Ranvir's Portfolio

Q&A: Questions & Answers Portfolio Q&A
1298

Kajaria Ceramics -

Q2 FY 25 results and concall highlights -

Revenues - 1179 vs 1122 cr, up 5 pc
EBITDA - 156 vs 179 cr, down 12 pc ( margins @ 13.5 vs 16 pc )
PAT - 86 vs 111 cr, down 22 pc

Excessive rains in July, Aug led to subdued Q2 for the tiles Industry. Still, company was able to grow their volumes by 8.5 pc YoY to 28.7 million Sq Mtrs ( vs Industry’s volume growth of 3 pc ). Price growth has been (-) 3 pc

EBITDA margins remained under pressure - also due to losses incurred in the recently commissioned Sanitaryware Unit at Morbi. This unit was under stabilisation in Q2. Expect significant improvement in H2

Segment wise revenues -

Tiles - 1053 cr, up 5 pc
Bathware - 90 cr, up 6 pc
Plywood - 18 cr, down 26 pc
Adhesives - 18 cr, up 40 pc

Company buys LNG from GAIL ( in North India ) and GSPC ( in Morbi ). Also, company meets aprox 23 pc of their energy requirements from Biofuels - which helps them save on energy costs

Company is seeing good demand pickup from its dealers in Oct. They expect H2 to be much better vs H1

Currently, company’s working capital days stand @ 59 days. By end of Mar 25, they intend to bring this down to 50 days - both by reducing inventories and receivables

In Tiles Industry, there are no distributors. There are only dealers. Kajaria currently has 1850 dealers. Post Sep ( ie rains ), they are seeing much better demand from their dealers

They intend to keep growing @ 5-6 higher than the Industry growth rates

Increased volumes in H2 should result in better EBITDA margins in H2

The margins hit because of operationalisation of new bath ware unit was to the extent of 100 bps ( roughly )

Company’s tiles pant in Nepal has gone live in Sep 24. It has a capacity of 5 million sq mtr. Nepal’s total tile mkt is aprox 25 million sq mtr. Company is looking to ramp up production in the next 3-6 months as the pant gets stabilised and as more and more dealer showrooms come up

Even in sanitary ware, a growth of 6 pc in Q2 was sub-par. They expect the same to pick up wef Q3

For full FY 25, company is guiding for a volume growth of 9-10 pc in the tiles business

They are also guiding for full yr EBITDA margins of 15-16 pc for FY 25

Company has recently set up a team for Govt projects in South, West and East India. They already had a team for North India. They expect a 25 pc growth in the Govt Projects business in FY 25 ( albeit on a small base )

Last yr, 10 pc of company’s tiles business came from Govt projects. This yr, they expect it to go upto 12-13 pc of company’s overall tiles business. By the end of FY 26, they intend to take it to 15 pc of total tiles business

Company got an opportunity in UK to acquire 7 retail stores for aprox 7 million pounds in a distressed sale scenario. So, they acquired them and converted them into Kajaria Exclusive stores

In H1, bathware segment has grown by 6 pc. For FY 25, company aims to grow the bath ware segment by 15 pc ( they r expecting H2 to be much better )

Setting up a plant in Nepal helps the company save on a lot of logistics costs. This should give them a good price advantage to ramp up sales in Nepal

Out of the 1850 dealers that the company has, company provides channel financing to aprox 200 dealers. By Mar 25, company intends to cover another 300 dealers by providing them channel financing

Capex planned for full FY 25 @ 200 cr ( including maintenance capex )

Company does not foresee any deterioration in working capital cycle even when they r ramping up their govt business. Acc to the company, GoI has been making prompt payments - even earlier than the private sector !!!

Earlier in Q1, company had acquired 90 pc stake in a brand called - KERONITE. They have a manufacturing capacity of 6 million Sq Mtr. This is supposed to be an economy brand and has been acquired to take on some of the competition from the Morbi players in the domestic mkts

Disc: hold a tracking position, biased, not SEBI registered, not a buy/sell recommendation

1 Like
1300

Cera Sanitaryware -

Q2 FY 25 results and concall highlights -

Revenues - 493 vs 463 cr
EBITDA - 88 vs 87 cr ( margins @ 18 vs 19 pc )
PAT - 69 vs 57 cr ( due reduced tax rate )

Sanitaryware and Faucets accounted for 46 pc and 41 pc of sales

Have taken 6 pc price hikes in faucets and 1 pc hike in sanitary ware in Sep 24. This should help cushion their margins going forward

Company sells its products under 4 prominent brand names - CERA, SENATOR, LUSTRE, LUXE

LY, company increased its faucets ware capacity from 3 lakh pieces / month to 4 lakh pieces / month

Company has acquired a land parcel for a new Greenfield sanitaryware facility. Not likely to commence construction in current FY - looking at the current mkt situation. Complete build up of the facility should take 18 months from day Zero

Company is investing aggressively behind the - Senator, Luxe, Lustre brands - basically to build a stronger presence in the Luxury space

Capacity utilisation for sanitary ware and faucet ware @ 89 and 91 pc in Q2

Advertisement spends in Q2 @ 16 cr vs 15 cr in Q2 FY 24

B2B sales @ 37 pc of total sales

Completed a buyback of shares worth 150 cr @ Rs 12k/share

Seeing early signs of demand recovery in an otherwise challenging macro environment. Should see better performance in H2

Gas prices from GAIL stood @ Rs 28.5 / cubic meter, from Sabarmati Gas ltd stood @ Rs 53.9 / cubic meter in Q2. Company bought 78 pc ( vs 70 pc in Q2 FY 24 ) of their Gas requirements from GAIL in Q2

Segment wise YoY growth -

Sanitaryware - (-) 6 pc
Faucetware - 20 pc
Tiles - (-) 11 pc
Wellness products - 38 pc

Category wise sales contribution -

Premium - 41 pc
Mid segment category - 34 pc
Entry level category - 25 pc

City wise sales distribution -

Tier - 1 - 34 pc
Tier -2 - 21 pc
Tier - 3 - 45 pc

Cash on books @ 659 cr ( lower vs LY due stock buyback during Q2 )

Company is holding onto its guidance of 2900 cr in topline by Mar 27. They expect high single digit growth in FY 25 despite weak Q1 and Q2

Projects business ( B2B ) was up 15 pc in H1. Expect this strong projects demand to continue in H2 as well. Its the retail ( B2C ) demand which has been tepid

Guiding for EBITDA margins of 15-16 pc for full FY 25

Company can take up the capacity of sanitary ware segment to 120-125 pc. Hence, they are currently waiting before commencing the Greenfield expansion. Plus they can also outsource a proportion of production

Company intends to set up a total of 50 stores selling only their Luxury brands ( 25 stores in this FY and another 25 in next FY ). They intend to take Luxury segment sales of their brands to around 10 pc in next 3-5 yrs. It should be a long drawn affair. In the meantime, they ll keep focussing more on the Premium segment

The growth in Faucets in Q2 was not led by price cuts

As a number of RE projects launched post COVID start nearing their possession dates, company expects strong growth for their products in FY26,27 - hence the guidance for a 2900 cr topline

The Greenfield expansion that the company intends to do wef next FY is expected to be in 2 phases. In phase 1, they ll add capacities of aprox 1.2 million pieces of sanitaryware / yr. This should cost them around 100 cr. This should have an annual revenue potential of Rs 300 cr / yr

Company reiterated that the strong RE sales post COVID will eventually lead to strong demand for building materials Industry. Its just that it takes 3-4 yrs for project completion and the wait has been rather painful

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation

2 Likes
1301

I think that the amount of capital you have is a key factor to consider as well. If your overall invested capital is relatively low (let’s say 10 lakhs) then having a very diversified portfolio of 30-50+ stocks will dilute your returns and make it harder to generate meaningful wealth. With a smaller portfolio, you’d want to be more focused on your highest conviction ideas.

On the flip side, if you have a larger amount to invest, say 1 crore, then you can afford to be a bit more diversified with 30-50 stocks.

1 Like
1302

I dont think so.
10 lakhs, 1 crore, 10 crores, even 100 crores size of portfolio wont make any difference. Only beyond 100 crores of portfolio size, you may not be able to execute your plans and may get forced to buy in more liquid/ bigger companies.

Read the last paragraph again. What if the best return comes in 31st stock. A portfolio with lesser no. of stocks will never have 31st stock. Why are you assuming that only your highest conviction bet will give you best returns.

1303

Hero Moto -

Q2 FY 25 results and concall highlights -

Revenues - 10483 vs 9533 cr
EBITDA - 1450 vs 1360 cr ( margins @ 14 vs 14 pc )
PAT - 1066 vs 1007 cr

Company will invest aggressively behind the ICE - scooters, Premium ICE bikes and Electric scooters

Sales from parts and Merchandise @ 1453 cr, up 7 pc in Q2 - highest ever

EBITDA margins for the ICE business was @ 16.5 pc

Company was able to sell an avg of 5k EV scooters/month in Q2. In the festive season they sold 11.6k EV scooters ( VIDA )

Company sold 16 lakh bikes in the Festive season ( of 32 days ) with a revenue growth of 13 pc YoY. The Upswing in sales came from both Urban and Rural geographies ( both grew in double digits - rural more than urban )

Strong festive sales have enabled the company to greatly reduce its inventories

Company is starting to see demand coming back from the bottom of pyramid segment. They believe - as the results of strong Govt Capex show up, the demand from this bottom of pyramid segment should grow strongly

No of bikes sold in the festive season via financing route was @ 66 pc. Around 17 pc were sold though company’s captive financing arm - Hero Fincorp ( these figures are in line with last year’s data )

Company has crossed 500 Hero 2.0 stores ( these are upgraded versions of their existing stores. Company has decided to upgrade a fixed no of its erstwhile stores to 2.0 standards ). These are upgraded stores giving a better customer experience

Have also crossed 40 Premia stores - should take them to 100 stores before end of FY 25. Premia stores have been opened to sell premium vehicles like - Harley X440, Harley Maverick, Karizma XMR, X Pulse 200 and Vida EVs

Company is seeing greater traction for their EVs and premium bikes in areas where they have set up their Premia and Hero 2.0 stores

Company’s 125 cc brands - Super Splendor, Xtreme, Glamour continue to do well

Within next 6 months - company will aggressively expand its product portfolio in the EV-scooters mkt. Have lined up multiple launches in this space

The Premia dealerships are doing brisk business. It’s the company’s existing dealers that are opening these Premia stores. Premia and Hero 2.0 stores are a great help for the company while selling their Premium and EV products

Company’s exports grew at a healthy 30 pc in H1. Countries like Mexico and Columbia did really well

Company sold 30k bikes to institutional buyers like - Zomato, Swiggy etc in the festive season

Xtreme 125 has been a huge success in both the Urban and Rural mkts. Its production is now up @ 40k units / month

Disc: holding, contrarian bet, biased, not SEBI registered, not a buy/sell recommendation

1304

Hero Moto -

Q2 FY 25 results and concall highlights -

Revenues - 10483 vs 9533 cr
EBITDA - 1450 vs 1360 cr ( margins @ 14 vs 14 pc )
PAT - 1066 vs 1007 cr

Company will invest aggressively behind the ICE - scooters, Premium ICE bikes and Electric scooters

Sales from parts and Merchandise @ 1453 cr, up 7 pc in Q2 - highest ever

EBITDA margins for the ICE business was @ 16.5 pc

Company was able to sell an avg of 5k EV scooters/month in Q2. In the festive season they sold 11.6k EV scooters ( VIDA )

Company sold 16 lakh bikes in the Festive season ( of 32 days ) with a revenue growth of 13 pc YoY. The Upswing in sales came from both Urban and Rural geographies ( both grew in double digits - rural more than urban )

Strong festive sales have enabled the company to greatly reduce its inventories

Company is starting to see demand coming back from the bottom of pyramid segment. They believe - as the results of strong Govt Capex show up, the demand from this bottom of pyramid segment should grow strongly

No of bikes sold in the festive season via financing route was @ 66 pc. Around 17 pc were sold though company’s captive financing arm - Hero Fincorp ( these figures are in line with last year’s data )

Company has crossed 500 Hero 2.0 stores ( these are upgraded versions of their existing stores. Company has decided to upgrade a fixed no of its erstwhile stores to 2.0 standards ). These are upgraded stores giving a better customer experience

Have also crossed 40 Premia stores - should take them to 100 stores before end of FY 25. Premia stores have been opened to sell premium vehicles like - Harley X440, Harley Maverick, Karizma XMR, X Pulse 200 and Vida EVs

Company is seeing greater traction for their EVs and premium bikes in areas where they have set up their Premia and Hero 2.0 stores

Company’s 125 cc brands - Super Splendor, Xtreme, Glamour continue to do well

Within next 6 months - company will aggressively expand its product portfolio in the EV-scooters mkt. Have lined up multiple launches in this space

The Premia dealerships are doing brisk business. It’s the company’s existing dealers that are opening these Premia stores. Premia and Hero 2.0 stores are a great help for the company while selling their Premium and EV products

Company’s exports grew at a healthy 30 pc in H1. Countries like Mexico and Columbia did really well

Company sold 30k bikes to institutional buyers like - Zomato, Swiggy etc in the festive season

Xtreme 125 has been a huge success in both the Urban and Rural mkts. Its production is now up @ 40k units / month

Disc: holding, contrarian bet, biased, not SEBI registered, not a buy/sell recommendation

1 Like
1305

Usha Martin -

Q2 FY 25 results and concall highlights -

Revenues - 891 vs 785 cr, up 13 pc
EBITDA - 161 vs 144 cr, up 11 pc ( margins @ 18 vs 18.5 pc )
PAT - 109 vs 110 cr ( largely flat YoY )

Gross Debt @ 318 cr
Net Debt @ 127 cr

Segment wise revenue breakup -

Wire Ropes - 661 vs 554 cr, up 19 pc ( volumes @ 28k vs 23k MT )
Wire and Strands - 80 vs 69 cr, up 16 pc ( volumes @ 10k vs 8k MT )
LRPC - 86 vs 92 cr, down 7 pc ( volumes @ 12k vs 13k MT )

Higher margin Wire ropes contributed to 73 pc of sales. Within wire ropes, value added segments like - crane, oil and offshore, elevator, mining and fishing - rose to 72 vs 70 pc YoY

EBITDA / ton @ Rs 32.5k vs Rs 31.2k YoY

Domestic : International sales @ 45 : 55

Have approved dedicated capex @ their UK facility to make Synthetic slings. Production of Synthetic slings should begin by start of Q4. Synthetic slings is an exiting new product line with high growth potential

Going forward, company is expecting a demand pickup for galvanised and plasticated LRPCs

Q2 is seasonally weak Qtr for company’s domestic business due monsoons. Expecting a pickup in Q3 as Govt expenditure also ramps up

Company expects EBITDA margins to improve ( due positive operating leverage )as the volumes pick up and the capacity utilisation of their expanded capacity @ Ranchi is utilised in a better fashion

Because of the Red Sea crisis, transit time has increased by 3-4 weeks for their products headed to US, EU mkts. This has led to longer working capital cycle for the company

Company’s facility for rock knitting wires ( specialised wires made up of Zinc and Aluminium ) should go live by start of Q4. It ll be a 7000 MT capacity with margin potential of Rs 35-45k / MT. Company may even expand this capacity if they see good demand in this segment

It took quite some time for the company to obtain all the necessary approvals and certifications from customers in Saudi Arabia. Have started to see good order inflow from Saudi Arabia in Q3. Execution of these orders is expected to commence in Q4. However, the real big bump up in business from Saudi Arabia should only happen in FY 26

Similarly, real business momentum in the Synthetic Slings segment should only start to build up in FY 26

At present, company is the only domestic supplier of specialised wires/ropes that are expected to be used in the Parvatmala project. Company is undergoing the process to obtain all the necessary clearances, certifications and approvals for the same. Once all this is completed, commercial supplies will only start after another 2-3 yrs. Total addressable mkt for the company in the Parvatmala project should be around 3-3.5k cr

Monsoons are a weak season for plasticated and galvanised LRPCs. Company is now seeing demand pickup for these products. Expect to sell volumes of 400-500 MT / month of these two products combined in the coming months

80-85 pc of company’s sales are from replacement demand. About 15 pc of their product demand is for fresh capex

Capex for H1 was @ 120 cr. Phase -1 of Ranchi Capex is now complete. It should take another 120-130 cr for phase -2 to be completed

Elevator Industry in India is showing very strong growth. Similarly, because of rapid infra buildup in India, demand from Crane ropes is also strong

Guiding for a 10-12 pc volume growth for FY 25, FY26. Should be able to clock EBITDA margins between 18-20 pc

Currently supplying to 4-5 different mining projects in US and 3-4 in Australia. Seeing good repeat orders from these projects. Growing the mining business is not easy as it takes a lot of time and effort to get validations and orders from new customers. Should take 2-3 yrs for company to see incremental growth in this segment ( as base business continues to be steady and profitable )

Renewables + Oil and Gas business - currently contributes aprox 20 pc of company’s business. Both these segments are witnessing good demand and growth trends

Life of mining ropes varies from 15 days to 1 yrs depending on application type. Life of crane ropes vary from 1-3 yrs. Life of Anchoring / Mooring ropes varies from 3-5 yrs

Company estimates that by Q1 FY 26 - company should start substantial operational leverage to kick in from the expanded capacities and increased volumes

Going fwd, as volumes pick up and the product mix improves - margins should gradually keep inching up

Sales realisation for general purpose ropes vary between Rs 1.2-1.4 lakh / MT. For the Value added ropes, it varies between Rs 2-4 lakh / MT

Disc : holding, biased, not SEBI registered, not a buy/sell recommendation

1 Like
1306

GSK Pharma -

Q2 FY 25 results and concall highlights -

Revenues - 1011 vs 957 cr, up 5 pc
EBITDA - 322 vs 289 cr, up 11 pc ( margins @ 32 vs 30 pc )
PAT - 252 vs 218 cr, up 15 pc

Company’s operates under 3 broad segments in the IPM -

General Medicine ( with brands like - Calpol, T-Bact, Neosporin, Augumentin, Betnovate etc )

Vaccines

Speciality Products like - Nucala ( an injectable for severe Asthma ), Trelegy ( Inhaler for Asthma )

Seeing good traction in the Paediatric Vaccines portfolio - growing in Double digits

Company continues to build momentum in the Adult Vaccines space through its - Shingrix Herpes Zoster Vaccine. Have launched an awareness campaign featuring Mr Amitabh Bacchan around Shingrix prevention ( its a dreadfully painful disease )

In H1, company has grown by 7 pc. Of this 7 pc, 5.5 pc growth has come from volumes and 1.5 pc has come from prices

Q2 growth was weak for the company because of delayed monsoons which led to a weaker season for acute therapies

Company launched its Shingrix vaccine 18 months ago. It has been able to sell 1.1 lakh doses in this period. Company is making aggressive efforts to educate patients by enrolling a lot of private clinics and Hospitals to promote their innovative Vaccine

The new assets - Trelegy, Nucala and Shingrix Vaccine ( all three launched within last 3 yrs ) - now contribute to roughly 6 pc of company’s sales in India ( that’s about an annual run rate of Rs 210 cr for these three assets ). Company aims to take this revenue contribution from innovative and new products to 10 pc in near future

Company intends to keep growing volumes in the range of 5-7 pc for H2 + they have taken some price hikes that ll get reflected in the H2 results

Company has a 23 pc mkt share in the Private ( ie Self Pay ) paediatric vaccine mkt in India

Company has lined up 2 product launches for Q2, both in Oncology space - for treatment of Ovarian and Endometrial cancer

Disc : not holding, studying, not SEBI registered, not a buy/sell recommendation

1 Like
1307

Time Technoplast -

Q2 FY 25 results and concall highlights -

Revenues - 1371 vs 1194 cr, up 15 pc ( volume growth @ 17 pc )
EBITDA - 197 vs 167 cr, up 18 pc ( margins @ 14.5 vs 14 pc )
PAT - 98 vs 70 cr, up 40 pc ( due reduction in interest and depreciation costs )

India : International revenue break up @ 66 : 34

Value added products reported a revenue growth of 21 pc vs 13 pc growth for established products

Product wise revenue break up -

Polymer products ( like - Drums, Jerry cans, Polyethylene pipes, turfs and mats, disposable bins, MOX films, steel drums ) - 63 pc, Segmental EBITDA margins @ 14 pc

Composite products (like Intermediate bulk containers, composite cylinders, Auto parts, energy storage devices) - 37 pc, Segmental EBITDA margins @ 15 pc

Out of the products listed above, the value added product segments include - Intermediate bulk containers ( IBCs ), Composite CNG,LPG cylinders and MOX films

Established products include - Drums, Jerry Cans, auto components, air and hydraulic tanks, their Lead - Acid batteries, door mats, PE pipes. Their batteries are used in Telecom sector, railway signalling and other Industrial applications

Established products revenues @ 980 cr, up 13 pc ( 72 pc of revenues ), Segmental EBITDA margins @ 13 pc

Value added product revenues @ 390 cr, up 21 pc ( 28 pc of revenues ), Segmental EBITDA margins @ 18 pc

Company’s board has approved raising 1000 cr via QIP for the following purposes -

Partial or full repayment of debt

Greenfield expansion projects for VAPs like IBCs, Composite LPG, CNG and Hydrogen cylinders

Brownfield expansion projects for Established packaging products

Working capital requirements and general corporate purposes

Company has earmarked non core assets worth Rs 60 cr for sale within next 12 months ( have already sold and realised Rs 65 cr in H1 )

Company is undertaking R&D to make fire extinguishers from composite materials. This will open up a huge mkt for them considering the light weight, easy to handle and longer shelf life advantages that come with composite materials

Company has decided not to proceed with 50 pc divestment of its stake in the UAE business ( most likely because of the QIP + better margin realisations from UAE operations in last 1 yr + the company is planning to put up an additional manufacturing plant in Sharjah )

Seeing strong demand for their CNG/LPG cylinders

Seeing good demand trends in India business post monsoons

In general H1 : H2 revenue split for the company is around 45:55. Similar trend should play out in the current FY as well

Company intends to hit VAP share of sales @ 35 pc in next 2-3 yrs from 28 pc currently

Capex in H1 @ 95 cr. Aprox 40 pc towards maintenance capex and the rest towards value added products. Should spend another 100 cr on Capex in H2

From the UAE facility ( which company was earlier planning to sell ) - company only makes their packaging products ie Jerry Cans, Drums and IBCs

Current capacity utilisation in India facilities is around 80 pc and 87 pc for international facilities

Breakup of company’s overseas business between ME, SE Asia, US stands @ 30 : 50 : 20. Confident of growing the total International business @ 15 pc kind of rates for foreseeable future

Another area of significant potential growth in composite ( light wt ) fuel tanks for drones used in Agri Sectors. These fuel tank enabled drones have 5 X flying endurance vs battery operated drones

The composite fire extinguisher that the company is developing shall weigh 20 pc of the metal fire extinguishers - currently in use. This is gonna be a huge improvement wrt being user friendly. Plus the composite cylinders will be rust/corrosion free. A lot of new Govt regulations are now mandating using composite fire extinguishers in critical areas - like Vande Bharat trains and other critical infra

The composite Hydrogen and CBG cylinders are another huge future business opportunity for the company

Company has a first mover + ahead of time by aprox 3 yrs in development cycle advantages - when it comes to composite material based storage systems

OEMs like Tata Motors have already approved company’s facilities for supply of composite CNG cylinders. As new capacities come up, supplies shall begin - maybe by late next yr

Current borrowing rates for the company are in the band of 8.25-8.5 pc

Disc : holding, biased, not SEBI registered, inclined to add more, not a buy / sell recommendation

5 Likes
1308

Technocraft Industries -

Q2 FY 25 results and concall highlights -

Revenues - 663 vs 536 cr, up 24 pc
EBITDA - 131 vs 118 cr, up 11 pc
PAT - 71 vs 70 cr ( due much higher interest and depreciation expenses )

Segmental revenues -

Drum closures - 157 vs 136 cr, up 15 pc
Scaffoldings and Formwork - 299 vs 234 cr, up 27 pc
Textiles - 139 vs 119 cr, up 17 pc
Engineering and Design services - 51 vs 52 cr, down 1 pc

Segmental EBIT -

Drum Closures - 56 vs 48 cr, up 17 pc, margins @ 36 vs 35 cr. Company remains optimistic about the future performance of this business. No major capex is planned in this segment. Company is the second largest maker of drum closures in the world

Scaffoldings and Formwork - 39 vs 45 cr, down 14 pc, margins @ 13 vs 19 pc. Contraction in margins is because of slowdown in US, Europe. Optimistic about growth in this division led by domestic mkt due buoyant Infra and RE development activities. Company’s new plants to make 17.5k MT/yr of Aluminium extrusion work and 6 lakh Sq Mtr of Aluminium Fabrications have gone live in Mar 24. Ramp up shall continue over FY 25

Textiles - (-) 12 vs (-) 9 cr, down 43 pc, margins @ (-) 9 vs (-) 8 pc

Engineering and Design services - 8 vs 12 cr, down 34 pc, margins @ 16 vs 24 pc. Expecting better performance going fwd due strong acceptance of company’s offshore global delivery model

Company is slowly moving away from selling cotton yarn and moving towards Garmenting - to improve margins in this segment

Because of Red Sea crisis - the freight rates almost doubled in Q2 vs LY. This led to a 7 pc hit on the margins in the Scaffoldings division ( exports ). Company has now increased prices to partially offset this. Also the freight rates are now cooling off. Plus, the tariffs on Chinese imports that were slowly relaxed and now fully back in the US - this should directly benefit the company. Company still maintains its guidance of 1250 cr of revenues from formwork and scaffoldings division. Margins in Q2 ( in all likelyhood ) have bottomed out. However, they may not go back to previous year levels till the new facilities reach optimum capacity utilisation

The demand for Aluminium formwork ( under the Mach 1 brand ) continues to remain robust in the domestic mkt

Company expects the new Extrusionwork and Formwork plant to reach optimum capacity utilisation only by next FY

Company has added extra manpower in their Engineering and Design services business in the developed mkts. This has led to margin compression as the costs have gone up by aprox 3.5 cr / Qtr. This should take an yr or so to reflect into significant increase in topline to offset the additional costs

The new Aurangabad plant ( for scaffoldings and formwork ) has the potential to add 400 cr to the revenues per year. Should start to see these jumps coming in wef next FY

Gross Debt - aprox 400 cr
Cash on books - aprox 400 cr
On a net level, company is practically debt free

Company has successfully developed JT coolers ( used to cool the electronics and sensors installed on Missile seekers ). Have already supplied 50 pieces to MoD routed via French company ) . Once the business picks up, it can be as big as the company’s drum closures division !!!

Once the Aurangabad plant reached optimum capacity utilisation, company expects to reach 20 pc EBITDA margin levels

Aim to reach 500 cr of PBT by Mar 26 ( for full FY 26 )

Disc: holding , biased, not SEBI registered, not a buy/sell recommendation

2 Likes
1309

Surya Roshni -

Q2 FY 25 results and concall highlights -

Revenues - 1529 vs 1916 cr, down 20 pc
EBITDA - 83 vs 139 cr, down 40 pc ( margins @ 5.4 vs 7.3 pc )
PAT - 34 vs 76 cr, down 55 pc

Segmental performance -

Lighting and consumer durables -

Revenues - 395 vs 377 cr, up 5 pc
EBITDA - 36 vs 35 cr, up 1 pc ( margins @ 9 vs 9.3 pc )
PBT - 26 vs 28 cr, down 6 pc

Lighting business saw strong volume growth ( up 15 pc ) however the price erosion in LED lighting continued

Fans business did well in both Q1 and Q2

Company’s water heaters clocked sharp volume growth of 50 pc

Steel Pipes and Strips -

Revenues - 1135 vs 1539 cr, down 26 pc
EBITDA - 48 vs 104 cr, down 54 pc
PBT - 20 vs 76 cr

EBITDA / MT @ Rs 2900 vs Rs 5100 YoY !!!

Hot Rolled steel prices corrected sharply by Rs 7500/Ton. This led to inventory losses to the tune of Rs 3000/Ton in the inventory value. Company was still able to manage an EBITDA of Rs 2900/Ton

VAP like - API, Galvanised and Spiral pipes now constitute 45 pc of company’s steel pipes segmental revenues

Company is the no 1 producer and exporter of ERW GI pipes from India. In the consumer lighting mkt, company is ranked No 2 in India

Over and above the steel price corrections - delayed monsoons, delayed govt spending and high freight rates due Red Sea crisis were additional headwinds for company’s steel pipes business

In Q1, company’s EBITDA/Ton was Rs 6065 / MT. In FY 24, full yr’s EBITDA / MT was @ Rs 5400 / MT

Company has revised its full yr EBITDA/ MT guidance to Rs 5200 with a volume growth guidance of 10-12 pc for full FY 25. Recent recovery in steel prices gives them hope of margin recovery for Q3 and Q4. Hope to clock EBITDA of 440 cr or so from the steel pipes division for full FY 25

Company is debt free and has cash on books of Rs 136 cr

Volumes sold in Q2 @ 1.65 lakh vs 2.03 lakh MT. Volume de-growth is again attributed to prolonged monsoons, slow down in Govt’s order flow and dealers reluctance in buying materials in a falling price environment. Still confident of selling > 9 lakh Mts for FY 25

Have seen a sharp upturn in volumes in Oct 24 ( up 17 pc YoY - volume growth )

Guiding for a 1700 cr topline from the lighting and consumer durables business for full FY 25. Should be able to do 160 cr kind of EBITDA from this segment for full FY 25. Have seen a sharp pickup in this segment too wef Oct

Capex guidance for next 3 yrs @ 500 cr ( @ 100 cr + 200 cr + 200 cr for FY 25, 26 and 27 ). Post all this capex, company’s capacity should increase from 12 lakh MT/yr to 19 lakh MT/yr

Canada and US have reduced anti dumping duties on company’s products. This should be an added kicker for company’s export business in H2

Enquiries and Order flows have also seen marked uptick in the months of Oct and Nov for steel pipes and professional lighting business

Out of this capex of 500 cr that the company has lined up, 400 cr shall be spent towards value added products. Eventually, they aim to derive 60 pc of their revenues from VAP segment vs 45 pc currently

There was a marked slowdown in the award of Govt tenders in piped water infrastructure space ( biggest consumer of ERW GI pipes ) in H1 due to general elections. Company is now seeing clear signs of reversal now

As the share of VAP increases in next 2-3 yrs, EBITDA / MT for the company should keep inching upwards. In the VAP segment, EBITDA / MT is > Rs 7000

As and when the price erosion stops / reverses in the LED lighting division, company may be in for some very good times

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation

1310

Alkem Labs -

Q2 FY 25 results and concall highlights -

Revenues - 3414 cr, down 0.7 pc
Gross Margins @ 64.7 vs 61.4 pc
EBITDA - 752 cr, up 0.8 pc ( margins @ 22 vs 21.7 pc )
PAT - 688 cr, up 11 pc YoY

R&D expenses @ 147 cr, @ 4.3 pc of sales

Segmental sales -

India - 2461 cr, up 5.7 pc ( representing 73 pc of company’s total sales ). Company’s volume growth was at 1.1 pc. Company continues to maintain No 1 position in Anti-Infectives, No 2 position in Vit/Minerals, No 3 position in GI and Pain/Analgesics portfolios. Company is ranked No 5 in the IPM

International sales - 918 cr, down 13 pc ( 17 pc of company sales come from US mkts and 10 pc come from RoW mkts ). US sales de-grew 22 pc to 597 cr. RoW mkt sales grew 12 pc to 320 cr. Launched 1 product in US mkt and received 5 new approvals

H1 Highlights -

Revenues - 6446 cr, up 0.6 pc YoY ( India sales @ 4483 cr, up 6 pc. International sales @ 1885 cr, down 9 pc. US sales de-grew 15 pc in H1, RoW mkts grew 6 pc in H1 )
Gross Margins @ 64.5 vs 60.6 pc ( significant jump )
EBITDA - 1361 cr, up 20 pc ( margins @ 21.1 vs 17.7 pc - significant jump )
PAT - 1233 cr, up 36 pc

Company’s BADDI facility was inspected in Mar 24, EIR received in Jun 24

Going to launch 1 product in US in Q3 for which they have received 180 days exclusivity

US business in H1 faced supply chain issues due to which company lost some volumes. Also there was price erosion. Expecting a much better H2 in the US business. Expect to end FY 25 with mid single digit de-growth in US business

Company has been very selective wrt products that they sell in US. This meant that they did forego some thin margin product sales. This has helped them improve profitability ( H1 profitability in this FY has been better than LY in US despite the sales decline )

IPM breakdown of Acute : Chronic is about 62 : 38. But for Alkem, its about 81 : 19. Acute business has been slow this Q2. Hence company’s growth in IPM has been 1 pc lower than the mkt in Q2

Company expects much better growth in H2 vs H1 in the India business as well

Enzene’s Biosimilar plant ( their subsidiary ) in US should go commercial in Q1 FY 26 ( have spent 400 cr on the same ). Seeing good enquiries + Orders to be made from this facility. Will share more details at an appropriate time. This facility will focus on CDMO operations

Guiding for mid single topline growth for FY 25 with EBITDA margins in the vicinity of 19 pc for full yr

US mkt seeing 6-7 pc kind of price erosion

Company hopes that their Biosimilars CDMO plant should break even in FY 26

Company’s subsidiary - MedTech ltd’s plant should also go live sometime in Q3. It will manufacture Hip and Knee replacement implants under license from Exatech US. They should be able to launch their products in the mkt by Q1 or Q2 next FY

Commercialisation expenses for both these plants ( MedTech and Enzene ) should start flowing into P&L wef Q3

Lower sales in US + Lower API prices have helped company improve their Gross Margins in H1. As the RoW sales pick up, they should also support the Gross Margins

Company also has a domestic Biosimilars business. Have commercialised 7 products in India. Aim to commercialise 3-5 products globally ( including US ) in next 3-4 yrs

In IPM, company’s focus is to grow their Chronic therapies. For the next 3 yrs, should grow at rates significantly higher than therapy growth rates in India - that should increase company’s chronic mkt share

Aim to keep improving company level EBITDA margins by 100 bps every passing yr for foreseeable future. If company happens to make some acquisition that’s margin accretive ( as they have aprox 4000 cr of cash on books ), the improvement may be even faster

Company is also bullish about their RoW business. As time passes and the scale of RoW business increases, that should be another trigger for margin improvement

India business split @ 80:20 between Branded : Trade generics. Even the margins in trade generics are also improving because of better product mix

Company has 145 approved ANDAs in US. Out of these, 100 products are currently active in US

Company will be launching Mirabegron ( used to treat over active bladder ) in US in FY 27 as per their agreement with the innovator

Disc: holding, inclined to add more, biased, not a buy/sell recommendation, not SEBI registered

1 Like
1311

Alembic Pharma -

Q2 FY 25 results and concall highlights -

Revenues - 1648 vs 1595 cr, up 3 pc YoY
Gross margins @ 74 pc
EBITDA - 257 vs 218 cr , up 18 pc YoY ( margins @ 15.6 vs 13.8 pc )
PAT - 153 cr, up 12 pc YoY

Segment wise sales -

India formulations - 609 vs 577 cr, up 6 pc ( 18 pc of India business ie 118 cr comes from Veterinary formulations ). Alembic is ranked no 20 in IPM. Company has a MR strength of 5200 MRs. Company has 4 brands with sales > 100 cr / yr. Veterinary business grew by 20 pc in Q2

US formulations - 467 vs 444 cr, up 5 pc. 8 products launched in US in Q2. 10 more launches are lined up in H2. Products from new facilities are expected to drive future growth. Capacity expansion is underway in the Oral Solids plant to meet the immediate demand in US and other export mkts

Company has a total of 214 ANDA approvals. Have launched 157 products so far. Company has 16 Injectable, 30 Derma, 19 Ophthalmic product approvals. Rest are oral solid approvals

Company aims to increase the complexity of products launched in US in order to obtain better pricing

RoW formulations - 298 vs 252 cr, up 18 pc. Mainly operating in EU, Canada, Aus, Brazil, RSA and Chile. Future growth to be led by product and geography expansion. Have line up expansions in ME, NA and Mexico

APIs - 274 vs 322 cr, down 15 pc
( mainly because of price erosions and the high growth base that the company has in this segment )

Manufacturing footprint -

Formulations facilities - 05 ( three of these have had USFDA audits in last 6 months, including the Onco Injectables facility )

API facilities - 03

US mkt is seeing good volume growth backed by recent launches. Same should continue in H2 as well as a number of new launches are lined up in H2 as well. However, price erosion in US mkt continues @ high single - low double digits

Acute business in India de-grew by 2 pc in Q2. Therapies like Gynae, Anti-Diabetic, Opthal grew by 8 pc, 11 pc, 18 pc and 13 pc respectively

Gross Debt @ 995 cr
Cash on books @ 125 cr
R&D expenses @ 8 pc of sales

Expect continued growth momentum in RoW business

Expect to clock a high single digit sales growth in India business in H2. Company expects H2 to be much better than H1 for US and RoW business

R&D spends for full FY should be around 500 cr

Expect API business to start reporting growth wef FY 26

In the RoW mkts in Q1, company had some supply chain issues. The same are now behind, which resulted in good growth in Q2. Expect H2 to maintain similar growth trajectory as Q2 for RoW business. In the US, expect a much better H2 led by new launches and ramp up of launches made in H1

API business is also seeing aggressive price erosions. Chinese aggression is a part of the reason

Company is in partnership with Natco Pharma to launch Olaparib ( Onco Drug ) in US. Have not yet arrived at a settlement with the innovator - AstraZeneca

Higher inventory levels at the end of Sep 24 are because of supply chain issues that the company faced in Q1 and hence they did build up inventory to offset those issues. They also expect much better H2 business in US + RoW mkts. This inventory will hence normalise going forward

Company is setting up a new formulations facility near Indore for the domestic mkts. That should come up by end of FY 25. Additionally, company is adding peptide manufacturing blocks to one of their API facility. Plus they are adding 2 more lines in their F3 formulations facility. These are the works in progress

Have filed for 2 peptides in the US mkt. These are not GLP-1 products. However, the company has ambitions to make both peptides and formulations for GLP-1 products ( for both Semaglutide and Tirzepetide ) and are working towards them. Most likely, company will be among the second wave of generic players launching these products. Have been doing R&D on peptides for 4-5 yrs now

As the inventory levels reduce in H2, the gross debt levels should come down by end of the year

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation

1 Like
1312

Updater Services Ltd -

Q2 FY 25 results and concall highlights -

Company’s business model -

Company offers services under two broad business segments -

IFMS ( Integrated Facility Management Services ) - this segment includes services like -
Housekeeping and cleaning services
Disinfecting and Sanitising services
Pest Control services
Horticulture services
Facade cleaning services
Washroom Hygiene
Material handling
Warehouse management services
Inward and Outbound logistics management Equipment maintenance services
Mechanical, Electrical and Plumbing repairs Ventilation and Air Conditioning
Catering services to corporates, educational institutes and industrial facilities
Staffing services - where trained field staff are provided to customers for deployment in various roles

IFMS - currently comprise of 65 pc of company’s revenues and 51 pc to company’s EBITDA

BSS ( Business support services ) -

Sales enablement services to various kinds of companies via BPOs operating out of India, Singapore, UK, Malaysia

Audit and Assurance services - including audit of supply chains, distributor audits, depot audits, retail point audits

Channel partner claim processing services Employee background checks, address verifications, educational qualification verifications, employment history verifications, legal cases history etc

Airport ground handling services ( company has got ground handling contracts across 22 airports in India )

Mailroom and asset movement management

BSS - currently contribute to 35 pc of company’s sales and 49 pc to company’s EBITDA

Company has slowly exitied non-viable businesses in the IFM space over the last 3-4 Qtrs. Going forward, they should have a clean slate. Hence the growth from here on should be of better quality and margin accretive

Company has aprox 242 clients in its BSS division. Key clients include - Microsoft, P&G, TCS, Hershey, Aditya Birla group, Tata Comm. 82 pc of BSS segment’s revenues comes from top 50 customers. Company intends to go for strategic acquisitions in the BSS space - both to improve growth rates and margins

Biggest opportunities in the BSS segment lie in the Employee verification, sales enablement, audit and assurance spaces. All these are asset light businesses

Some key competitive advantages for the company include - scale of operations, ability to handle complex and large scale contracts

India is adding office space at a brisk pace. Hence the volume growth for the company should not be a problem going forward. Margins shall continue to improve - albeit gradually

Company has about 825 clients in the IFMS segment. Top 10 customers contribute to 26 pc of sales, top 50 customers contribute to 65 pc of sales

Six - main segments ( largest contributors ) for the company in the IFMS segment include - Cleaning services, engineering services, production support services, Institutional catering, warehouse management and washroom hygiene services

Q2 FY25 financial outcomes -

Revenues - 680 vs 600 cr, up 13 pc

EBITDA - 44 vs 26 cr, up 66 pc {margins @ 6.4 vs 4.4 pc ( excluding other income ) - massive margin improvement }

PAT - 28 vs 9 cr, up 205 pc

Segmental results -

IFMS revenues - 448 vs 408 cr, up 10 pc. EBITDA margins @ 6.5 pc - including other income

BSS revenues - 238 vs 198 cr, up 20 pc. EBITDA margins @ 9.1 pc - including other income

Company’s share of non-profitable IFMS business has now come down to single digits

EBITDA for IFMS grew by 57 pc YoY in H1 @ the margins stood at 6.1 pc vs 4.2 pc LY ( all because of company’s focus on higher profitability business contracts )

In India, outsourcing services are growing @ a healthy 10 pc CAGR - which augurs well for the company

Rapid infra development and development of large corporate parks, industrial hubs, manufacturing facilities - all bring more business opportunities for the company

In the BSS segment, company has developed AI enabled services and has on-boarded one of World’s largest IT company as their client

EBITDA for BSS segment grew by 31 pc in H1 vs LY. EBITDA margins in BSS segment for H1 stood @ 9.5 pc

Company expects to continue to grow their BSS segment’s revenues by 20 pc CAGR in near future ( organic growth ). This should further improve company level margins

Company’s track record in acquiring businesses in BSS space and integrating them + turning them around has been a key strength of theirs. Company is actively looking at acquisition targets in both IFMS and BSS segments

Company is also looking at cross sell opportunities between IFM and BSS divisions - this should be a natural catchment area for the company

UDS is a net cash company with Debt/Equity @ (-) 0.1 pc as on 30 Sep

Employee count in IFMS @ 53.9k employees
Employee count in BSS @ 14.6k employees

Company believes that the margins reported in Q2 are sustainable. Their internal EBITDA margin tgts for IFMS, BSS segments are >6 pc and >9 pc respectively

If the company doesn’t make any new acquisition this yr, expect the cash debt levels to trend lower by end of Q4

Company made 9 pc EBITDA margins from their new foray into airport ground handing ops in Q1. They improved their margins to 10 pc in Q2. Q1, Q2 revenues from this segment were at 12 and 13 pc respectively

Company’s preference for inorganic acquisitions is within India. However, they are open to explore overseas opportunities if they are comfortable with the country they r going to operate in. Also, most of company’s acquisitions should happen in the BSS space as these r high margin spaces

Because of the recent run up in the stock mkts, Promoters expectations have increased and hence acquiring companies has now become costlier. However, UDS is very clear about their valuations criteria. If they r not met, they ll walk away from the deal. They ll not acquire for the sake for making an acquisition

For full FY 25, IFMS segment should grow its sales by 10-11 pc. BSS should grow topline @ around 20 pc. Increased sales / toplines naturally result in better operational leverages and hence improving EBITDA margins. To meet this guidance, company will have to grow its IFMS segment @ > 13 pc in H2

Company’s sweet spot range for target acquisitions continue to remain in the 200-300 cr range

When company gets into a sales enablement contract with their clients, typically these r fixed rate contracts for 90 pc of payments and 10 pc payments are generally made depending on the sales improvement that the company is able to achieve for their clients

Most of company’s contracts ( 80-85 pc ) are yearly in nature and come up for renewals @ year end. More recently, company has started getting into 3-5 yr contracts with annual appraisals

Disc: holding, biased, may add more if business momentum continues as was demonstrated in Q2, not a buy/sell recommendation, not SEBI registered

4 Likes
1313

EIH Ltd -

Q2 FY25 results and concall highlights -

Revenues - 623 vs 552 cr, up 13 pc
EBITDA - 208 vs 165 cr, up 26 pc ( margins @ 33 vs 30 pc YoY )
PAT - 133 vs 94 cr, up 41 pc

Cash on books @ 771 cr

Avg Room rents @ 14.9k vs 13.7k
Avg Occupancy @ 73 vs 72 pc

Current Portfolio of Hotels ( managed + owned ) -

The Oberoi ( in India ) - 12
The Oberoi ( International ) - 07
Trident ( in India ) - 10

Total rooms @ 1513 ( the Oberoi ) + 2204 ( Trident ) = 3717 rooms

Q2 - City wise RevPar growth led by - Agra - up 19 pc, International Hotels - up 7 pc, Chennai - up 13 pc, Hyderabad - up 31 pc, Chd+Shimla - up 16 pc , Cochin - up 19 pc, Mumbai - up 24 pc, Bengaluru - up 10 pc

Q2 - City wise laggards on RevPar were - Kolkata - down 19 pc, Delhi NCR - flat, Jaipur, Ranthambhore and Udaipur - up 5 pc

Hotels in pipeline -

2025 - 96 rooms -
The Oberoi Rajgarh Palace - Owned
Oberoi Bandhavgarh - Managed
2 Luxury Boats ( International ) - Managed

2026 - 133 rooms -
The Oberoi Goa - Managed
Nile Cruiser - Managed
The Oberoi Bardiya - Managed
The Oberoi Diriyah ( Riyadh ) - Managed

2027 - 334 rooms -
Trident Vishakhapatnam - Owned
Trident Tirupati - Owned
The Oberoi Kathmandu - Managed

2028 - 216 rooms -
The Oberoi Goa - Owned
The Oberoi Jawai - Managed
The Oberoi London - Owned
The Oberoi Bhutan - Managed
Nature by Oberoi Diriyah ( Riyadh ) - Managed

2029 - 581 rooms -
The Oberoi Gandikota - Owned
The Oberoi Hebbal - Owned
Trident - Hebbal - Owned
Trident Pune - Owned

Company will also develop Grade A commercial space along with its two hotels @ Hebbal - Bengaluru ( to be leased out )

The bulk of Oberoi Leisure hotels drive most of their business in H2

The London hotel that is expected to come up should cost them aprox 730 cr. It’s gonna be a 21 room hotel ( mostly suites ). Company is expected to go in with a 51 pc stake in it and find a JV partner to own 49 pc. Avg room rates in Mayfair area in London ( these days ) are around Rs 1.25 lakh / night

EIH is a major caterer to Indigo Airlines. Indigo coming up with business class ( in the domestic mkt ) should help EIH’s catering business

The Oberoi Hotels @ Gurugram, Udaipur, New Delhi, Chandigarh + The Trident @ Udaipur - are 4 of company’s major hotels that drive a lot of revenues from the Weddings segment. Generally - company prefers to go for a full hotel buyout ( specially for Udaipur and Chandigarh properties )

Company believes that they have a lot of potential to drive higher ARRs in their Luxury hotels and they r making all efforts to ensure that this starts to play out

Company sources a lot of their customers from UK and US. Hence the company is spending so much money on their London property ( basically to establish their Brand ). This will also help them lever their brand in case they want to take up management contracts of Hotels in UK

The Oberoi grand was closed for a significant number of days ( in Q2 ) for renovation. That led to negative Rev Par growth in Kolkata. Another hotel undergoing renovation right now is the property at Ranthambhore ( slated to be completed next yr ). Renovations - big and small should continue next yr as well

Company doesn’t disclose their revenues for their flight catering business

The Oberoi Mumbai and Trident at Nariman Point are benefiting from the improving road infrastructure in Mumbai

Oberoi Bandhavgarh should open before the end of Q4 FY25. Oberoi Rajgarh should open in next FY

Expecting strong business momentum in H2

All the capex that’s lined up ( as mentioned above ), company doesn’t intend to go beyond a Debt / Equity ratio of 0.25

Disc: holding, biased, not SEBI registered, not a buy / sell recommendation

1 Like
1314

Glenmark Pharma -

Q2 FY 25 concall and results updates -

Revenues - 3434 vs 3207 cr, up 7 pc
EBITDA - 602 vs 462 cr, up 30 pc ( margins @ 18 vs 14 pc, significant margin improvement )
PAT - 354 vs (-) 62 cr ( not comparable because LY, the company had to bear a one time exceptional loss of 205 cr )

R&D expenses - 227 cr @ 6.6 pc of revenues

Geography wise sales performance -

India - 1281 cr, up 14 pc ( @ 37 pc of sales ). Significantly outgrew the IPM which grew @ 7.6 pc. Cardiac, Respiratory and Derma therapies grew strongly. Company’s OTC business also grew strongly @ 15 pc. Company is ranked no 2 in Derma and Respiratory therapies and no 5 in cardiac therapy in India

Company already has some unique / differentiated products in IPM. These are - LIRAFIT ( Liraglutide - GLP-1 drug ), JABRYUS ( to treat atopic dermatitis, in-licensed from Pfizer ), TISLEIZUMAB and ZANUBRUTINIB ( in-licensed from BeiGene )

North America - 740 cr, down 1 pc ( @ 22 pc of sales ). Company has commercialised 8 injectable products in US. Launched 04 products in US in Q2. Slated to launch another 3-4 products in Q3. Have a strong filing pipeline - 02 Nasal sprays and gFlovent awaiting approval

Europe - 687 cr, 15 pc ( @ 20 pc of sales ). Branded respiratory portfolio led by Riyaltris continues to lead the growth in EU. Awaiting approval for 4 more respiratory products in EU ( were filed in Q4 LY ). Expected to launch WINLEVI ( derma drug for severe acne ) in selected EU mkts in next FY. Has in-licensed WINLEVI for 15 European mkts + South Africa

RoW - 704 cr, down 4 pc ( @ 20 pc of sales ). Reported 19 pc growth in Russia. Launched Riyaltris in Mexico, Kenya and some Asia-Pacific mkts

Till date, company has commercialised RIYALTRIS in 41 markets. They have filed for approval for RIYALTRIS in 90 markets. Should be launching it in 10-11 mkts in next 2-3 Qtrs

Company has partnered with Hikma ( has out-licensed RIYALTRIS to them ) for US market. Seeing good demand traction for the same

Expect to launch RIYALTRIS in China in FY 26. Has out-licensed it to Grand Pharma in China

Company has in-licensed ENVAFOLIMAB ( Onco Drug ) from Jiangsu Biopharma ( China ) for commercialisation in over 20 markets across the globe

Guiding for a full yr EBITDA margin of 19 pc ( that means they should do 20 pc kind of margins in H2 vs 18 pc in H1 )

Company believes, RIYALTRIS has the potential to do a $ 200 million sales / yr in next 3-4 yrs time. This year, it should cross the $ 100 million sales mark

The pipeline of respiratory products lined up for approvals / launches in US + EU should support growth in next 6-12 months

Company is now ranked 13 in IPM with 9 brands in top 300 brands in India

Company is the first one to launch Liraglutide in India under the brand name LIRAFIT. Had launched JABRYUS in India in Jan 24. Company is currently engaged in a lot of marketing, educational, promotional activities across dermatologists across India. TISLEIZUMAB and ZUNUBRUTINIB are expected to be launched in next 9-12 months

Company expects a significant growth pickup in RoW mkts in H2 after a flattish H1. Expects to end the year with high single digit growth in RoW mkts

Company is now ranked no 2 in the Kenyan Pharma mkt

Company’s developmental drug - ISB 2001 - to treat Multiple Myeloma ( a type of blood cancer ) is undergoing Phase - 1 trials in US. The initial data is very encouraging. Hence the company is currently curtailing its expenditure behind other novel assets and focussing primarily on ISB 2001. Likely to keep spending aprox 450-500 cr / yr on the R&D effort at Ichionis ( company’s Innovation led subsidiary )

Company is looking to find a partner for further funding @ Ichionis after raising money by out-licensing ISB 2001. This should take some time and also depends on the safety and efficacy data of ISB 2001. At present, company seems confident of being able to do so in FY 26/27

Company’s Plant in US at Munroe is Serving a USFDA warning letter. Once that is lifted ( should happen in FY 26 ) and company starts launching products from there, it should result in significant operational leverage for the company. Currently, company ends up spending 150-200 cr / yr on the Munroe plant with no revenues

Should be able to commercialise WINLEVI in next 9-12 months. Should be able to start launching ENVAFOLIMAB in next 3-6 months. Should achieve descent scale in both these assets in about 2-3 yr’s time

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation

1 Like
1315

Sandhar Technologies -
Q2 FY 25 results and concall highlights -

Revenues - 989 vs 888 cr, up 11 pc
EBITDA - 104 vs 84 cr, up 24 pc ( margins @ 10.5 vs 9.4 pc )
PAT - 42 vs 28 cr, up 55 pc

Category wise revenue breakup -

2Ws - 62 pc
PVs - 17 pc
OHVs ( off highway vehicles ) - 14 pc
CVs - 2 pc
Others - 5 pc

Products wise revenue breakup -

Cabins and Fabrication - 14 pc
Sheet metal parts - 18 pc
Aluminium Dye Castings - 26 pc
Locking systems - 18 pc
Vision systems - 5 pc
Others - 8 pc
Assemblies - 10 pc

EV parts under development with tentative timelines for commencement of production -

Motor controllers for 2Ws and 3Ws - Apr 25
Battery chargers - Feb 25
AC-DC converters - Apr 25

Company is localising a lot of the parts that go into these EV components. In medium term, company expects margins in these EV products to be as good or better than company level margins

32 pc of company’s revenues come from TVS, 19 pc from Heromotocorp, 8 pc from JCB. These are company’s top 3 customers. Other important customers contributing 4-5 pc of sales each include Honda, Bosch

Company has 07 operational JVs. 06 of them are PAT positive. Combined together, the 07 JVs make an EBITDA of 10 pc

Company is guiding for a topline of 4000-4100 cr for FY 25 and 4500-4600 cr for FY 26. EBITDA margins for full FY 25 and 26 should be around 10.5 and 11 pc respectively

Capex spends lined up for their FY25 @ 250 cr. Next year onwards, company is guiding for an annual capex equivalent to annual depreciation ( or thereabouts )

Company expects H2 to be better than H1 - both for 2W and construction equipment segments. As such, company generally does 40-45 of its business in H1 and 55-60 pc of the business in H2

The order from Suzuki 2Ws for smart locks has been delayed from Nov 24 to Jan 25. These r high value products ( vs the traditional mechanicals locks )

Gross Debt @ 620 cr
Net Debt @ 580 cr

Do not intend to breach Gross Debt figure of 700 cr. As such, the capex intensity should taper off wef next FY

According to FADA, rural demand has picked up in Q3 ( against general expectations ). Also ( as of Nov ), the 2Ws inventory has dropped to < 30 days at the dealer levels. This has happened after several Qtrs and is a very healthy sign for the Industry

Company has started supplying Castings, Mechanical locks to Honda 2Ws. Already doing business worth > 100 cr / yr with them. They r also slated to supply smart locks to Honda 2Ws as well ( after Suzuki 2Ws ). They expect Honda to also become one of their major clients going fwd

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation

2 Likes
1316

Crompton Greaves Consumer Electricals

Q2 FY25 results and concall highlights -

Revenues - 1896 vs 1782 cr, up 6 pc
Gross Margins @ 32.7 vs 31.3 pc
EBITDA - 203 vs 175, up 17 pc ( margins @ 10.7 vs 9.8 pc )
PAT - 128 vs 101 cr, up 27 pc ( margins @ 6.8 vs 5.7 pc )

Segment wise performance -

Electrical consumer durables ( ECD ) -

Revenues - 1393 vs 1238 cr, up 13 pc
EBIT - 206 vs 176 cr, up 18 pc ( margins @ 14.8 vs 14.2 pc )

Price increases and premiumisation in ECD portfolio led to margins improvement

Executed 42 cr worth Solar pump orders in Q2. Also continued growth in residential pumps led by new product launches

Witnessed strong growth in Mixer-Grinders portfolio

Built in Kitchen appliances recorded a revenue of 19 cr. Still operating in the EBIT negative territory ( although the losses have reduced considerably )

Lighting -

Revenues - 253 vs 238 cr
EBIT - 27 vs 25 cr ( margins @ 10.7 vs 10.5 pc )

Witnessed strong growth in ceiling panels and battens amid price erosion

Focusing on improving the range of higher Wattage and Premium products

Butterfly -

Revenues - 258 vs 308 cr ( down YoY, however, witnesses strong QoQ growth of 42 pc )
EBIT - 17 vs 20 cr, EBIT margins improved from 5.1 pc in Q1 to 8.9 pc in Q2

Company undertook a lot of business restructuring wef Q3 FY 24 wrt their butterfly brand. Business now getting back on track post the restructuring

Fans business grew by 5 pc, Crompton branded appliances ( like coolers, heaters, mixer-grinders ) and Pumps grew by 20 pc YoY

Have crossed sales for 100 cr in H1 in the solar pumps category. Plus the order book for the Solar pumps business continues to be strong

A&P spends stood @ 58 cr a jump of 70 pc over Q1 !!!

Company has taken price hikes in the Fans portfolio ( being the Mkt leader ). However, competition has till now refrained from taking up price hikes

Decorative ceiling panels is now company’s largest segment in the lighting business

In South India, Crompton and Butterfly’s kitchen appliances have different front ends and sales teams. Outside South India ( where Butterfly is not strong ), sales teams are same for both the brands. Back ends for both brands do share significant synergies

Company continues to be extremely bullish about their Solar Pumps business as the demand trends are extremely strong ( aided by a strong Govt push via Kusum scheme )

Company witnessed good festive demand for kitchen appliances during the festive period

Channel inventory remains @ normal levels

Disc: I keep trading in and out of this stock, biased, not SEBI registered, not a buy/sell recommendation

1 Like
1317

This is interesting. There are some large cap and mid cap stocks which I have also noticed that, have wide fluctuations of 25% to 30% due to market moods. There fundamentals are mostly intact and Intrinsic value is also stable.

ITC has fluctuated between 400 to 500+ 2 times in past one year.
Same might be the case with Coal India. 400 to 550 swing once in last one year.
If one can make a profit of 30% in such large caps then also funds can be compounded safely, off course with STCG tax implications.

In USA markets, these swings do happen on regular basis for large caps. Probably with increasing participation of Retail investors in India, we may also see such 30%-40% swings in Indian large and mid cap stocks in future.

An investor can have small portfolio for such stocks.

Not holding all these stocks. Just mentioning out of observations.

4 Likes
1318

To be honest, I have not thought about it in a structured manner. However, I do keep trading in / out of stocks worth aprox 10-15 pc of my portfolio

The whole aim is to add 2-3 pc extra returns ( on a portfolio level ) by taking advantage of normal market fluctuations

This is also the prime reason that I keep a track of so many companies at a time. At any point of time, 2-3 companies get into overvalued zones and there are 2-3 others who start to underperform / witness a correction for reasons that are temporary in nature. Having a large database ( with updates of latest concalls etc ) of 60-70 companies help u to then reduce the overvalued ones in favour of the beaten down ones

4 Likes