Smart link has finally reentered into Structured cabling business.
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Smartlink seems to be completely changing its model. Its transferred all its business to 2 subsidiaries and invested substantial cash in them. Latest results shows steep decline in business. Does anyone have an idea about the company’s strategy?
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Tracking closely, however don’t like the business growing in subsidiary companies. If so, the holding company value could remain discounted for a long time.
Discl. Not invested yet
the holding company is to be transformed into an NBFC. The board has given
its okay. I am still undecided about this.
disclosure: holding
Looks like the core business lines (networking products & ems) ended up with negative margins (Per the Dec 16 financial statements) due to severe competition (including Chinese dumping) and the company has during this 3rd quarter classified them as discontinued operations, pushing them behind the scene into two 100% owned subsidiaries. My guess is that these businesses will wind down.
With the NBFC license application and most of its assets being good quality current investments and cash, the company can get a head start in its new LOB. At a book value of Rs 138/- (as at 31 March 2016; Approx 148/- now) with most of the reserves being free reserves and in a low Price/BV, the stock looks attractive inspite of negligible/negative earnings this financial year.
Repute Auditors and no increase in contingents between 03/15 & 03/16 adds further confidence.
No investments yet but I plan to enter.
The holding company has classified them as discontinued operations as the business is transferred to subsidiaries. That is how it is presented as it is a discontinued business for holding company. They are pretty much operational. They have re-entered structured cabling business with 3rd subsidiary - Telesmart SCS.
The holding company now will only have income from investments from its cash + investment holding of approx. Rs.280 crores. It is mandatory as per RBI Guidelines to categorize such companies as NBFC and they do not have any intention to enter into NBFC space. So this is clearly not a new LOB they are considering. They are pretty much focused on networking business.
Discl.: Not invested. Tracking
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Is anyone tracking this company?
Anyone can share updates from the AGM that happenend over the weekend?
Hi, I am also looking for AGM notes on smartlink. Pls share if you get them. Also, in the DC theme pictorial shared by you, cant find smartlink. Any reason why you posted this ? thanks
Yes, Smartlink is not yet matured/strong brand enough where it can own and control a segment fully within the DC infra. Also its not a name that people will stand by irrespective of pricing. They still have a long way to go.
Does it has the ingredients to grow into one of the brands in the DC theme pictorial? Possibly Yes. Will it? that will depend on the journey of the company and the decisions it takes along with the way.
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I think it does not has high value products for DC. But it does offer some low value products to DCs. What makes it interesting for me is that it is one of the few “Make in India” offerings which will make lot of business come to them by default. Also of interest is their EMS subsidiary where they have built capability and there is potential upside from EMS tailwinds
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For me it is a play for 3-4 high growth rate industries - DC, Networking products due to high growth in internet usage and penetration, Electronic manufacturing , EV chargers. Few Big orders in EMS/EV chargers and their trajectory will change
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can you throw more light on the EMS subsidiary? What kind of capability or capacity they have? potential revenues or operating leverage that can have.
I am sorry, but being lazy to dig around the AR, with lots of other things happening this/next month. Any pointers from you will help, will add my side in a few weeks, once my workload lightens up.
They haven’t shared a lot in terms of orderflow, etc. They have a subsidiary Synegra where they have been investing for EMS. They have mentioned that they are targeting multiple sectors like defence, medical, EV chargers, PCB and few more. They have designed EV chargers for some international OEM (no data available if they manufactured these as well). Now they are merging Synerga with parent Smartlink Holdings (this is a wholly owned subsidiary today). As of now no revenues booked in this as seen in P&L
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I presented this at a forum , can check from 1:39 onwards, last presentation in the link (audio quality is bad, so you can leave a message here if you need clarification on some point)
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Great discussion on smartlink. Thanks for sharing the link to this discussion.
I had a similar view, small unproven company in a interesting space. Promoter is ethical, but capability to take to next level is not proven. This will be on my watchlist to see how things move, and if in required direction.
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- Promoter Background: Mr. K. R. Naik was the first employee of IBM in India.
- Ethical Leadership: A clean promoter with strong ethics, he chose not to shut down any plants, even though they could have made more profits by importing from China and selling in India. His primary reason was to ensure that employees at their plants did not lose their jobs.
- Next-Generation Ambitions: He has set up the business in such a way that the investments are sufficient for the next generation to have a great life. However, I am unsure about the level of ambition the next generation holds, as the business is currently run by his daughter.
- Factory in Goa: The factory in Goa is huge, with most of the land owned personally by the promoter rather than being on the company’s books. It was once used for manufacturing D-Link products and is now an EMS (Electronic Manufacturing Services) unit. Based on the reverse merger, the revenues are around ₹58 crores (Source). https://www.smartlinkholdings.com/wp-content/uploads/2024/02/Smartlink-AmalgamationSE-Intimation-09-02-2024.pdf
- Financial Position: The company is cash-rich, and the EMS sector seems promising. However, I am uncertain about how aggressive the promoters are in capturing this opportunity.
Could someone shed some light on this? The valuation looks attractive.
Disclosure: Tracking
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Jain Sir, Say your video on Smart Link
Quick help needed
has the revenue of EMS being counted in Smartlink,
The employees on EMS biz shown are really less
Any idea that we could get on EMS contracts, bcoz it that clicks this can be the next multipler
Hi, yes revenues from EMS are included as per mail reply from company. Company is not very forthcoming in sharing details. But the good part is that they replied
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Great, Noted.
Sir, so how will this playout, how would the company be like a the listed company was like an NBFC with investment, post the merger of EMS dept would this be a EMS play bcoz Digisol product current do not have that much of brand pull or brand trust like it had before, there are other players which a buyer would prefer
How do you see the current valuation based on revenue, the Promotor Naik sir and daugther are non-ambitious as a promotors which i know from source close to them and are happy with the returns gained from FD
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