I plan to post my notes and con-call updates on SME and micro cap stocks in this thread which do not have a thread of their own.
I treat this as my personal corner to store the notes on Sme stocks I am Researching on.
I would be cleaning up 1-2 liner posts periodically to ensure we dont have too much clutter for too long.
This is not a buy/sell reco and sme and micro cap stocks despite everything going well on the business side stocks could react in divergent manner, stocks go down 20-50% easily as volumes are limited and liquidity is very low. Please exercise caution while investing in such businesses.
As of now I will be able to post info which is publicly available and non-UPSI.
33 Likes
Envirotech Systems Ltd H2 Fy25 con-call :
Its a Leading acoustic products manufacturing organization. Below are some products listed
• ANECHOIC CHAMBERS
• ACOUSTIC ENCLOSURES
• ENCLOSURES
• NOISE BARRIERS
Growth Drivers
- Introducing Soundproof Windows & Doors
- Collaboration with IIT-Delhi to develop new products
- Introducing B2C Vertical
- Targeting Defense Industry
Operating at 100% capacity and hence 30% net margin. (margins will go down a bit with new facility coming in Located in Kasna, Greater Noida )
Currently 21,150 sq ft of facility, will be 1,21,520 sq-ft by Dec 2025, a 5x increase.
This year we target to do 100 cr revenue (currently 50 Cr) and can expect 23-25% margins.
Receivables come down around May as payments happen majorly that time. But Receivable trend to continue in the same fashion going ahead.
Focused on domestic orders.
Most customers are repeat customers. Enviro is the leading player in this space. It takes 2 months to close on a customer to place an order.
25 crore order book at the end of March 2025 executable by 4 months. The total addressable market is large and not able to be quantified.
The additional pipeline is around 80 crore, and conversion is expected to be 30 crore in the order book by June. Rest might take a longer time-frame. For tenders-based orders, the success rate on bidding-to-order conversions is 30%.
4 cr other income seen in FY 25 will not be seen in the next year.
H1 is usually around 30%, and H2 is around 70% is the norm.
Defense is around 30%, and the company is focused on defense.
Collaboration with IIT D for some new material will take 2 years for commercialization.
Most of the competitors are small and unorganized; they are mostly contractors getting ready-made stuff. They are not able to customize or certify in government labs. It takes years to build the kind of technical know-how that Enviro has.
Siemens revenue will come only from the new facility, but this is not counted in the current revenue guidance.
Starting with B2C products, as there is a huge market. This B2C will impact margins as a new vertical for the company.
New facility:
Partially operational by June 2025, fully operational by Dec 2025.
9 crores for machines, 21 for land. Construction included total is around 37 cr.
Data center:
Power gen-sets make a lot of noise in Dc, so the company gets some orders there.
Currently, orders are executed for LnT DC , Adani (Google DC), and some overseas orders for LnT are expected.
Dscl : Invested
32 Likes
Posting my few observations on Envirotech systems.
Some good points: The CEO is a technical person and he is very passionate on the subject and appears to be confident of company’s prospect.
It is now operating at optimum capacity and has invested for future expansion.
New facility which is 5x is being ramped up and expected to be fully functional by Dec, 2025.
Very high margin business.
It has got reputed client base including international ones.
It is a sunrise industry and there is phenomenal prospect.
Company appears to be the only and early from organised industry.
Not so good points: There is no yoy growth in 24-25. Company should clarify.
Company’s website is not updated with latest investor related information. This is most important for shareholders.
Other income, if adjusted with profit, net profit is down you.
IPO proceeds are shown to be utilised fully. This cannot be. There has to be some difference. Absolute ditto is not acceptable and reflects negativity on the management.
No clarity on order book.
2 Likes
One thing is company is not doing any active noise attenuation( Electronically or through signal processing nothing is done ). They are relying more on shapes and materials used to absorb the noise.
They have hinted that they operated at 100% capacity utilisation and hence revenues could not go beyond what was achieved.
3 Likes
SOURCE : CHATGPT
Industrial:
-
Active noise canceling ducts or enclosures
- Used in certain HVAC systems, turbines, or high-frequency machinery.
-
Providers include Kinetics Noise Control, Noise Barriers LLC, and Faist Anlagenbau (Germany).
There was some question for this around 49 min. mark . Is it a misprint in DHRP? As it’s such a large amount.
5 Likes
This would likely be in lakhs. I remember the question. They denied existence of any such number. 11.7 crore is much more reasonable by all accounts.
That apart, I am curious to know who their competitors are. On searching a bit, I found this on the site of Cochin Port as vendors unders " LIST OF APPROVED MAKES FOR CIVIL/ ARCHITECTURAL WORKS"
We need to find more and also study about these companies. We also need to search tenders database for their govt contract claims(if any) to validate the claims.
1 Like
CS replied that it was typo error in dhrp and is corrected in RHP https://www.envirotechltd.com/assets/images/investor/ENV_Prog_RHP_merged_QR%20(2)-Amamnded%20%20_compressed.pdf.
3 Likes
Stallion India Fluorochemicals Ltd : (My notes from recent con-call and other publicly available sources)
Shazad Sheriar RustomJi started this business as a first-generation entrepreneur when he was 22 years old. He has been running and growing it successfully for the past 32 years.
The company is involved in the debulking, blending, and processing of approximately 40 different refrigerant and non-refrigerant gases, holding around a 10% market share in India. The company primarily focuses on after-market sales rather than OEM sales, with 80% of its revenue derived from the higher-margin replacement/after-market channel. This strategy provides resilience during down-cycles. However, HFO and specialty gases will exclusively target the OEM market, as this represents a new and emerging business for the company.
There are few tailwinds in favour of this company
- As it’s into cooling and refrigerant gases used in ACs and cold chains, regulatory transitions from HFC to HFO by 2030. India has its HCFC phase-out scheduled through 2030 for R-22, and will start phasing down HFCs in coming years (freeze by 2028); regulatory change creates a replacement demand cycle that Stallion can ride.
- Semiconductor and electronics manufacturing in India are picking up now and have a good runway for ultra-high purity gases (such as neon, argon, silane, etc. for chip production).
Company has four facilities, and two more are coming up. A new specialty and semiconductor/solar cell gas facility will come up at Mambattu, with a 7,200 MTPA capacity. The capacity for liquid helium processing will be 1,200 metric tonnes per annum.
Company is moving from low-margin hydro-fluoro-carbon to higher-margin hydro-fluoro-olefin. Profit margins are expected to improve by 3-4% in the near term due to new product segments and backward integration. The margin improvement can be seen from FY27 onwards as the new facility is coming up in Q4 of FY26. (Under the Kigali Amendment to the Montreal Protocol, India and other developing countries must start cutting HFC consumption in 2032 and reach an 85% phase-down by 2047).
Guidance :
Expect to grow 35% CAGR top-line for the next three years, with 3-4% margin improvements.
There are some entry barriers to supplying semicon gases due to a multi-year approval process; new entrants will take that much time to get into this business. There is a cyclical upturn right now for the business. HFOs don’t have a down cycle compared to HFCs. Stallion is the largest distributor for Honeywell and Honeywell moving from HFC to HFO. Demand for the product is skewed in some months, so QoQ top-line fluctuations can be seen.
In Flourochems, China has 85% share, RM prices can fluctuate hugely from 100-300%. Company keeps higher inventory to ensure it can navigate the price hikes. Need to watch out for receivables, working capital management, import issues from China and RM fluctuations.
Comparison with peers ( not strictly peers as these are large players with significant economies of scale)
Valuation :
FY25 PAT is 39 Cr. The stock is trading at a trailing PE of 15, which seems to be at a significantly lower valuation than peers in the same industry, though not necessarily the same business. Now that debt is fully reduced, one can expect interest savings flowing to the bottom line. Over a three-year period, if they are able to reach 1000 Cr topline with interest savings and margin expansion, the bottom line could hover between 100-120 Cr, and with some PE rerating, the stock looks to be poised for a significant upside.
DSCL : Invested recently.
21 Likes
OBSC PERFECTION LIMITED : (My notes from their First ever con-call and other publicly available sources)
OBSC is a precision metal component manufacturer established in 2017 with key customer like Zf , tenneco, , JTKT , tesla, Tata AutoComp etc. The Company is backed by 50 year old Parent Anglian Omega Group.
Its Current order-book is around 720 crores. They are trying to foray into aerospace now.
Of the 720 cr. OB, 220 cr. is EV and 200 cr. is from defence + Marine which is expected to grow by 50% cagr.
They have added a new forging facility with total 150,000 sq feet of factory space right now. New forging vertical to get higher margins and help in backward integration. In the last 3 months, 7 aerospace companies have shown interest and 2 of them are International companies.
They have a multi year order of 130 crore ( total) for 10 years duration. Segmental revenue to get better from current split of 85% auto and 15% non auto 65% auto and 35% non auto.Top 2 products Shock absorber and Sensor Boss with around 40% of Auto revenues currently.
Current capacity utilisation from old plants is around 84%, They have sufficient capacity for future growth 1) from new plant and 2)by adding extra machines in older plants as they have sufficient space in the older plants. Company is planning to consolidate multiple plants into one single largest plant in near term.
Fy 26 Guidance of 200 cr or more and Ebidta to improve by 2% from 18 to 20%.
Company recently got a ~20 cr order/ year for 5 years from Tenneco for EV parts end user OEM would be Tesla, Volvo , Stellantis. This is on top of the 720 crore order book stated earlier. Overall we can infer they would be able to do 220 crore for fy 26.
Plus new order( expected as they have confirmed LoI already) for Sanand facility to produce shock absorber rod looks like will be part of H2 or fy27 and could push top-line higher than 220 cr. ~50% growth.
The Pune plant, built for Tata AutoComp’s EV parts, has a business ₹50 Cr/year from a ₹250 Cr order. If Sanand plant is of similar capacity we can infer 30-50 cr range from this plant per year adding to the top-line by h2 or fy 27.
Dscl: Have tracking position, planning to add more in future.
17 Likes
Hi Satis , I see a lot of sme companies boast about recieving orders how do we check if they are from genuine companies
2 Likes
Since the company is not focused on building proprietary products and primarily offers services, my key expectation is that it should possess some form of intellectual property—such as patents—that can provide both long-term sustainability and industry visibility. Without a strong differentiator or moat, especially in this sector, retaining top talent and sustaining competitive advantage becomes significantly more challenging..Could you please confirm if the company has any registered patents or ongoing efforts in that direction?
Hi Rishab,
Tough to answer in general, if you have any specific company we can discuss about that.
Companies cant file fake orders in BSE/NSE as its illegal to mislead investors with fake orders.
That said I usually skip EPC companies where there could be lot of MOU and LOI signed.
Also check management past track record, better to wait and watch and build conviction/position slowly over time in SMEs.
3 Likes
We are partnering with various experts of the acoustics. We are searching for new materials. We are developing the technology, as on date the innovation we are doing, we are working on the ANC, AMC means Active Noise Control, which is coming in your earphone and all. We would like to make the environment quieter from software and technology. So a lot of development we as Envirotech are doing in this. And soonest, I expect that we as Envirotech will be able to give a quieter environment to society. This is our field. So business is one thing, but a quieter environment is our necessity and we as Envirotech is dedicated to delivering to society. So anyhow, thank you. Thanks a lot.
last paragraph of the latest concall, they will definitely introduce it in future
MD interview
MD PODCAST
more interview
part 1 Interview with MK Gupta, Envirotech Systems Limited | SmallCap Spotlight posted on the topic | LinkedIn
part 2 Interview with MK Gupta, Managing Director, Envirotech Systems Limited | SmallCap Spotlight posted on the topic | LinkedIn
iit collab #sustainableacoustics #ecofriendlysolutions #noisecontrolinnovation… | Envirotech Systems Limited
2 Likes
@satishwe your thought on this.
Obsc recent order Execution starts in fy27 , so no impact in current year growth . But good to see stability in growth for fy27 . I do expect they will hit more orders in coming months .
4 Likes
with the latest 29 cr orderbook the order book swallowed to 1000 cr from 723Cr in Mar.
Total Order Book - â‚ą723Cr +286 Cr in May(1000cr)-Non-defense to be executed over 5 years; defense over 10 years.
Now Domestic Orders ₹553 – 58%
Export Orders ₹161+286 (447Cr) – 42%
if we consider this then 193 Cr revenue is already visible in FY 2026 as guided by company
great going, if they execute well then great future is shaping ahead
With an SME promising Quarterly updates says lot about the confidence about the management
9 Likes