Hii
I request all the small and midcap hunters to read the relevant thread of this two companies.
1.Shivalic bimetal
2.Arman financials.
I have been studying all the aspects of this two companies since 2 years and day by day my confidence on both of this has increased.
Disc. Invested in both.
Wanted to know your thoughts on Kanchi Kapooram and why would it be considered a better play than Mangalam Organics which is also into camphor?
Further, where do you think we are in the Camphor cycle?
From the portfolio thesis looks, like you have a clear idea about what you are doing. But on a caution note sometimes market donāt react to bottom and top line growth for a long time expecially during bear or range bound phase. One example from my own experience is Acrysil, it moved nowhere during my 2 year holding although company perfomance was good and then after my exit it started surging now, luckily it didnāt incur losses to me. As you are investing on triggers within small and microcap space, I suggest to condider your risk and adjust your allocation when you are not comfortable with the risk. Wish you good luck.
The reason for going after expansion is so that when profits are higher, the pE is lower and sp rises to adjust pe to industry standard
As an excercise pe for vipul organics is 18, bhageria is 13 and shre pushkar is 15
Letās say average pe for dyes is 14, vipul has 6x expansion recently, the other 2 donāt for next 1 year
Letās say vipul is able to bring all 6x to production and keep same profit margins.
The new profit hence will be roughly 5cr per quarter. Or 20cr per year. Market cap is 94 so the pe now is 4.7
To get to average it as to rise in price by at least 3 times
This is what expansion does, you have to be in it until itās fully played out.
Some pe on face like vipul will look expensive because markets forward looking tendency.
So instead of being able to buy at a PE of 14, on upfront you might be paying 20 on face but you need use last QTR to keep calculating
Hence some times pe is much higher in anticipation
Most people will be happy with 2 times instead of 3 times
Was looking at this with interest and did some research. Apparently they were saying the same in 2018, I find it a bit strange the said in 2018 that they will utilise the second unit and now a repeating the same in 2020 annual report
Please see this link on their web:
Here are a few good ideas from IIC 2020 which one might consider for further analysis
Honestly, I feel mangalam organics is certainly good for long term. Kanchi Karpooram is more of a short term play for me. Not more than a year. I would like to enter mangalam organics once it falls a bit over the next 1 year. Also , I feel Mangalam having a B2C model will suffer in the short term but will be a better buy over a longer term horizon. I do not follow Camphor prices closely, but I feel camphorās demand will keep on growing from here considering it has a religious + pharma angle.
Both on my watchlist. Became aware of Shivalik Bimetals off late, so studying it.
Arman and Spandana are two interesting finance plays.
I completely agree with your viewpoint. It would be almost similar to picking startups, maybe 1 in 100 would become successful. My main intention is to get a 50%+ return in a year at the moment as the investor I am working with has that philosophy(and he has been very successful through it, so would like to see how it plays out). I personally prefer to hold over a 2-3 year horizon minimum. So we are trying to find triggers, which can be like scrappage policy, textile policy, ethanol price hike, electric vehicles policy, massive capacity expansion. Biggest trigger is a jump in topline and bottomline, so trying to find expansion oriented companies on a shorter term perspective. We have a separate portfolio for long term picks, some out of these stocks can become a part of that. But would be a much more refined list than the one I have provided as various other metrics will come in play.
I have gone through VP posts on Chemcrux, RACL & Axtel. Will check them out in detail.
I usually check Gross block vs gross block preceding year. Also CWIP vs Gross Block and CWIP + Gross block vs CWIP + Gross block preceding year. Will share my copy soon.
"Despite this gloomy outlook, Your Company plans to diversify further with the addition of new specialty pigments, mono pigments, thereby meeting the requirement of digital printing market with the finest particle size of pigment dispersions. Company is in the process of regulatory approvals and approval of infrastructure for the expansion at its Dahej factory.
As informed in our last AGM, our Tarapur Plant was completed during the AY 2019-20. Production of Pigment Dispersion was stated at early stage. The ZLD effluent treatment plant was installed and completed. The commissioning of ZLD plant was done in October/ November 2019. Commercial Production of Pigment powder was started thereafter. With the Dahej plant in pipeline, your company will have a very strong position as one of top five pigment manufacturers in India."
Based on this I did a LinkedIn check on the staff, which seemed decent. They are currently hiring for the Tarapur plant. I went back into last 3 ARs and they have not mentioned exact details of capacity expansion, in terms of volume of each product. Also since last 3 AR they have been mentioning about Dahej plant and starting work on it, but have not see any movement on it. I certainly think Vipul organics is interesting, would like to know the exact amount of expansion that has taken place product wise. Stock price is certainly at an interesting level for a short term call.
Vipul organics- Their capacity for dye intermediaries was completely utilised, if you read 2019 annual report
Sources close to management that I have spoken to, have said most of their production is used by Asian Paints and DIC Japan
Their old capacity was 20 tons and the new capacity is 125 tons
They have a zero discharge plant so no environmental issues. If you look recent filing of fine organics, one of the plants in Tarapur was closed due to environmental issues
From another source I was told lot of Tarapur plants are being given a notice due to environmental issues, I donāt know if any of these are dye companies
This quarter for vipul organics might be very good.
Disc: I have around 6% of my portfolio invested in vipul organics
You might also like Everest organics and Hindustan adhesives
I donāt have any other small caps other than these 3 and they form roughly 15% of my portfolio
I think this link ( consistent growth microcaps (https://www.screener.in/screens/290863/1-Nov-SmallCap-healthy-growth/ 59) is broken. Would you mind posting the link again ? @sahil_vi
Hello,
I think I understand the problem. The problem is that I use a few custom defined fields and that is why everyone else is unable to see it.
My filter conditions are:
"Market Capitalization < 1000
AND
Market Capitalization > 10 AND
Average return on capital employed 5Years > 12
AND
Sales growth 5Years > 7
AND
Profit growth 5Years > 15 AND
OPM 5Year > 7
AND
ocfbyearnings > 0.7
AND
Piotroski score >= 4
AND
Profit growth 3Years / 3 > 0.8*Profit growth 5Years / 5
AND
Price to Earning > 1
AND
Empirical ROIC > 10"
with
Capital Turnover = Sales / Invested Capital
Empirical ROIC = OPM * Capital Turnover
ocfbyearnings = (0.2*Operating cash flow 5years)/Average Earnings 5Year
Attaching the output as of today. Please feel free to create a filter of your own. 
1-Nov-SmallCap-healthy-growth.xlsx (23.9 KB)
Thanks for the information,
I have few questions,
Tracking, not invested as these questions are unanswered.
Hi Kalpesh
Almost every company that I track on dyes have gone for capacity expansion
Vipuls capacity even after 6x is no where near Shree Pushkar or Bhageria
Shree Puskhar announced in their concall capacity is fully utilised and they are going for expansion
Other dye companies planning expansion are
Poddar Pigments - expanding 20%
ASAHI SONGWON COLORS
Shreyas Intermediates - expanding 250 ton
I can understand just Vipul Organics expanding for better usage of funds but when business was doing well and expansion did not make sense, Vipul organics distributed a good part of their profit as dividends. I think this is a good sign. Further expansion by everyone which could be due to competition is scary and a race to bottom, however expansion when capacities are fully utilised is a good sign.
I would want to see the current expansion fully utilised before they get their hands dirty in Dahej. If I dont see this, Iāll sell but for now I am willing to give them a benefit of doubt that they should be able to sell the 6x
Past 3 quarters the numbers imply they have been, this is in the face of covid when its probably difficult to source new business
Inspite of 6x expansion, debt levels are still reasonable, which is another good sign
Inspite of 6x depreciation on quarterly p&l, profit have maintained or improved a bit which suggests the new plant is starting to contribute. How much and how soon they will be able to utilize all that, I dont know ? No one can be sure, probably not even the mgmt.
I was looking at Alufloride when it was at its support price of 160 since last few days and suddenly in next 3 days, it shot up by 50% so i think you have got a good entry level in that one. enjoy the ride.
Mangalam Org is also the other stock which came in my radar as its at a good support level.
Disc: havent taken position in both.
regarding Philips Carbonā> there are only 2 main player Philips and Goa and depending on Anti China sentiments, they both have decent future.
Greaves cottonā> financially it doesnt look attractive to me
Any views on Kitex, I am super interested in this company, the sales will go through the roof as the economies re-open next year. In addition, compared to other companies this one has not gone up much. What is holding this back? promoters dabbling in politics ?
Disc. Tracking quantity while researching the company
Study the entire Kitex thread and read 2 point 2 capitals article on the Curious case of Kitex Garments. Do not forget what happened in the past cycle 
Disclaimer: Not invested.
Vipul organics rallied quite a bit today
There was news dyes prices have increased after the increase in yarn and shortage
Although I think itās still cheap, ath is around 290 and pre covid another 15% higher
If this quarter utilisation is high, which given shortage most likely will be, I think it will reach ath after quarter results
There was a big seller (3% holding as per annual report) called Mittal who bulk sold last time and had very little shares left
Looks like he is out of the script and his constant selling was holding prices down.
Might move strongly up from here
