It is strange to see the stock being beaten down so badly. Fundamentals seem good having won 80cr of annual orders as per exchange disclosures in H2 Fy25. Trading at ~10 Fy25 estimated PE.
There seems to be selling pressure in the stock with a public investor " Affluence Marketing And Distribution Pvt Ltd" paring almost 6-7% stake. Unable to ascertain who this is and till when the selling pressure will continue.
Would appreciate any guidance/advise from experienced and learned members of the community on how to perceive such situations. It seems very tempting to double down but am concerned if there are any pitfalls I may be missing.
I checked DRHP and affluance marketing cost price is negligant may be around 10 rs as they had pre ipo investment.why they selling is just wild guess.
But primarily their are no red flags. Company catters to govt contract and one canât fake such contract details as itâs available in public domain.
Till today urban is bidding in Gujarat and mp and area around. This are not that big contract . But think of the big opportunity. For eg MUMBAI waste management contract is expiring in 2025. Last contract was around 2000 cr for 4 or 5 years. (From newspaper articles).
Think if urban gets even 10 % then also what will be revenues. Company has very low equity. So results can be fantastic.
Yes, it is good that Urban is winning so many tenders. So near term visibility is good. At least they are not like Antony waiting for big tenders. But geographical spread is risky. Even if they win tenders in different Urban bodies in MP and Gujarat, profitability is reduced due to logistics issues. And they donât have any MOJOs. They collect garbage physically and sort them for compost or other purpose. So they are susceptible to competition. So it is risky to chase it and expect any big return. I will prefer near monopoly stocks or those where there is strong barriers( technology or anything), even at higher valuation.
This is my opinion and I may be wrong.
So in this space (waste management or water waste infra), which monopoly stocks are you talking about? I see Antony as being the largest player (donât know if it is a monopoly though)?
New order for 10 cr spread over 7 years. The amount is modest. But this is the first work order for setting up and operating a Solid Waste Processing Plant. A new vertical for the company which could have more value add and margins eventually when more such but bigger orders come it way.
Can anyone check is their any big work order starting from April 25 ?. EPFO website shows their staff count to approx 5200 in april from 3500 in march. Salaries exp increased in last quarter by around 3.5 cr Also depreciation increased in last quarter by 1.75 cr.
Summarizing my observations for this counter so far:
As of today, PE is ~13, growth rates in both revenue and profit have been phenomenal over 1,3 and 5 year windows. PEG ratio is throwaway number, mere 0.16. But the elephant in the room is the bloating debt at 1.3 times equity and increasing.
Depreciation is definitely aggressive - is that a red flag though? some may consider it management smartness. Other risk heavily weighing in is exploding debtor days - from 43 in 2021 to 107 in 2025. These two facts combined - start to smell fishy
I see no technological edge with them. But I have read in some investor discussion that the best businesses are usually the most boring ones - zero flashiness in the work, grinding day in and day out. But this very reason gives such businesses longevity - they are boring enough to keep competition out. Profit margins look to be in high teens, no fat enough to attract serious capital either. But there definitely is competition, and it will keep pouring in as government schemes focusing on waste management keep coming up.
Given the small scale of the company, I wonât complain that they donât share quarterly PPTs but will definitely admire how promptly they share new order wins. So - they do care about the investors and their public image.
Main comfort is coming from the fact that given the growth trajectory, there valuations are really good for grabs to my puny brain - post covid investor psychology, you see. If they manage to decrease their debt, improve cash conversion cycle and continue to deliver such growth numbers, I donât see why markets can reward it better - at least a 2x PE rerating looks on the cards
I understand the write-up has been more a narrative essay that actual cold hard facts and figures. While I would want to come back with a fact heavy one soon, I just wanted to share my thoughts and hear opinions of more learned community members on my thought process.
I am following this company since ipo. I donât smell any fishy about company.
My views maybe biased as I am holding shares.
Few points are as below
: company gave bonus wich was not needed at all. SME segment people see bonus and rights ISSUE as negative .
:company dont do PR neither is regular in concall or investor presentation.
:one original investor sold his complete investment of approx 10 % wich created pressure and increased supply reason is unknow as his investment was costing 10 rs it can be any reason.
:: biggest negative was ESM rules wich presured price as supply increased due to above mentioned seller.
now positive points
: depreciation is naturally high as they also give vehicles on rent to Municiple corp and they are getting good additional revenue(check balance sheet)
: some other investor invested more then 5% and absorbed supply .
: company gets business majorly from municipals so they cant cook up revenue its by tender process and openly available online.
: they are employing more then 5000 workers and pay PF which cant be faked as its available on EMPF website.
: its recession proof business , no mandi or tariff affects them. people are going to make more waste irrespective of mandi
3 months back they got just such an order but on a modest scale. Repasting my original post below:
New order for 10 cr spread over 7 years. The amount is modest. But this is the first work order for setting up and operating a Solid Waste Processing Plant. A new vertical for the company which could have more value add and margins eventually when more such but bigger orders come it way.
Another order win for them today, 7 years contract with ~89Lacs business per year by Halol Nagar Palika, Gujarat. Another intresting development is that promoter bought about 0.2% shares ( about 25 lakh ruppees worth). Another individual investor named Swaminathan Sivaramakrishnan has been adding ferociously. Any idea who they maybe?
Overall - looks like a sweeter deal than in October
