Some Ideas discussed

There were many informal hangout sessions apart from the scheduled heavy-duty Domain Expert 2 hour sessions.

This time we kept the main formal sessions load light, leaving folks to be free, enjoy and bond more amongst themselves - as there was a very eclectic mix of newcomers, seniors, and top contributors to VP.

Requesting folks who attended to record (in brief) the Ideas discussed at one-to-one, one-to-many, and many-to-many informal sessions - that happened all day and night :grinning:


My notes of some ideas discussed in the middle of sessions.
Disclosure: Fellow investors who had presented ideas may or may not have positions in the said companies. These are not buy recommendations so please do your own research before buying or selling the following ideas.

1. Aarti Pharmalabs (Dhwanil Desai)

  • CMP: 386; Mcap: Rs. 3,498 crs
  • Three divisions in aarti industries – chemicals, pharma/API, surfactants
  • Surfactants got demerged before
  • Pharma business recently demerged
  • Pharma has 3 divisions – Xanthine derivatives, API and Intermediates
  • Xanthine Derivatives – Caffeine derivatives, used in anti-respiratory; clients – DRL, Cipla
  • API – High Value APIs (Realization more than $18,000 per kg vs. $100 per kg in general APIs)
  • Intermediates – Most interesting; 30-40 cr business 2 years back which has scaled up really well. It will also make patented product intermediates.
  • March 2023 – it will do 1900 cr revenue
  • It generates gross margins of 50% (considered good in pharma)
  • Oncology API block – expansion completed in Q2
  • Greenfield capex coming up
  • 1900 crs revenue and 200 cr PAT in FY23 to reach 2700 crs in and 350 cr PAT in 3 years with 21% EBIT margin
  • 50-60 new products which will do EBITDA margin of 25-30%
  • Funds had to exit this coz this became a small cap company post demerger.

2. Centum Electronics

  • CMP: 739; Mcap: Rs. 952 crs
  • Defence EMS and ER&D segments
  • ER&D – acquired Adatel in 2017-18 which was a loss making company
  • It was acquired at 40-50 cr
  • Defence segment: sub-component supplier and has an order book of 1450 cr – 400-450 from BTS, 200-250 from ISRO (now less focus) and 200-250 cr from defence (now more focus).
  • BTS – working on a lot of new products.
  • BTS revenue can do Rs. 400-500 cr Revenue with an EBITDA margin of 25-30%
  • EMS division – Defence offset before, didn’t pick up in a big way. Now change in govt. thrust
  • 600-700 cr EMS should grow by 30% next year and by 600-700 cr next 3 years. It is a low margin business segment (10-12% margins)
  • ER&D – sold out a product division. 2 geographical segments – France and Canada. Onshore to offshore ratio skewed towards onshore (80:20). Increase in offshore to 30-40% can do higher margins. Low growth and decent margins from this segment.
  • New CEO brought in as well.

3. JM Financials (Anant Jain)

  • CMP: 61; Mcap: Rs. 5,824 crs
  • Peak price of 175 in 2017
  • Roughly generated 5000 cr PAT in the last 5 years vs. current market cap of Rs. 5,800 crs
  • In the last 5 years, Mcap has fallen to 1/3rd value and added 5000 cr PAT to that.
  • MD will not focus on Real Estate business
  • Mortgage lending segment EBIT segment – Not Bad and he was able to get out in time
  • Nov Concall: Conservative management tone.
  • Nov Concall IB segment: Investment banking is expected to hit INR 700-800 crores in profitability in the next couple of years.
  • Demerger of private wealth business mentioned in latest credit rating
  • Walking the talk.
  • Book is not leveraged.
  • ISSUES – Hired bad managers in past
  • ISSUES – Not scaled up well.

4. D-Link India (Hitesh Patel)

  • CMP: 283; Mcap: 1004 crs
  • Last two quarterly nos. – something has changed.
  • Info. Is not readily available.
  • 10 P/E, Debt Free and MNC pedigree
  • Hit 244 high in 2014 which was crossed in 1st quarter 2023 result – only happens when something in underlying business changed.
    52 week highs and all time highs strategy - #517 by hitesh2710