland @ 2100 - 2.3 pc
RPG life @ 610 - 1.7 pc
Jubilant Pharmova @ 710 - 2.1 pc
Syngene @ 480 - 2.11 pc
Suven Pharma @ 480 - 2.05 pc
Supriya Life @ 400 - 1 pc ( tracking position )

HEALTHCARE PACK -

Narayan Hrudayalya @ 560 - 2.5 pc
Metropolis @ 2700 - 1.8 pc
Fortis @ 270 - 2.5 pc
KIMS @ 1120 - 4.1 pc

Recent profitable exits ( ranging from 20-40 pc gains ) - Havells, GCPL, Tata consumer, Asian Paints , Pidilite, Aarti Industries, Dabur , Marico

Recent flat / loss making exits ( ranging from +5 to (-) 5 pc ) - HDFC Bank, Kotak Bank

Reason for exit from Tier -1 banks - fear ( rational or not …I am not sure ) of Fin Tech led disruptions and the image of HDFC, Kotak being slow on new gen tech adoption

Reason for other exits - expensive valuations. If the economy does well for the next 2-3 yrs ( my hypothesis ), then it may be better to go in with mid and small caps.

Regards,
Ranvir Dehal

7 Likes
623

NOTES FROM Monte Carlo Q2 CONCALL -

  1. Sales - 238 cr vs 98 cr YoY. ( out of this, 65 cr revenues were from home textiles division ) /['Online sales at 19 cr vs 7 cr YoY - encouraging. EBITDA at 52 cr vs 15 cr. EBITDA margins at 22 vs 15 pc YoY. PAT at 33 cr vs 4.5 cr. Cash and cash equivalents on balance sheet at 197 cr with nearly zero debt.

  2. Well diversified portfolio across cotton, wooden, kids and home furnishings. Under cotton segment company makes jackets, coats, T Shirts, shirts, Denims, trousers and suits. Also make cotton and cotton blended T Shirts in economic category under the Cloak and Decker brand.

  3. Has 307 EBOs( exclusive brand outlets ) and presence in 1400 MBOs ( multi brand outlets ). 14 new outlets opened in the last 01 Qtr.

  4. Board has approved incorporation of a new subsidiary ( Monte Carlo Home Furnishings ) to make rugs and blankets for a total investment outlay of 350 cr over a period of next 5 yrs. Main aim is to drive exports of Rugs and Mink Blankets where the company is seeing huge opportunities due China +1 strategy. Plus they ll get PLI benefits. Plus the company is creating a wholly owned subsidiary and not a separate operating division so as to avail Govt incentives like tax cuts which would otherwise not be avlb.

  5. Instead of appointing and spending on brand ambassadors and adv, company is opening EBOs at good locations to create brand awareness. This strategy is working out well.

  6. Company guiding for 25 -30 pc growth this year ( that too on a conservative basis ). This despite rapid rise in RM costs ( cotton ). Shows the brand strength that Monte Carlo enjoys. Also, company is making active efforts to improve its sales performance from Q1 and Q4 which are otherwise lean Qtrs for the company. Results are likely to show up very soon.

  7. Company already imports a lot of Mink Blankets from China and pays a lot of duties and logistics costs. The new expansion into rugs and blankets will also help them offset some of that.

Disc : not invested

Planning to take up a tracking position

2 Likes
624

Disc : Trimmed United Spirits ( due expensive valuations )

Added : Montecarlo Fashions and Nilkamal Ltd

1 Like
625

Disc:

Mild trimming in Ajanta Pharma

Mild additions - Supriya Life, Nilkamal Ltd

1 Like
626

Notes from FY 2021 AR iro Nilkamal Ltd -

Plastic Division - The most challenging year in company’s history. Overall volume and value de-growth of 2 and 7 percent reported by this division. The division reported a turnover of 1731 vs 1866 cr last yr. The furniture division bounced back from lockdown by growing by 14 pc between Jul 20- Mar 21. This helped the division recover 95 pc of last yr’s sales. The furniture division focusses on 3 verticals -

Moulded Furniture
Ready Furniture
Mattress

Moulded Furniture - company supported the division by additional cash discounts. The division was back to growth mode from Q2 onwards. Company launched 06 new products during the year. All were well accepted by the market. Company focussed on appointing new dealers and increasing shelf space within existing stores. Aim to launch more products in Chair and Storage spaces to fill in product gaps.

Ready Furniture - Dominated by unorganised sector. Division took biggest hit due labour shortage, challenges around imports and working capital shortage. Supply chain issues due higher sea freight and other challenges around imports were highest in this division. Company could do 88 pc of PY sales by appointing new franchises and launching new products. At present, company has 62 company owned and franchise stores. Plans to add 30 more franchise stores in FY 21-22 Some of the new products launched during the year ( work from home focussed ) were - Computer chairs, office tables, office chairs which were well accepted by the market.

Mattress Segment - Grew by 29 pc over PY. Company gained mkt share from both organised and un-organised segments. Added 7 new products during the FY. Confident of growing this segment by increasing reach and penetration on a pan India basis.
Also introduced a holistic sleep solutions brand - Doctor Dreams. Brand offers - Mattresses, mattress protectors, pillows, Beds and more can be accessed by the consumers at the click of a button.

Expansion plans - aims to expand manufacturing facility at Hosur in Metal, Sofa and panel board furniture. Company’s supply chain, 40 plus Depots, 300 plus sales staff gives it confidence to keep growing in double digits.

It was a challenging year for Industrial packaging division ( BUBBLE GUARD ). Company still managed to grow this division by 6 pc.

Material Handling division - Full of challenges due COVID. However - FMCG, Pharma, Dairy, Food processing, sanitation and Hygiene saw a big surge. Key products in this segment include - crates, racks, industrial cleaning equipment and disposal bins. Other big challenge in the FY was surging RM cost due hike in crude oil prices. With continuous cost saving efforts, the segment remained profitable.

Capex in this segment is underway for production of injection moulded pallets at Hosur. The same is being carried out at Jammu plant.

With boom in E Commerce and company’s good relations with these companies, the segment should do well in future. The pandemic is further pushing the unorganised to organised push in this segment.

@HOME ( lifestyle furniture, furnishing and accessories division ) - Registered a revenue of Rs 157 cr despite first Qtr being completely washed out and tough challenges in importing goods due supply chain disruptions and rising freight costs. @HOME registered online sales of 37 cr. Company closed the year with 27 stores with a total retail space of 3.4 lakh sq ft. Out of these, 09 are franchise stores. Five new stores are lined up at Hubli, Shimoga, Hyderabad, Erode and Hosur. Another five stores are planned for FY 22. Total floor area addition should be around 80k sq ft

Financial results -

Sales - 2092 vs 2257 cr
EBITDA - 256 vs 284 cr
PAT - 150 vs 182 cr
EPS - 75 vs 95

Disc: initiated a tracking position

Views may be biased

Regards,
Ranvir Dehal

2 Likes
627

Notes form latest AR iro MIRZA INTL -

  1. Incorporated in 1979. Among the largest footwear manufacturers in India.Also supply leather footwear to international brands and one of the largest supplier of finished leather to overseas markets. Also make and sell processed leather through in house tannery unit.

  2. Company also foraying into apparels and accessories segments in both domestic and intl markets. Revenue breakup by products -

Branded footwear - 33 pc
Non Branded footwear - 24 pc
Apparels and accessories - 37 pc
Leather 7 pc

  1. Revenue break up by geographies -

India - 68 pc
UK - 17 pc
US - 5 pc
RoW- 10 pc

  1. Company’s brands -

Red Tape
Red Tape Athleisure
Bond street ( lower priced for mass appeal )
Oak Tree ( premium leather footwear )
Mode ( Exclusive women’s brand )
Yezdi ( Sports shoes for women )

  1. Key Infra -

06 Manufacturing units
01 Tannery with state of the art effluent treatment plant ( biggest in India )
02 in house design studios
02 warehouses to serve E Commerce at Noida and Bangalore spread across 70k and 30k sq ft
276 Exclusive brand outlets - out of these, 125 are company owned and company operated.
246 Shop in Shops
05 International showrooms
12 Shop in Shops in Dubai
5.4 cr pairs - annual capacity, 38 pc utilised in FY 21

  1. Financial performance ( in a Covid hit year ) -

Sales - 1048 vs 1261 cr
PBT - 10.5 vs 65 cr

Overseas revenues - 332 vs 527 cr
Domestic revenues - 715 vs 734 cr ( this is commendable in my opinion if one compares with Relaxo, Bata , Metro brands etc )

Company focussed on driving omni channel sales and bringing virtual engagements that strikes a chord with the customers. Going fwd, digital channel is expected to be a very very imp channel. Company’s brands combine style, quality and value for money propositions.

  1. India is second largest footwear maker in the world however its exports lags China with the latter having a 65 pc mkt share. This provides a huge runway for growth.

  2. Business strengths -

Design excellence - has hired best designers to create delightful products. Have 2 in house design studios. Roll out around 900 new footwear designs every year.

Robust Manufacturing - 06 fully integrated manufacturing units equipped with latest machinery enable high quality production. Besides, company also outsources footwear, apparel and accessories.

  1. With accelerating shift to online channels, company is also confident of its aggressive offline strategy and proactive marketing in order to seize max opportunities.

Channel wise sales for FY 21 vs FY 20 -

EBOs - 462 vs 371 cr
MCOs- NIL vs 83 cr
E Comm - 670 vs 667 cr

  1. Intl business - Exported footwear account for 32 pc ( 332 cr ) of total revenues. Company supplies branded and white label footwear to UK,US,France, Germany, UAE and others. Have established great relationships with reputed retail chains in these countries. 6 pc of export sales were under the Red Tape ( 21 cr ) brand name. RED TAPE is present in over 1000 MBOs in UK. Company actively looking for China +1 opportunities.

Disc : initiated a tracking position @ 151 by exiting United Spirits ( due expensive valuations )

Views may be biased

2 Likes
628

Prince Pipes - Notes from AR 2020-21 -

  1. Total manufacturing plants - 07 @ Chennai, Dadra, Jaipur, Sangareddy, Kolhapur, Athal and Haridwar. Total installed capacity at 2,59,000 MTPA. A total of 11 warehouses across the country for efficient supply and timely service. Largest range of SKUs - 7200 plus. Among top 5 processors in the piping Industry.

  2. Technical collaborations with -

Lubrizol- world’s largest maker of CPVC compound. Lubrizol was also the inventor of CPVC.

Tooling Holland - A global leader in plastic moulds manufacturing.

  1. Sales at 2072 cr, up 27 pc
    EBITDA at 362 cr, up 58 pc
    EBITDA margin at 17.5 pc
    PAT at 222 cr, up 97 pc
    Long term debt free

These performance parameters in a pandemic year are truly commendable and shows the growth mindset of the company.

  1. New plant in Sangareddy ( Telangana ) helps the company expand distribution in South India. Prince flow guard plus ( CPVC Plumbing system ) helps the company engage with top quality distributors across the country to sell CPVC piping systems.

  2. Types of plumbing polymers and their applications -

UPVC - irrigation, cold water applications, drainage
CPVC - hot and cold water, industrial applications
HDPE - Underground drainage structured wall, WSS solid wall
PPR - Hot and cold water, industrial applications

Revenue mix by end users -

Irrigation - 33 pc
WSS and plumbing + Sewerage - 67 pc

  1. Indian pipes and fitting industry was estimated to be at 30,000 cr at the end of 2019. It is expected to reach 50,000 cr by 2025 growing at 12-14 pc CAGR on the back of various government initiatives like - Pradham mantra kris Sinchayee Yoyjna, Housing for all, Atal mission for rejuvenation and urban transformation etc. Among various types of pipes, CPVC is expected to be the fastest growing at a CAGR of 18 pc till 2025. UPVC , PPR and HDPE are expected to grow at 10, 11 and 11 pc CAGR till 2025.

  2. Industry growth drivers -

(a) Irrigation - Irrigation sector is the prime user of PVC pipes contributing 47 pc of total sales. Only 50 pc of India’s agri land is currently irrigated. Under PM kris sinchai yoyja, GoI is spending Rs 5000 cr over the next 5 yrs on micro irrigation projects. For long term, GoI has created another fund - Irrigation fund of 45000cr to finance irrigation related projects. Acc to CRISIL, investments in irrigation are expected to rise at 8-9 pc CAGR till FY 25

(b) WSS and plumbing - WSS and plumbing contribute 35-40 pc of PVC pipe mkt in India. Over the last 5 yrs, GoI has invested 41,600 cr in schemes likes her jam se nal which promises to bring piped drinking water to 14.6 cr rural households by 2024.

An amount of 60 lakh cr has been earmarked for Jal Jeevan Mission which aims to improve access to water in India’s water stressed districts.

Swatch Bharat mission Namami Ganga are further likely to boost construction of household, community and public toilets.

Other govt schemes include - AMRUT ( Atal mission for rejuvenation and transformation ) - to focus on basic infra such as water supply, storm water drains, development of green spaces and parks.

Smart city projects - core infra of smart cities include adequate water supply and sanitation facilities.

(c) Real Estate - prime consumer of plastic pipes and fittings. RERA, low rates, REITs, stamp duty cuts are all helping the sector. PM Awas Yojana is targeting housing shortage among the urban poor. RE sector in India is expected to reach $ 1 trillion by 2030 from $ 120 billion in 2017 and contribute 13 pc of country’s GDP by 2025. Other tailwinds for the sector include -

REITs led foreign investments at low interest rates
Sustaines demand from IT/ITeS, E-Comm, FMCG and healthcare players
Increased desire to own houses by residents and NRIs

MAJOR ADVANTAGES OF CPVC PIPES -

CORROSION RESISTANCE
EASE OF INSTALLATION
BETTER FLOW RATES
FLAME AND SMOKE RESISTANT

These attributes makes them ideal for home plumbing systems. They r also 4 times quieter than metallic pipes.

  1. Company Highlights - Company’s brands - Prince Piping systems and Trubore. Have expansive operations across agri, plumbing and bore well categories. Makes 7200 SKUs… is an end to end solutions provider. Extensive pan India distribution with 1500 channel partners. Has 07 manufacturing facilities …as covered earlier. Strategically located sites near RM and demand centres help reduce freight costs and improve efficiencies. Company has also appointed 05 contract manufacturers at - Guntur ( AP ), Balasore ( Odisha), 02 in Aurangabad and Hajipur ( Bihar). Company has 11 warehouses to focus on efficient and timely service.

Company makes products using all 04 polymers - UPVC, CPVC, HDPE, PPR.

Company making deeper in roads into tier-2,3 towns and rural areas.

A unique outsourcing strategy for eastern India has helped company expand there in an asset light model.

Company’s core strengths are its widespread manufacturing facilities ( both owned and third party ) and distribution networks.

Company also provides working capital channel financing to its channel partners… which is truly unique ( at least I think so ).

Disc : invested

Regards,
Ranvir Dehal

2 Likes