I can answer for past data. Then you can apply your understanding to extrapolate:
| Attribute / type | Rest of Diagnostics | Covid-Kits | ||
|---|---|---|---|---|
| Revenue | PBT | Revenue | PBT | |
| Jan-Mar 2020 | 5 | 3 | 0 | 0 |
| Apr-Jun 2020 | 8.7 | 5.22 | 44.3 | 26.58 |
| Jul-Sep 2020 | 11 | 6.6 | 101 | 60.6 |
| Oct-Dec 2020 | 9 | 5.4 | 34 | 20.4 |
Kilpest - Management doesnāt provide guidance, but based on my last interaction 40 - 50 crore is a reasonable assumption for non-Covid revenue in FY22 (might be impacted by 2nd wave). I would add another 40 - 50 crore of Covid revenue to this. ++ income from pesticides business, fixed deposits, potential acquisition
There is also that valuation report that they put about on the merger with 3B which pegs profits at 150cr by 2025 if Iām not wrong. The report is available on the Kilpest thread
Sahil, Itās always good reading your posts.
I observed you have not updated RPPL in your portfolio. Is RPPL temporary in your PF?
Thanks
.
Only update it once a month
I donāt have such a concept.
Interestingly 30cr is coming in q1 itselfā¦
The non covid estimate is bang on imo. Likely to be on lower side of that though, around 40cr.
Sahil, whats makes you so confident to invest more in Mastek rather than add some more prominent IT stocks like Mindtree & Tata Elxsiā¦
Tata elxsi looks very expensive ā¦ ER&D is a promising sector , but i wont pay 65 times PE for a service company ā¦ its too risky .
Mastek is growing leaps & bounds with the evosys acquisition. Evosys is a cloud service company which is the growing sub segment in IT. Also PE looks moderate around 27 which is neither cheap nor expensive imo.
@sahil_vi sorry for replying for a question asked to you ā¦ you can add your viewpints
Perfect answer. Please everyone feel free to answer on my behalf. everyone learns from a good conversation.
Also, i must add that i started adding mastek when it was roughly 40-50% cheaper, so the margin of safety was even larger at a TTM p/e of 15-20.
Valuations must provide comfort for me to even study a biz. I have not studied elxsi. That tells you something.
On mindtree, what i have generally observed is that beyond a mcap, cos are very well researched and priced to perfection. At 10-12% topline growth and 38 p/e, midntree is not something i would even prioritize studying, forget owning.
Between Tata Elxsi and L&T Tech, L&T tech looks more promising since it comes from a group which has engineering and R&D as its core competence.
Agree LTTS comes from a group with engineering & R&D as core competence while Tata Elxsi comes from a group with capability to create largest tech company in India & also decent engineering capabilities in some unlisted group companies as well. 
On lighter note, I am invested in both though still could not decide which one is more promising till nowā¦LTTS somehow seems to miss the extra fillip despite being from such renowned engineering groupā¦I would have expected it to be most valued EPAM firm in India but seeing Happiest Minds trade at more than double its valuation makes me want more out of LTTS coming from best engineering company of India!
Sahil out of RACL geartech and Rajshree, where you would invest more money?
Given that Racl geartech business has higher entry barrier, better roe and roce than industry peers, it trades at 15 pe whereas its bigger peers like Minda, Motherson who have comparatively lower roe, roce command pe of about 70.
Rajshree has got great clients as well which are difficult to acquire, but this industry has low entry barriers and peers like Moldtek packaging trade at 30 pe. Rajshree has lower roe, roce.
Racl geartech, I think has better possibility of rerating and it will double its topline in next 4 years. But I think Rajshree topline can grow much faster percentage wise.
Where you would allocate more money? Whats your opinion?
I am adding my viewā¦ Investing is all about risk reduction and maximizing profitā¦Both Coās are different sectorsā¦ Racl is in automotive which is quite cyclical.
We donāt know whether Ev adoption will be at faster space or slowerā¦ Donāt believe the consensusā¦ Just ask yourself whether electricity generation is getting cheaperā¦ 80% of solar panels are made in China ( cost low now)ā¦ What about metals need if solar and wind gets big?? Battery technology is sustainable??? I am not against Ev but I canāt find many answers for ev adoption and green energyā¦
On the other hand rppl is growing at nice speedā¦ Next decade there is big opportunity for packaging coāsā¦ Raw materials big issue when crude unleashesā¦ it doesnāt have pricing power like raclā¦ In my view I invest in both coās with same allocationā¦ As a retail investor donāt try to play too smartā¦ Even every company can give rosy picture but future is always unpredictableā¦ So try to be conservativeā¦ Happy investingā¦
Note - This is my personal viewā¦ Not a buy sell recommendationā¦
Now that Q4 is over, here is my take on PF companies Q4 results:
| Instrument | Q4 highlights | Q4 lowlights | Overall conviction weighted sentiment |
|---|---|---|---|
| IDFCFIRSTB | Strong CASA growth, strong retail loan book growth, more conservative underwriting practices, good eventual credit loss guidance | Gross NPAs still high, VI issue might hurt in short term | 8 |
| RACLGEAR | Got to learn a lot about how co works, EV is higher gross margin, 3-4% of topline next yr, relationships with customers, R&D spends, long term contracts, depreciation of capex started, capacity to be utilized next yr | EV would lead to some reduction in volumes, as long as impact is spread out over next many years, disruption should be limited | 9 |
| NEULANDLAB | 2 more late stage molecules on-boarded, will commercialize 6 late stage CMS molecules in next 2 years, consistent topline growth, lesser depenence on china (10% now) | some pressure on margins due to lumpy product mix: lower contribution by CMS segment | 8 |
| VAIBHAVGBL | high topline growth even on the larger base of last year, entry into germany: addressable market goes up, operating leverage playing out, lage FCF generation, continues to gain market share | some opex pressure in 2-3 year medium term as germany business ramps up | 9 |
| SAREGAMA | Unit economics of music streaming emerging, lage runway, beautiful YoY growth, good guidance on Yodlee and no wasteful spending on carvaan | Margins are inflated due to less spending on Carvaan and content aquisition, valuations have run up. But there are enough & more growth and profitablity triggers lined up | 9 |
| MASTEK | Wonderful QoQ growth, scale up is visible in deal win sizes, order book up 40% YoY, UK engine firing all guns blazing | Who will new CEO be? How will cash be utilized? margins will come down a bit as travel increases | 8 |
| LAURUSLABS | Great capex guidance, growth guidance, margin guidance, great strategic vision for bio and synthesis | valuations have increased | 8 |
| SEQUENT | Great strategic vision, US entry in formulations; pet biz in India, brazil, turkey; focus on specialty branded generics to be key growth triggers | To get all this growth, some up front investments, and margin improvement guidance going away; run up in valuations | 7 |
| DYNPRO | Great growth given that cap utilization has not started yet, | some pressure on margins, capacity beginning delayed due to covid | 7 |
| ANGELBRKG | Great MoM growth (even continuing into June), great profitability, new app created, on track to become a fintech | concentration in profit pools (coming from F&O trading) is becoming worse. Looking for distribution revenue to go up in medium term | 8 |
| Garware High Tech Films | Great growth (& Guidance) , great capex guidance | Management did not really know how to counter XPEL, no guidance on land bank, some temporary pressure on margins | 7 |
| PIX | Great to see gross margins being maintained despite such pressure from RM side. OPM also maintained. Great growth momentum | None | 8 |
| KILPEST | Long term transformation in tact. Progress being made on amalgamation, covid keeps throwing up more cash, great maintanance of margins | Valuations gone up suddenly, some drop in non covid kit dx sales but cant be too harsh on a biz of this scale | 8 |
| SASTASUNDAR | Great YoY growth, able to maintain near break even margins | No QoQ Growth, big ? is over fund raise which will enable them to scale up to next orbit | 7 |
| RAJSHREE | Got to learn a lot regarding why GM have come down, capacity utilization has started, great growth guidance, great this half growth | Cant buy more. | 8 |
Disc: Invested in all of these, biased, this is not buy or sell reco, please consult financial advisor before investing.
What canāt you buy more of RPPL?
Hi Sahil,
Can you please elaborate how you calculated the conviction weight score and with one example would be much appreciated? I wanted to build something similar probably this helps me to frame my own model
It is locked in UC with huge volumes, i dont think ill be able to buy at margin of safety. but i hope im wrong.
This is just a number i made up. No way to say how i came upon it. This is one of the art side of investing. This is my way to score how happy i was with the results and how i see the co evolving
Lower the score, lower the conviction to add more, right ?
Lower the score, the less happy i am with performance. Lower the score lower is conviction in the future growth of the co.
