I Recently Came Across this Microcap Company
With Business model Combined to that of ACE and Sanghvi Movers
I have Made my notes on it and sharing the same
Views are welcomed
Disclaimer - Not Invested but Tracking to get better Price
Tara Chand Infralogistic Solutions Ltd.pdf (851.9 KB)
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You need to put detailed risk analysis. Also need to put content on the thread. Pdf file is not preferred.
thanks Ashar for the detailed insights. I have recently taken position in the company.
Key triggers:
- 100 crore capex done in last 3 years - Big number for any micro cap. Can be highly valuable if INDIA’s growth story in steel, construction sector with timely capex done.
- Undervalued due to high depreciation leading to low ROE but consistent & increasing positive cash from operations.
- Exposure to steel transport and warehousing plus equipment rental business - 2 very strong growing businesses.
- Equipment fleet of 300 Machines includes Heavy Cranes (up to800MT), Hydraulic Piling Rigs, Steel Processing, and Concrete Equipment. working on High-Speed Bullet Train and Metro Line projects as well.
- 40 years vintage in steel logistics management.
- Well groomed and confident MD from 2nd generation and seemed to be quite transparent about business and any related issues.
Risks:
1.Exposure to cyclical Infra sector and receivables getting stuck although customers are quite diversified.(Had to write off some receivables in Covid time).
-
Excessive capex and inability to manage the same.
-
Company is from microcap space and can be iliiquid and risky bet.
Happy to hear others view on the stock.
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Management invited at Alpha SME ideas conference. Everyone can subscribe to Alpha ideas since they keep hosting lot of SME’s.
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Thanks For the input
Certain Point to be added Are that since the company’s Major tailwind will be Bharat’s Capex Cycle
We have to continuously track Capex Spend of Various Sector
See Sanghvi Movers for example during the time of Slow growth in Economy during 2015- 2019 the company suffered a lot on bottom lines
But one thing to add is that Sanghvi is more dependent upon Wind Energy Space
That makes them heavily reliant on single Sector
Where as Tarachand is Equally diversified in Mining, Railway, Cement, and Infra
In Recent concall they said they want to take Revenue from Equipment rental in Cement capex to be taken at current Mining’s Level (35%)
For Such a small Company and having Clients like ACC, Ambuja, LT) is quite Big
also they have the product Portfolio Equally competitive as that of ACE and Sanghvi their largest Vehicle In Fleet is of the same size of that of Sanghvi
and correction on your comment imo about
They Have Left this work since this work was majorly Sub contracting and they were loss making there
Imo the real growth will start in next 2 Years when the Machinery is half way Depreciated and there is better pricing and also Utilization of the equipment’s
Very true But the sector is very Similar to Economy as large and if economy is seeing down turn that will be the first clue of Anti thesis being hit
I don’t think this will be the issue tbh, From Operational Standpoint they are Quite Fantastic
Very True but still the Alpha is also generated in this type Micro cap with Solid Business with Great Tailwinds
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thanks Ashar for the comments. Have highlighted few macro risks only. I dont feel any major risk to the company or stock at present. Also would like to add that have even reviewed the financials and AR and could not see any forensic or accounting issues here.
Have invested in the company for long term only. Truly believe it is a sanghvi kind of story whereas sanghvi is exposed to wind sector only which is a bigger risk.
On the PE expansion, it can happen anytime if investors realise that Cranes have to be depreciated 20% every year as per Companies Act. Once the equipment gets little old, Dep shall go down and PAT shall go up resulting in PE expansion.
6 Likes
Tarachand infra logistics CMP-175 ( 14/jan / 24) MKT CAP - 248 crore P/E -21 Promoter holding - 73.3%
It serves India’s infrastructural & industrialneeds through Warehousing,
Transportation, Equipment Rental, &
Turnkey Infra-Project Execution. With 35+
years’ experience, we’re a top Steel
Warehousing & Transport entity, handling
10M+ tons of Steel annually.
Our fleet of 300Machines includes Heavy Cranes (up to
800MT), Hydraulic Piling Rigs, Steel
Processing, & Concrete Equipment. We’ve
contributed significantly to High-Speed
Bullet Train & Metro Line projects across
cities like Ahmedabad, Delhi, Mumbai,&
more
Our team of experts & modernequipment serve sectors like Power, Oil &
Gas, Renewable Energy, & Urban & Rural
Infrastructure. We cater to 52 diverse
customers, spanning PSUs to Indian
multinationals, operating in 21 states &
even internationally in Mauritius.
Our capable team of 627 members, plus 300 contract workers, manage operations across 50+ cities Sectoral service offering Railway infrastructure Oil & gas Power Road & highway Cement.Growth strategyFocus on acquisition of large tonnage cranes & higher capacity pillingrigs & aerial platform,cont capacity addition, cont pursuing opportunities to take up EPC projects, civil & mechanical construction of building
Birds eye views insight One of the largest steel logistics services provider in the country with handling of 9.45 million tonness fy 22-23, Introduce first of its kind ZOOMLION ZCC5800(500MT),crwaler crane with highest configuration of 84+84 with superlift DerrickExpanded steel logistics vertical with addition of nagpur stockyard under 7 year contract with rashtriya ispat nigam ltdexpanded operations to the j&k, Assam ,Kerala Odisha
Highest ever dispatch of 121 rakes steel by rail from central dispatch yard of vizag steel in march23( you can get idea also how steel demand is)Leadership Mr Ajay Kumar is whole time director of tarachand, since inception,varoius client relationship & manages finance in his 30 years of experience, Himanshu Agrawal is excutive director &also currently chief financial officer,associated with company since 2017Mr vinay kumar managing director,he also associated with company since inception ,he is pioneer in getting a number of innovative features implemented in material handling equipment,he is real driver behind the company for think new act now You can watch video of this giant https://youtu.be/1ryXQKm26lg?si=ZrFUCLfaYXblegXf… Another video of tarachand delivery https://youtube.com/watch?v=CFpnHeFdC1A&feature=shared…
Profit & lossOPM margin is v good
EPS growth is fantastic
Recently company gives presentation at alpha ideas sme 2023
Financial highlight and esteemed customer
Running project, client,& city, fleet size , geographical presence.
Industry outlook
Segment wise revenue mix
Financial highlight with B/S
Cash flow Is continuously increasing
Recently bag order from SAIL for 4.5 Years of 20 crore
Peer comparison!Sanghvi mover is available at good valuation , good OPM ,
ACE construction
Thesis If you bullish on infra capex than this type proxy can good play, heavy investment & construction , it’s at present fairly valued, first’ time concallAnti thesisDemand of industrial production if someone down cycle comes it’s become heavy affected, other also some very good brands than tarachand can able to get to capture higher market share leading to loss, client concentrate L&T
Disc I m not sebi registeredPl consultant your financial advisor before investing,
No buy & sell reco,
Invested & biased
first investment at dec 23
no transcation last 15 days
6 Likes
Concall Summary (Q3 of FY24)
Quarter Ended: December 31, 2023 (Q3 of FY24)
- Total Revenue: ₹44.85 Crores
- EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): ₹14.53 Crores
- EBITDA Percentage: 32%
- Profit After Tax (PAT): ₹3.35 Crores
- Cash Profit After Tax: ₹11.55 Crores
Period: 9 months ending on December 31, 23
- Total Revenue: ₹127.96 crores
- EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): ₹41.30 crores
- EBITDA Percentage: 32%
- Profit After Tax (PAT): ₹9.83 crores
- Cash PAT: ₹33.35 crores
CapEx Overview (Year Ended 31st December 23):
- Total CapEx for the year: 48.52 crores
- CapEx for the quarter-ended 31st December 23: 14.06 crores
- Equipment addition is based on the order book with clients.
- Average Capex of 40 to 50 crores annually expected for the upcoming years
Net Block Increase:
- Year-on-year increase in netblock: 27.94%
- Net block as of 31st December 23: 172 crores (compared to 134.7 crores in the previous year period)
Gross block Growth:
- Gross block as of 31st December 23: 284.76 crores
- Percentage increase: 22.64%
Debt and Financial Ratios (as of 31st December 23):
- Total debt: 89.52 crores
- Debt-to-equity ratio: 1.08
Receivable Cycles Improvement:
- Receivable cycles as of 31st December 23: 110 days
- Improvement: 29 days compared to the previous financial year as of 31st March 2023
Order Book (as of 1st February 2024):
- Order book value: 36 crores
- Anticipation of new orders in the coming months for continued growth
Equipment Hiring Services (Segment A):
- Revenue of 20.42 crores in Last Quater
- Revenue of 54.29 crores in Last 9 Months
- Contracts have variable durations, ranging from a few months to several years.
Steel Logistics (Warehousing and Transportation) (Segment B)
- Revenue of 20.38 crores in Last Quater
- Revenue of 60.64 crores in Last 9 Months
- Contracts in this segment involve working with public sector undertakings like SAIL (20 Crore Project) for 10 Years.
- Contract durations typically range from 4 to 7 years.
- Contracts are secured through government tenders.
EPC Business (Segment C):
- Revenue of 3.56 crores in Last Quater
- Revenue of 10.61 crores in Last 9 Months
- Anticipated tenders in the last quarter did not materialize as quickly due to a prolonged tendering process.
- Expectation of positive impact in the current quarter and subsequent quarters.
- Exploring entry into specialized EPC segment.
Capacity Expansion Projects in the Steel and Cement Sector:
- Reasons for Infra Projects:
- Equipment acquisition in recent years focused on capacity expansion projects.
- Equipment aligns with the ongoing expansion initiatives.
- Factors Driving Project Selection:
- Improved revenue mix and better pricing at selected plants.
- Long-term contracts are established with these plants.
- Effect of Subcontracting Discontinuation:
- Subcontracting work ceased in the last year.
- Resulted in a significant margin expansion across all quarters.
- Future Margins:
- Margin expansion is expected to persist with the ongoing growth in the top line.
Overall Business Growth and Future Plans:
- The company has experienced a growth rate of 20 to 25% in the past year.
- The average monthly yield is approximately 2.5%.
- Anticipating this growth trend to continue.
- Expecting additional growth with new orders in the pipeline.
- The fourth quarter is crucial for sector revenue and for growth.
- Target industries for expansion: cement, steel, and petrochemicals.
- Exploring the renewable energy sector, specifically the wind sector will be carefully evaluated but the equipment is already purchased.
- Continued focus on cement, steel, and petrochemicals expansion.
Interested and Tracking the Company
Regards,
Fawaaz.
4 Likes
how long does it take one to migrate, when is it expected to complete ?
Anywhere between 20-25 days. As per concall Himanshu stated that Tarachand will be on NSE main board before end of this quarter.
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Does conversion of warrants into equity shares have some lock-in period?
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Attatched is the following page of the document you attached.
For better understanding,
Does Letter of intent / Acceptance of tender means the contract is awarded?
Question from a novice investor.
Yes, Swadesh. The above image I shared is an update to NSE from Tara Chand about the same.
Much required triger imo
Management is capital prudent
Will have to see the terms of finance for further understanding
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Any idea, when it’ll be migrated?
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Please do your due diligence first
Dont clutter thread with one liner questions
There was Prefrential issue at a price of 70
A simple screen search would have been sufficient