The SME portfolio

Hello Dhvanit
Have you ever came across ?

Manglam Worldwide ? ( [NSE - SM : MWL]
Recently listed
Mcap ~300 cr
PE~17, Listed at PE~38
ROCE ~ 8.2%.Metals and Mining industry average ROCE~14%.

From first glance, What would be your comments based on your SME experience ?
What criterio/parameters would you suggest to study further,if one is interested ?

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I do not track Mangalam Worldwide for imvestment.
I track its results every half yearly (they have decent growth and are always further up in providing results).

I probably will not invest later also.

The experience has been good so far (there are ups and downs but it is greater in % terms).
I also got to learn that even if a company is good, they also should have some decent traction/ good investors. They give boost and new bases for share price until results go bad (I hold two shares in which Ashish Kacholia sir invested, and he invested in other one and after that it went to the skies. KMEW, Saakshi amd BEW).

There are several red flags which you habe carry with. Obviously less or null is the norm.
And promoters are everything. If promoters’ intention got bad, leaves or dies unfortunately, then it will be the biggest issues. (Eg: as far as I know Adeshwar Meditex’s promotet died unfortunately. I haven’t got in detail but the stock nosedived)

I think I have written points above which are roughly common points only in reading about any company and information is scarce in SME. (I am new in discussion and have little experience, so might not follow basic things as I keep on learning)

I hope this satisfies your question.

And I am trimming my SMEs little by little. Ever since I got to know about the portal, I started to lower my %. I cannot easily switch into cash in SME and there are several shares which I want to track for atleast March 24.

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I glanced over Mangalam Worldwide. What I can figure out is that the company is manufacturing Stainless steel billets and Stainless steel flat bar.

There OPM is measly 4% but their asset turnover is 3+. That means they are adding very little value but their product is moving very fast. I think their main business is to convert iron ore into billets and bars, which are used by their customer as raw material to create high value products. This company feels more like a commodity stock.

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Sorry, if I missed it earlier, but which Portal are you referring to…

Valuepickr forum. I mistakenly use portal.

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Do you have any advisory service focused on SME or ultra micro caps?

No. Just a student. I am into Auditing field so just know fair amount of rules and regulations which I use in these companies.

100% self. Just a little help regarding how business runs in different industries if happen to know someone working in that field.

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All E Technologies

Results

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A must listen concall from All E technologies



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Portfolio Update:

Stock Cost % Latest % Avg Holding Period
Omfurn India 31.60% 27.20% 42
Holmarc 10.35% 12.51% 54
PNGS Gargi FJ 6.26% 10.38% 137
Bondada Eng 5.66% 10.32% 52
Chaman Metalics 4.73% 4.49% 213
Labelkraft Tech 6.45% 4.27% 185
Aurangabad Distill 4.29% 3.94% 51
Knowledge Marine 0.76% 3.16% 467
SKP Bearings 4.56% 3.05% 7
Saakshi Medtech 3.86% 3.05% 41
Kotyark Industries 2.31% 3.02% 299
Evans Electric 2.46% 2.92% 135
Technopack Polymers 4.28% 2.70% 89
Felix Industries 2.82% 2.10% 31
Cosmic CRF 1.76% 1.38% 30
Cadsys 1.91% 1.27% 60
Oriana Power 1.85% 1.24% 51
Silicon Rental 1.66% 1.23% 89
Perfect Infra 1.28% 0.95% 80
Markolines 1.13% 0.84% 95

New Entries:
SKP Bearings:
Good Business, Decent Capex coming into play, good results and less decent valuation.

Re-entries:
Cosmic CRF:
Re-entered on expectation of good results and incoming orders. The litigation issue persists though.

Exits:

  1. Magson Retail:
    Despite flat results, the share price rose due to HNIs and hence exited.

  2. Uma Converter:
    The valuations still are way ahead of the bottom-line results. Classic Pre-IPO window dressing levels are far away and other factors continue the company being sub par.

  3. EP Bio:
    Bad Results. The employee expenses have gone over the roof and due to this the bottom-line is flat. Emp exp may be RPTs so exited.

H1 Season:

The results were mixed as a whole, but majority have negative Operating Cash Flows (even prior positive cash flow companies turned red).

Positive results from companies:

  1. Omfurn: Good Growth numbers and around 12-13 months order book still on hand.

  2. Bondada Eng:
    H1 Fy 24 vs H1 Fy 23 are great. H2FY23 comparison is decent.

  3. PNGS Gargi:
    Consistent Results.

  4. Evans:
    Highest ever op margins along with net profits (but with negative cash flows)

  5. Cosmic CRF:
    COSMIC CRF LIMITED - sme - #21 by Dhvanit_Merchant17.

Overall SME exposure is now at 95% and no new investment is done in SMEs (except SKP Bearings arising from sale proceeds of others on poor results)
Average Holding Period reduced substantially due to tax harvesting done in September and despite this the holding has increased to 115 days.

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Already up 2x since September. Any one else been following this, any other latest updates on their business since September? I haven’t had time to check on this since.

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Portfolio update: 05-01-2024

Stock Cost % Latest % Avg Holding Period
Omfurn India 29.57% 26.92% 63
PNGS Gargi FJ 5.28% 10.82% 185
Holmarc 8.73% 10.37% 102
Bondada Eng 4.23% 5.67% 74
Chaman Metalics 5.59% 4.96% 197
Kotyark Industries 3.32% 4.87% 192
Aurangabad Distill 3.61% 3.85% 99
Srivasavi Adhesives 5.06% 3.72% 38
Shri Balaji Valves 4.58% 3.69% 3
Labelkraft Tech 5.44% 3.46% 233
Saakshi Medtech 3.76% 3.13% 66
Knowledge Marine 0.64% 3.07% 515
SKP Bearings 3.85% 3.06% 55
Technopack Polymers 4.23% 2.79% 87
Felix Industries 3.12% 2.42% 3
Perfect Infra 2.33% 2.32% 83
Sunita Tools 3.11% 2.24% 2
Markolines 1.94% 1.38% 90
Cadsys 1.61% 1.25% 108

New Entries:

  1. Srivasavi Adhesives:
    Good business, expensive valuations but production has started in mfg facility 3. Also another plant commissioned in Vadodara.

  2. Shri Balaji Valves:
    Bought on listing.
    Decent business. No major red flags, valuations slightly decent and company raising funds for capex.

  3. Sunita Tools:
    Bought with expectation of good result. Will decide later. (although reviewed the co.)

Felix Ind - Tax Adjustment and hence holding period reduced.

Exits:
Evans Electric:
Price had cooled down after good results and anticipation of no immediate update from company till next results. Negative cash flows in latest results.

Cosmic CRF:
Internally adjusted and exited as I wanted to consolidate my number of scripts. (Unfortunately exited at 310)

Oriana Power:
As part of consolidation and with sky high valuations, exited at 275. (It was part of long term view but the half yearly results did not provide any comfort)

Silicon Rental:
As part of consolidation exited from the share at 220.

The market is giving new year gifts and Christmas gifts here and there and the shares are running like there is no end.
Planning to trim several more shares in immediate next fall or in 1-2 weeks time.
Reduction to SMEs is going on. 91% Eq-SME, SGB 1%, MF 4%, Cash 4%.
Average Holding period - 126 days

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Sir, Any sme stock recommend

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Any presentation or learning available for saakshi medtech? Its in my radar since 2 months.

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@YAZAR_ARAFATH

Not recommendation but some interesting SME stocks to study…Do your own study and consider accordingly.

  • Sungarner energy‚ĶSolar
  • Australian premium solar
  • Alpex solar
  • Oriana power‚Ķindustrial and commercial solar solution
  • Rox hi-tech‚ĶAL/ML, digital, medical automation, Micron technology is top client
  • All E technology‚ĶAI, Microsoft busyness application, digital, Asian paint is client
  • Infinium pharmachem‚Ķspeciality chemical, niche segment, iodinated derivative
  • Hi green carbon‚Ķtyre recycling, unique business model, very high growth opportunity due to Govt. initiative.
  • Arham tech‚Ķelectronic manufacturing
  • Deepak chemtex‚Ķspeciality chemical
  • Paragon fine chemical‚Ķspeciality chemical
  • Beta drug‚Ķ oncology medicine
  • Sadhav shipping‚ĶShipping services, costal logistic, technology, L&T defence, Cochine shipyard and Mazagon dock are clients.

**My gross criteria for selection of SME stock **…

  1. In my best available information company exist.
  2. Fundamentals of company are strong.
  3. Product/services of company are related with common man day to day life and belongs to growing sectors (related with AI/ML, automation, renewable energy and manufacturing).
  4. Busyness may sustain next 10-20 yr.
  5. Company is growing, profitable with less debt (high ROE/ROCE, low D/E ratio).
  6. Individual stock is considered as individual business…so multiple stocks of same sector present.

Biggest problem with SME stocks that averaging is difficult as investment amount is higher for a lot.

During bear phase stock value may correct >50%…so u have to remain calm if conviction level.is high.

Risk/reward ratio is quite high but this is deep analysis and homework not speculations.

Disclosue-- invested and will share my portfolio once my present investment cycle will be completed in next 1-2 month.

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Compiled some notes in December from here and there, especially from Nilesh Kurhade. See if it’s useful. Seems like a good company.

The final lock-in for anchor investors ended on 12th February, there was no selling pressure post that. This shows that the interest has not vaned and they believe in company’s future prospects.

Saakshi Medtech and Panels Limited.docx (17.4 KB)

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Thank your honest reply sir

Interested to know how badly your pf was hurt in recent SME stocks crash .

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yes. it is continuously going down.

January month around 35% up overall.
February month around 3-4% down overall.
Upto March 7th around 2% down.
Yesterday survived luckily with flat.
Today around 7% down. (Today’s trades not accounted which may reduce this to 5.5-6%)

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