SmallCap Hunter : Trying to find the dark horses with triggers

Any one tracking balaxi, any idea about recent result , exceptional item losses?

Kanchi Karpooram is listed in BSE only. Is it a negative point?

Balaxi Pharma as a stock is very attractively valued. However 40% or so of their revenue comes from Angola which is facing hyperinflation. So that’s the current risk which is putting downward pressure on its revenues. Else the business model is strong

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Are you tracking Maan Aluminum? It seemed to be the cheapest aluminium stock even before split/bonus. One thing in their favour is that the split/bonus and delivery of shares was most prompt.

However, after these events, no buying seems to be possible, though the bid is made at higher than the offer price. Can anybody enlighten me?

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previously balaxi was just into trading good, but now planning to start its own manufacturing
one needs to know if they will be able to execute this
we dont know its capabilities
several certifications will be required
labor cost will come in
margins will reduce

very risky, needs to be looked at closely, especially the execution capabilities

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Few things to note for this company:

  1. Margin is low. But the margin has been increasing. This means they are adding higher margin products. This is exactly what management spoke about. Walking the talk.

  2. “check the short term borrowings which is growing tremendously”—Their short term borrowing is at March 2016 levels. Whereas their sales is more than 4x the March 2016 sales.

My take: I know that not every financial ratio is perfect here. I believe if that had been the case, the company would not be trading at sub 10 PE. We can invest during their journey of improving financials(most of the PE expansion happens here). Or after the financials have improved(returns based on earnings only). I choose to do the former.

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Which company are you talking about ?

Maan aluminium, you can see by following the linked thread of replies

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Why are the margins so low? Are these expected to expand going ahead? What are the entry barriers for new entrants? Please elaborate. Disc: Studying

As steel products is commodity based and is 90% of the revenue and non-steel products being only 10% ,so as the product mix changes towards non-steel, margins will expand.

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Is anyone tracking below two companies?

  1. Jai Balaji Industries: It makes iron and steel products. Its profit has jumped from 22cr to 170cr. YoY.
  2. Ashapura Minechem: It is involved in mining and makes derivative products. Their profit has jumped to 102 cr. from 35 cr. YoY.

Just wanted to understand the root cause for such a big jump in profits. And if these profits are sustainable.

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IKIO lightings ltd makes Interesting case study !! If anyone tracking this company kindly share your findings it will be much appreciated.
Compañy recently came up with its sucessful ipo listing and held its maiden earnings call and here are the highlights

  1. Company primarily operates in the ODM ( Original Design Manufacturer) mainly LED
  2. Company has a B2B model and are not looking to go into B2C model
  3. The growth trajectory has been good in the last 5-6 years as the SKUs have grown from 200 to 1000+, the company was heavily dependent on imports but has become backward integrated and export numbers have also grown over the years
  4. Company has 3 business verticals
    :black_small_square:︎LED products
    :black_small_square:︎Commercial refrigeration
    :black_small_square:︎ Others ( usb chargers, mcb switches, rotary switches, ips containers, drivers)
  5. Company has 4 well integrated manufacturing facilities. 3 in Noida and 1 in Haridwar. The total area of these facilities is ~ 3,00,000 sq feet
  6. Conpany has repaid 50cr of debt from the ipo proceeds and the consolidated gross debt now stands at 48cr as of June 2023, other items in ipo prospectus include investment in new facility and general corporate purposes, both are in-progress
  7. CAPEX - Company is building a 5,00,000 sq feet project into three blocks where Block 1 is almost in final stages of completion and is expected to commence operations by end of this FY. Overall completion of all three blocks is expected in next 2 years. Total capex required for the entire project is 212cr. The asset turns expected around 5x with more than 60% plant utilization. The capex is primarily funded by ipo proceeds.
  8. Company has given good 1st quarter result
    Total income 36.19cr
    Ebitda 237 million Rs
    Ebitda margins 21.7%
    PAT 138 million
    PAT margins 12.7%
  9. Downsides
    :black_small_square:︎Small cap company so competition from existing industry giants a threat
    :black_small_square:︎ Company’s 50% sales are to Signify (Philips) so major dependence on one client
    :black_small_square:︎ Delay / divergence from capex plans will dent the future prospects

Disc - Recently added to my portfolio (2%) so may be biased

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the products are not manufactured by shankara but traded, they just capture the spread, no value add or further processing by them.

now they are adding higher margin non steel products, which will increase margins as well as ROCE

Maan Aluminium financial ratios are very attractive (all tables courtesy the Screener)

Performance in the last few years has also been excellent.

It is also doing wonderfully in comparison with its peers.

It has split and given a bonus in one go recently. Adjusting for bonus and split, its price should be more than ₹90. But since then it has been falling, in a real cascading manner. It has not been possible to buy more also.

Is anybody aware of any any adverse factor relating to this company or aluminum in general?

PS: I have a small holding.
PS-2: The thread on thus stock has been closed in 2021. I think it is an interesting stock.

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@avneesh @Deven @somu0915 and seniors.
I am newbie and Since my PF is 87% small caps…it has ran very hard and fast since march end.
Nowadays, i keep coming across same news regarding small cap space being over heated.
I refer to another recent thread on small cap.

My query -
1.How hot is small cap space ?
2.Is it possible to dentify that its time to get off the party while its still on ?
3.What indicators can be helpful and if we can stay clear when the tide is about to turn ?

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Its temperature is not homogeneous. You have a look at your portfolio, consider the business prospects, consider the valuations, and then make a decision on a per stock basis. Don’t get swayed by macro noisemakers, they will fill your ears, not your pockets. If a stock has a long runway ahead, unless its obscenely valued (>80 PE), stay put. As long as you feel growth rate can justify valuation, no need to worry. Even if price falls, you can own more of that business.

Depends on your thesis for buying in, whether you wanted to simply play the PE expansion and exit once your targets are met, or whether you want to stay in the game for longer.

Never wait for the market to tell you when to exit, always stick to your rules/plans based on your time horizon, return expectations and risk appetite.

Indicators don’t guarantee anything. US Government Bond Yield Curve Inversion typically an indicator of recession. We all know how that played, and those who sold thinking the market will go lower are either biting their nails from the sidelines or Fomoing at higher prices.

Disclosure: 75% of my portfolio are small caps. Continue to hold unless I get extreme lucrative exit deals

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When the bull market starts, expect it to last atleast a year. I see no reason to exit small caps so soon. We have probably seen just 1/3rd of the entire up rally. There’s a lot more to go… Also, stocks are not extreme hot. You could still find some small caps that are still value buys.

Disc: my portfolio is 95%smallcap, rest midcap

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Focus on what is possible at your end rather than worrying about inflation, oil prices, GDP numbers, etc.

Can you predict the market direction, oil prices, etc. ? Not really
Can you take action when your stocks start falling? Yes

If you don’t have an exit plan then you may follow this very simple one below:

  1. Low conviction stocks: Sell if they fall below 20EMA or below your purchase price.
  2. High conviction stocks: Give them more room but sell if they fall below 50EMA.
  3. Stocks that are already in loss: Your personal call depending on your thesis. You should know why you bought it in the first place.

Selling will always be filled with regret. Either you sell too soon or you sell too late. But if you want to grow as an investor, you have to learn to live with this emotion.

But it’s best to have an exit plan. I have seen my big profits turn into losses. I don’t want to repeat that again. Either you can learn from others mistakes or you can pay a price to learn the same lesson.

Note: All this is not applicable if you’re a TRUE fundamental investor.
EMA- Exponential Moving Average

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Wonderful Insights related to selling!!
Which timeframe like weekly , Daily or Monthly that we should follow these EMAs?

@StonePitbull @ajayt001 @avneesh and seniors.

I feel, We all would be busy by now trying to catch up with…my pf is down by -5%…biggest single day down i saw recently…anyway,i again bought few i liked…though i tried not to fall in love with them …but that emotional bias i am still trying to overcome(i couldnt today !)
the Question
is it correction ? retest ?
or is the music slowing down ? …is it time to run ?