Sika Interplant Systems Ltd

Stock Opportunities Untested - but worth a good look
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Part 2 : PART 2 : Maintenance Repair Organisation (MRO) / Aircraft Maintenance Organisation (AMO) facts, operational and financial aspects.

Aircrafts require “Major Maintenance” , that’s where Third Party AMO comes in since hangars and other Support equipment are required which the airline may deem as CAPEX which it is not ready at present or not necessary, since it wants to outsource all Major Maintenance activities (ex GoAir) or since its own Hangars are occupied by other aircraft, it will outsource the spillovers (ex SpiceJet)

Airlines who have their hangar & Related Facilities

-SpiceJet (2 Hangars)

-Indigo (1 Under Construction)

-Air India (many locations across India)

-Jet Airways (2 locations- i have mentioned it since the hangars may be sold soon via NCLT)

AMO in India

  • Airworks (1 Running, 1 yet to be operationalised) [DGCA,EASA, FAA and other approvals]
  • GMR (1 Running) [DGCA, EASA, FAA and other approvals] , yes they have got the EASA back
  • Air India (1 for third party) [DGCA, FAA]
  • SpiceTechnik (Not yet operational for Third Parties, for Internal use as of now)
  • ARR (Not yet operational)

Setting up of an AMO is a very straight forward affair, one has to only follow DGCA requirements its not too complicated, CLICK HERE ( https://dgca.gov.in/digigov-portal/?dynamicPage=dynamicPdf/130576724&maincivilAviationRequirements/6/0/viewDynamicRulesReq ) if you’re interested in knowing in detail.

Manpower is no issues, we have ample competent and experienced people in India. What is required is DEEP POCKETS for land and setup including tools and equipment. The tooling and equipment itself can run into CRORES ! GMR has an advantage here since the airport belongs to them and Airworks uses a remote airstrip which is not used by commercial aviation.

DOES SIKA have any advantage ? NO !

Unlike some years back, Airlines have an option of multiple facilities to choose from, this then results in cut-throat bidding, where margins are wafer thin and timelines are very tight. Also expect high Debtor days in the current senario.

Also unlike other boarders views, the number of aircraft in India is set to REDUCE in the short - Medium term due to the COVID effect.

Disc- As per initial post.

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PART 3 : Feasibility of AMO

There are 3 things in my opinion,

  • Lack of Margins
  • Reduction of aircraft in the short - medium term
  • Lack of support infrastructure

The First 2 are already mentioned in PART 2, so i’ll just leave it there

Now to point 3 -

Major maintenance typically involves removing of various parts like Engines and its major components, Landing Gear and Aux Power Unit (description here),etc . This requires Overhaul Shops to be within the radius of the AMO so that all activities are completed as per the requirement.

This is the crux of a successful AMO and this is how organisations like Luftansa Technik (world leaders), ST Aerospace (Singapore, Asias finest operate). This is a severe handicap in India, where these components have to be shipped abroad and the option is to put in an exchange part or wait for the original one to arrive back. I don’t care what Mr. Amber says, unless this is prioritised by the government, airlines may find it cheaper and more efficient to do their maintenance in China , Malaysia, Thailand etc. this is the sad truth.

Since Aerotek has been mentioned, what do they have on the plate for India? its pretty unclear.

I WOULD REALLY STEER CLEAR OF THIS SCRIP TILL ALL THIS IS CLEAR

Disc : same as initial post
References:

  1. https://dgca.gov.in/digigov-portal/?dynamicPage=dynamicPdf/130576724&maincivilAviationRequirements/6/0/viewDynamicRulesReq

  2. https://certifications.thomasnet.com/certifications/glossary/other-certification_registration/faa/faa-certified-repair-station/

  3. https://www.easa.europa.eu/easa-and-you/aircraft-products/continuing-airworthiness-organisations/foreign-part-145-organisations

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Not so great results but on the bright side it’s balance sheet has gotten a lot stronger

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Hello everyone. Has anyone attended todays AGM of Sika interplant. If anyone had attended please share your inputs on AGM. @1.5cr or @j2eeprofession_ have anyone of you attended the AGM?

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Sika interplant has broken out of what appears to be a cup and handle formation …

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Good results https://www.bseindia.com/xml-data/corpfiling/AttachLive/060c0e2f-fb15-4245-b1fd-53d05f542cb4.pdf …charts looking good

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Has Sika Interplant systems finally turned the corner? Consolidated Annual PBT for FY21 Rs.15.73 cr vs Rs.9.14 cr. Borrowings almost fully paid back. Cash and Bank balance Rs.29.5 cr vs Rs.3.35 (up almost 10X), obviously reflecting new orders wins. Good times ahead? https://twitter.com/kushkatakia/status/1409559589763248135/photo/1

Can expect big re rating here
Keep an eye
Dis:- invested

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#SIKA Sika Interplant Systems Ltd - Bumper results over the quarter :star_struck:

Q1FY22 EPS of 9.62
VS
Q4FY21 EPS of 8.26

Q1FY22 PBT of 546.49 lacs
VS
Q4FY21 PBT of 480.53 lacs

This stock will give a huge upside (Current price ) :money_with_wings:

Company has now become debt free

Reserves have been increased by a large percentage , i.e, from 48 cr to 60 cr in a year :boom:

Company has delivered good profit growth of 46.74% CAGR over last 5 years

Co. Has also posted a lifetime high EBITDA and PAT ( Bigg positive👏)

Stock is trading at a reasonably low P.E of 12.3 , It is very much undervalued being in the aerospace and defence sector

Has very good future prospects

invested in company from last six months

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Q3 FY22 results are out.

There is a drop in sales both in YoY (marginal), and QoQ (massive, almost 50%). Similar trend is seen in EPS too. Though overall, the company is still doing better when compared YoY terms for the cumulative 9M figures, I am curious to know what caused the stiff drop in sales in Q3. Or one of looking at it could be, was there a sales spike in Q2 and Q3 which was not sustainable in the long run? The markets have of course not taken to this kindly, as the stock has hit 2 back to back lower circuits since results. In the absence of earnings call, its not clear, but will look for answers nonetheless. Sika has been a relatively trouble free multi-bagger for me since last year, so really curious to understand the reasons for appearance of this speed bump !

Disc: invested from lower levels

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Yes same here, trying to understand the situation here. I bought it at 150 odd. I’m trying to determine if this drop is a new buying opportunity or let the situation play out for a bit.

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Any reasons for the sharp correction? Stock did went up a lot… But am I missing something? Very difficult to get credible information as the management doesn’t have concall.

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I think this should not be looked at from q0q basis due to the nature of business.if there is a slight delay in getting approval then quarter may change.
We are seeing one week quarter.

Surely feel its a buying opportunity at lower level given the mcap and the nature of business.

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Q3 FY23 results

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Seems like there is a minor mistake in the latest quarterly result sheet …

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MRO space has got tailwinds again after the order given by incumbent airlines like akasa and Indigo. Huge number btw. MRO space should do well just on the basis of number of airlines increasing exponentially.

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Results - 9th August

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30% odd top line growth

75% jump in PAT

^ All QoQ

SIKA Results came out

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Can anyone explain their sales or revenue coming from ? What is visibility for future

This stock is on my watchlist but last time I checked company had no proper stream of orders

It will be helpful if anyone can explain

And any other small cap defence stocks available like these to study