Total Returns: 45.64%
Capital deployed growth: 30%
Another interesting thing to note is that I have increased capital deployed by 30% between December end and Jan end. The price action is quite strong given that 25% of current capital deployed is < 1 month old.
Overall results season is going great. All companies have posted positive results so far except Astec, in astec the management commentary for next K years is unchanged. Analyzing on a QoQ basis might be restrictive for astec. Will post a detailed scorecard for the quarterly business performance once most results are out.
Hi Sahil!
I understand you were studying Sakar Healthcare last yearâŚ
Wanted to know your views regarding the company.
A relative of mine owns around 2.6% in the co. Unfortunately, he isnât someone who speaks up about his investments.
Itâd be great if you could share your notes of the same.
I understand you have been tracking Dynemic Products which came up with good Q3 numbers. New capex should also start generating numbers from next fiscal.
Do you understand why Vidhi says Dynemic doesnât compete with them? Seems both are in synthetic food colours market. This confusion is the main reason why I havenât been able to build conviction to invest into Dynemic.
Vidhi once said that the quality and type of natural colors they produce is non overlapping with Dynemic. I am saying this from memory after attending one of the AGMâs
Vidhis customers are Mars chocolate(USA) , Nestle(Europe) etc (source:Tijori) whose quality standards would certainly be stringent so maybe there is a grain of truth to that.
Here is how my PF performed in Q3FY21 business wise
Instrument
Percent of PF
Cumulative % of PF
Net chg.
Q3 results
Q3 results commentary
IDFCFIRSTB
0.113
0.113
88.39
Good
Great CASA growth. Good provisioning. Great retail loan book growth. Risks wrt Asset quality to be monitored
NEULANDLAB
0.099
0.212
68.84
Good
Great CMS segment performance. Good growth in all segments. Management guidance on margins and growth in tact
RACLGEAR
0.093
0.305
149.01
Good
Great topline growth and good bottomline growth. All time high sales. More clients. Capex underway.
VAIBHAVGBL
0.068
0.373
34.96
Good
Perfect delivery with great topline growth led by web and wonderful operating margin based bottomline growth
EMBASSY
0.06
0.433
0.58
Good
Good distribution. ~6% dividend yield tax free. Some medium term pain, but dividend income can easily grow 50% in near future as more and more under construction properties come online
NCC
0.058
0.491
160.39
Good
Great recovery in the revenues and amazing order book
LAURUSLABS
0.057
0.548
23.49
Good
Good performance from all sections, specially CMO. The management commentary is quite bullish as well
AXTEL
0.053
0.601
30.98
Good
50% topline and bottomline growth.
ASTEC
0.052
0.653
-1.58
Poor
Poor Quarterly performance due to some QoQ variance. Long term management vision for business mix change and growth in tact
POLYMED
0.05
0.703
45.32
Good
13% topline and 35% bottomline growth. Bullish management commentary and great 600cr capex going to happen soon
SEQUENT
0.049
0.752
54.21
Good
13% topline and 80% bottomline growth with great operating leverage playing out. Wonderful direction due to all the plans like the US entry, china entry, carlyle helping with US aquisitions. Turkey growth.
CHEMCRUX
0.047
0.799
22.37
Poor
Plant closure due to GPCB notice tests patience. EC approval is also delayed. Not planning to deploy any additional capital here until some clarify emerges
APOLLOTRI
0.042
0.841
10.76
Good
Wonderful tailwinds for their new age products (Chaukhat, railings, roofs). Position size small due to high valuations. Increasing it slowly.
DYNPRO
0.038
0.879
46.35
Good
Great results. Waiting for capex commercialization in April 2021. Will watch for growth guidance.
ITC
0.03
0.909
14.23
Good
Good direction due to the FMCG margins improving. Least conviction position. Holding it largely for the dividend as a âsafeâ bet due to the cash cow that cigarettes business is
ARMANFIN
0.029
0.938
2.41
Good
Great improvement in the collections and industry leading 7.5% provisions. Some pain in short term but long term compounding intact
POKARNA
0.024
0.962
11.73
Good
Waiting for the capex to be commercialized. Good industry tailwinds with advanced technology production lines. Current quarter results were okaish
SANDUMA
0.018
0.98
31.24
Neutral
0% bottomline growth. Was one of my undervaluation plays. Might look to sell it soon unless the capex triggers materialize
TYCHE
0.01
0.99
1.69
Good
Wonderful growth and high margin products. Still exploring this company. Looks quite interesting for the size they have. Will post about it on VP thread soon.
Hi Sahil,
Had been following your thread. Congrats on your gains.
If I may, whatâs your exit strategy with NCC? Since it is a PEC (politically exposed company) i am not sure if I can hold it for a long time. The company went through hard time when political atmosphere was changed in Andhra. Now itâs rumoured that all has been resolved. Evidently the company is getting lots of new orders. Also the budget was friendlier to the sector.
Disclosure: I am holding this stock from low levels. No addition in recent times.
Hey @sahil_vi . Been a while. Had a question regards apollo tricoat and dint want to post in the thread.
Considering
Ebitda/ton isnât sustainable at 7000+/ton and should settle near 4000 over the next few quarters AND considering volume growth looks capped at 20 percent for the next 2 years(unless management surprises with capex) whatâs your strategy with apollo tricoat?
Iâm dying to invest but can see a lot of pain for some time here with results not being upto the high expectations set by Q2 and Q3 in the next year. Itâs a wonderful company with great promoters and with disruptive products with huge runways ahead but considering the above I cant see the last 2 quarters being a new base which puts them at sky high valuations currently.
Thinking of SIPing over the next few quarters and then letting my investment run but even though the price has fallen quite a bit considering ebitda/ton can fall by nearly 40 percent and volume growth can only cover 20 percent maybe waiting until valautions cool off is the best bet? Or have I misunderstood the whole scenario?
Edit: Thanks for the amazing reply @sahil_vi . Did not want to clutter your thread so posting it here. My thesis was wrong and Iâm glad it was. Unfortunately I missed a buying opportunity at 845 recently due to my misunderstanding. Anyway will continue studying and will attend the latest concall since I clearly misunderstood the takeaways in the apl thread. Cheers. And thanks again
Peak revenue would be around >12kcr in 2-3 years time. Peak EV is around 1.2x revenues. This would leave us with a peak valuation of around >12k cr. mcap right now is around 6k cr. So it can double from here. I am not in any hurry to sell. The infra cycle has started to turn. The system is getting a huge liquidity boost. Itâs going to be quite some time before I sell, personally speaking. Infra sector is only getting started. I personally do not sell on overvaluation. It all depends on business prospects and to what extent infra sector can continue to grow for next X years.
Would suggest consuming latest concall. Not only is 7000/ton sustainable, but management is aiming to take it to 10,000/ton over next 2/3 years with moree value added forward integration eg: chaukhat to complete door solutions.
IMO brownfield 50,000 ton/annum Capacity expansion can easily happen. They already did that once between Q2 and Q3 unannounced. Wouldnât be surprised if it happens again in next 2/3 years.
There is still room for EBITDA/ton expansion and the overall market size opportunity is huge. A large part of their sales comes from replacement of existing chaukhats and hence demand is counter-cyclical to a large extent which helps. Real estate revival helps as well.
Valuations have to be evaluated in the context of opportunity size. They are a virtual monopoly in a sector with 1% market share. It does not get any better than this. They can replicate Q3 results in next year IMO. Annualized earnings basis, they are at a P/E of 18. That is hardly sky high given the market creating innovative products, brand building, cash flow generation and working capital changes that they have pioneered.
I think so.
Disc: Invested. Please do your own due diligence. IMO this is one of the most secular growth stories. Growth might be limited in next year, but profitability should improve and a business with 60% ROCE available at 34x TTM P/E (including a few quarters with covid impact) and 18x NTM P/E is a good deal, IMO.
Valuations. I do not want to be the guy who buys Cisco at the peak of 2000 bubble and make 0% profits in next 10 years.
Also biologics compliance is a different beast all together. See the interview harsh and I did: Pharma compliance issues - #14 by harsh.beria93
Much higher probability of downside surprise.
Market rewards rate of change. Neuland was available at 2x sales for a very long period of time (when i accumulated).
Donât you think the mangalore api plant would be a ticking time bomb for syngene given that the plant is going thru with the validations and customers stickiness would be moderate enough?
The management has explicitly said not to expect any hockey stick growth. Anyone that is still expecting this is essentially doing some hope based investing.
It is available at 10x sales. The primary question is, when everyone knows that the mangalore API plant is going to come online, isnât it something which would already be priced in? Between a 10x sales and a 10x earnings business, which one would one pick (given both are good businesses). The choice was a no-brainer. Besides, Neuland has a lot of unseen value, as one can find in my posts on Neuland thread, Sajal sirâs tweets, my tweets, or Punit sirâs tweets.
My hurdle rate is ~25% CAGR over long durations. I simply do not think Syngene can deliver that from CMP (or it could anytime since augustâ20).
Iâve been searching for the Apollo Tricoat concall. Is there a dedicated concall for the company, or is it spoken about as a part of APL Apolloâs conferences? Have only seen the investor presentation that they publish along with their earnings.
Discovered your post on pharma compliance today; such an amazing read.
I just love reading your posts. They are simply amazing.
Going off topic here, I just wanted to know are there any good threads here or other good reads which can help me with understanding valuations and how to actually start. It will be of great help.
this was a sort of long reply. I have made a quick and dirty video out of it. Uploaded it to YouTube so that people have option to watch at 1.5x I hope that is ok with you:
I hope that is ok with you:
