Sunday, October 23, 2022



During  last two Diwalis we have discussed two stocks that supports two different mega trends. This year also let us discuss one such stock , that I believe will lead in the forefront of an emerging mega trend  .


Ageing is a reality and nobody can escape from this . Nowadays rhythm of life changed a lot and everyone is running behind something that we can’t even define. In our society, even if people making more than enough money, lot of people facing the issue of finding enough time to care their parents. This is where the potential of Senior Care business lies. The senior care market is still at a nascent stage India. As per a 2019 report by consultancy firm McKinsey ,17% of the seniors in India are living alone and I believe this number will increase drastically going forward considering the changing socio-economic situation, increase in the number of  nuclear families , improving  life expectancy that results in increasing senior population in the country etc. Migration of younger generation to foreign countries and unwillingness of their parents to follow the same adding fuel to the loneliness of elders in these days. All these are increasing the business potential of senior care business here .  As per Industry analysis, “out of  the 20,000 senior living units in India, about 55% are operational, while the rest are at various stages of construction. The demand – pegged at about 240,000 units – is almost 12 times the available capacity” . On the basis of this background let us look into the only listed company operating in this sector – MAX INDIA – through its subsidiary ANTARA .



 MAX INDIA evolved through an organizational restructuring in Max group during 2020. It is  now the holding company of Max Group’s Senior Care business Antara. Antara operating in two verticals - Antara Senior living and Antara assisted Care .


Antara Senior living is offering independent Residences for seniors.  First Senior residential community of this division started functioning in a 14 Acre facility at Dehradun with 180 apartments in 2020. Its second facility is under construction at Noida with 340 apartments that is expected to ready for possession by 2025.As per latest update ,Company already sold out 300 units out of 340.

 Under the Assisted care division ,it operates  Care Homes, Care at Home, MedCare and  Memory care homes .This division cater to seniors over the age of 55, who need more frequent  interventions in their daily lives due to medical or age-related issues. I strongly believe there is immense scope for these verticals due to more than one reasons like  the increase in seniors  who are attaining an age where they are in dire need of any type of home care due to increasing life expectancy .

Care homes are specialized residential facilities meant for short- and long-term care, pre & post-operative care and memory care for seniors. These assisted living facilities provide primary health care and emergency response services.

Care at home providing  personalised care and attention under the guidance and supervision of reputed clinicians.  A team of highly trained professionals provides care in the comfort of elder’s home itself Instead of taking the sick and elderly people out for their homes for meeting appointments and treatment. This is bringing the much needed care and services to the home which is  more convenient both for elders and those who are responsible to provide care to them. In addition to the above it is a fact that senior home care is a rather affordable route for giving people the help that they need compared with treating them in a hospital. This division’s service includes diagnostics, nursing care , physiotherapy ..etc

MedCare division providing a range of medical products and equipments on rent/ sale for the  recovery and well-being of elderly people .

Under the Memory Care homes division Antara takes care of Dementia patients and assists them in carrying out their everyday tasks. Recently company opened its first dedicated residential Memory Care Home in Gurugram for Dementia patients. Max now planning to add  35-40 more care homes/ memory care homes  with a bed capacity of approximately 2000 .

This is the brief business profile of the company. Since more details are available in company’s website, I am not going in-depth. ( Link of Investor presentation and latest Conference call provided at the bottom which will help you to understand more about the Industry and specific to the company )


It is a fact that few other business groups are keenly looking to tap the opportunities in this sector .But  I strongly believe , MAX group is one of the most eligible business group to run  such a business because of their experience in running hospital/medical business for decades. In addition to this, company having a treasury Corpus of  around Rs.300 Cr (after recent buy back) and other monetizable assets of worth Rs 160 crore to fuel its growth going forward and its current market cap is even below the combined figure of these liquid resources. Promoters didn't participate in the just concluded buy back ,hence their stake in the company increased from 40 % to above 51% .


 According to the Global Health and Aging Report by the World Health Organization, people aged 65 and above is projected to grow from an estimated 524 million in 2010 to nearly 1.5 billion in 2050. In the US alone, senior care is an established industry valued around $750 Billion at present and growing at 6% per year. As per available statistics, percentage of senior citizens in India to total population is about 8% which is expected to increase to 20% by 2050 . Considering the huge population of India, changing life style and way of thinking, more disposable income in the hands of citizens, possible government aid for senior care etc., I believe this industry having huge potential going forward. In last FY company reported a turnover of Rs.230 Cr .Since this business is just taking off and company is now in the investment phase ,this is not  a stock who are looking for historic data like  ROE,ROCE, P/E ..etc at this stage and this company may not report any commendable numbers for another few quarters . But I strongly believe they are in a sweet spot with enough resources and experience, management bandwidth, huge business potential ..etc and able to deliver good return to share holders in the years to come. Max India is currently trading around Rs.80 in both exchanges.

Once again wishing a Happy Diwali to all my dear friends  ...

For more details and Reports , go through the following links.

Antara Company Website Link HERE

Antara Senior living Apartment Video Tour HERE

Max India Investor presentation HERE

Max India Q1 FY 2022-23 Conference call Audio link HERE

Article on Senior Care business LINK1 , LINK2


P    Above note is prepared only for educational purpose .Part of data used in the above note taken from publicly available sources and credit of the same goes to the original owner . Few sentences are copy pasted without any editing . Personally holding shares of Max India  , hence views expressed here may be biased , do own due diligence before taking any investment decision.


Saturday, October 30, 2021


As we are aware, long-term investors always searching for early signs of emerging trends and try to make benefit out of it. Since our government already declared their aim to make India as a manufacturing hub and taking lot of efforts in this direction.  We all know, without developing Electronic Manufacturing, it is not easy to convert India as a manufacturing hub to the world and recent issues related with semi-conductor shortage underlining this fact. With this background let us look into a company that may benefit immensely from India’s efforts to become an electronic manufacturing hub and increasing Electric Vehicle (EV) penetration.

Government support with incentives is the major attraction of common man to shift to EV for the time being. But factors like skyrocketing fossil fuel prices, increasing awareness about environment protection may result in a natural shift though it may take some time. Still there is lot of experiments happening in the energy saving space and personally I am expecting emergence of a breakthrough technology in this field which can revolutionize the EV usage. It may happen in the form of quick charging- long lasting batteries that will reduce the effective cost and positively impact ease of usage. Because of this reason, I am not very enthused in the highly proclaimed ‘Lithium Ion Battery stories’ and not aggressively betting on such companies at least till this industry show widespread acceptance even with the current limitations of Li-Ion batteries. In this situation , let us look  into a company that is expected to benefit from electronic manufacturing as well as EV penetration in spite of the battery we are going to embrace in future.


Whatever be the battery pack, ‘Ferrites’ are unavoidable part of an EV and more than that for the electronics industry. Ferrite can be defined as “Any of a class of metal oxides which show ferrimagnetism; used in transformers, inductors, antennas, recording heads, microwave devices, motors, chargers ,loudspeakers (copied from publicly available sources). Ferrites are generally divided into two - Hard Ferrites and Soft Ferrites. Hard ferrites have high coercivity, so are difficult to demagnetize. They are used to make permanent magnets for applications such as refrigerator magnetsloudspeakers, and small electric motorsFerrites that are used in transformer or electromagnetic cores contain nickelzinc, and/or manganese compounds with low coercivity are called Soft Ferrites or Temporary magnets which activate and work only under and electric field. The low coercivity means the material's magnetization can easily reverse direction without dissipating much energy. Out of these, soft ferrite is more complicated both in terms of manufacturing process and characteristic requirements hence we have limited manufactures in India for this and demand for rest is met by imports.

 Let us look into the application of soft ferries in various fields. In automotive electronics soft ferrites find applications in Battery Management system, DC-DC converter, Car security, Keyless entry system, Auto start/stop, Battery Charger, Lighting ..etc. Another emerging opportunity is in the field of Solar inverter that is gaining wide acceptability in recent times. LED lighting is another big opportunity for ferrites. Smart Energy meter is another big emerging business opportunity for this industry. Among these let us look into EV opportunities specifically. Since magnetic systems used in many components like transformers PCB ..etc., this product is critical for an EV .It is used mainly in EV charger and conversion units as part of Line filters, Inductors, transformers..etc .Ferrite core transformers are present in PCB also that find applications not only in EV but electronic industry as a whole. This clearly means demand for ferrites will increase in tandem with the EV penetration and India’s efforts to make our country a manufacturing hub going forward.


The company we are trying to study is BSE listed Cosmo Ferrites .  Yes , the same company covered in this blog about 10 years back around Rs.13 .Few of my old readers  may doubt why it is again now  after more than 10 fold rise in its price. Changed business potential is my only answer for this question. This company belongs to the same business group that owned another listed company Cosmo Films (market cap of around Rs.2800 Cr) which is operating in packaging related business. This business group is perceived as clean and minority shareholder friendly one. Manufacturing plant of Cosmo ferrites located at Solan, Himachal Pradesh. Alisha Coils and transformers – a division of Cosmo Ferrites- manufacturing SMPS Transformers from 10W to 250W as forward integration. Citing better business prospects on account of emerging trends in user industries, company now enhancing its production capacity by 50% from 2400 MT to 3600 MT at a cost of Rs.30 Cr. As per company estimate contribution from enhanced capacity will start to reflect from first quarter of FY 2022-23. It is a fact that, so far company’s performance was erratic. Only in recent times it started to show improved performance with good profit margins that indicating changing fortunes of the company due to emerging business potential. 

Cosmo EV Video Link HERE

In latest September quarter, Cosmo Ferrites reported a top line of around Rs.27 Cr, bottom line of Rs.3.51 and an EPS of Rs.3. Considering management’s confidence to enhance capacity by 50%, robust prospects of user industries like Electric Vehicle, Solar Inverters, Energy meters, Battery Chargers, Transformers ..etc it is expected to perform well going forward. At present company exporting its products to more than 50 countries.  Company is a government recognized export house and as a testimony of increasing export opportunities, Cosmo's export turnover reported a robust 48% growth in latest quarter. 

CMP. Rs.168


Part of data used in the above note are taken from publicly available sources and credit of the same goes to the original owner . Personally holding shares of Cosmo Ferrites , hence views expressed here may be biased , do own due diligence before taking any investment decision.

Saturday, April 10, 2021



EKI Energy Services - EnKing International - ( EKI ) is a company listed in BSE ( Scrip Code-543284)  just three days back. I am aware about the fact that  there is many additional risks in buying a stock just after IPO and listing . So please take this note only as an introduction to a company that is operating in a niche sector which I feel there is very big opportunity existing in the years to come . Enking claiming that they are  the  ‘ World largest Carbon Credit Developer and Supplier’ . I have no statistics with me to verify and ascertain this claim but it is a fact that company generating more than 90% of its income from overseas markets.

 The Sector and Scope  

Global warming is a threat in these days and all countries around the globe realized the seriousness of the same and necessity to fight against it. It is widely accepted that Green House Gases ( GHG)  is the major reason for global warming . Kyoto Protocol was a landmark development in the history of world for the fight against global warming. The Kyoto Protocol is an international treaty which extends the 1992 United Nations Framework Convention on Climate Change (UNFCCC) that commits state parties to reduce greenhouse gas emissions, based on the scientific consensus that global warming is occurring and human-made CO2 emissions are driving it. The Kyoto Protocol implemented the objective of the UNFCCC to reduce the onset of global warming by reducing greenhouse gas concentrations in the atmosphere to 'a level that would prevent dangerous anthropogenic interference with the climate system'. The Protocol's first commitment period started in 2008 and ended in 2012. All 36 countries that fully participated in the first commitment period complied with the Protocol. However, nine countries had to resort to the flexibility mechanisms by funding emission reductions in other countries because their national emissions were greater than their targets. A second commitment period was agreed in 2012, known as the Doha Amendment to the Kyoto Protocol, in which 37 countries have binding targets. Negotiations were held in the framework of the yearly UNFCCC Climate Change Conferences on measures to be taken after the second commitment period ends in 2020. The Protocol defines three "flexibility mechanisms" that can be used by Parties in meeting their emission limitation commitments. The flexibility mechanisms are International Emissions Trading (IET), the Clean Development Mechanism (CDM), and Joint Implementation (JI). IET allows Parties to "trade" their emissions that held in digital form (Assigned Amount Units, AAUs, or "allowances").


 Next to Kyoto Protocol, another important event  in the same direction was ‘The Paris Agreement’ which is an agreement within the  UNFCCC on climate change mitigationadaptation, and finance, signed in 2016. As of March 2021, 191 members of the UNFCCC are parties to the agreement. The Paris Agreement's long-term temperature goal is to keep the rise in global average temperature to well below 2 °C (3.6 °F) above pre-industrial levels; and to pursue efforts to limit the increase to 1.5 °C (2.7 °F), recognizing that this would substantially reduce the risks and impacts of climate change. This should be done by reducing emissions as soon as possible, in order to 'achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases' in the second half of the 21st century.

 The concept of carbon credit and its trading.

A carbon credit is a generic term for any tradable certificate or permit representing the right to emit one tonne of carbon dioxide or the equivalent amount of a different greenhouse gas. ( Courtesy : Wikipedia)

Let me explain the concept in layman’s language ,  as per the agreements approved by the participant countries in UNFCCC a fixed level of GHC emission is permitted for each countries, that in turn divided among the industries/companies operating in that country.  Suppose you own a polluting industry that generates 100 units  of greenhouse gases beyond the level permitted to you . On the other side , suppose one of your friend own a large area of plantation or a large solar farm  that generating pollutants 100 units less than the permitted level to him. If you have no option left to reduce pollution( gas emission)  below the permitted level or it is uneconomical for you, you can buy your friend’s 100 units available with him to offset your excess generation and comply with the rule . Ultimately this resulted in transfer of some money from your pockets ( assume the seller is someone you don’t know and sitting somewhere in the world ) to the seller . Such an earning will help and encourage the seller to plant more trees or establish another power plant using non fossil fuel unit  . This is the basic concept of carbon credit trading .The tradable carbon credits are held in digital form.

There are two types of Carbon credit market , one is mandatory by law of each countries and the other is voluntary . The voluntary market is driven by companies and individuals that take responsibility for offsetting their own emissions, and entities that purchase offsets before emissions reductions are required by regulation. Buyers are driven by corporate social responsibility, ethics, a desire to enhance their reputation and so on.

As per reports by 'Reuters' , based on 2020 statistics ,The turnover in global emissions trading hit a record high last year of $214 billion as prices rose on current or expected stricter regulation. The turnover was up 34% from previous year and marked a third consecutive year of growth. It is a fact that ,not even 25% of countries in the world  started carbon credit trading and we can imagine the potential opportunity size from this statistics.


Role of Company

 EKI - acting as an advisor, facilitator  and solution provider in environment protection initiatives of corporates ,NGO.s ,individuals..etc. . They are providing  end to end solution to achieve carbon neutrality. Their business activities can be broadly classified into :

Carbon Credits management.

*  Climate Change Advisory Services.

* Business Excellence Advisory & Training Services.

* Electrical Safety Audits.

They are assisting in completing all formalities for earning carbon credits that involved various inspections, certification ..etc.  and helping the buyers and sellers of the same to find their genuine counter parties and smooth completion of transaction. Though they are operating in these four verticals, more than 90% of income coming from carbon credit trading and that itself from overseas customers. Company’s client list includes various firms from countries like  Australia, USA, Germany, Europe ..etc. and its Indian client list includes Airport Authority of India, World Bank, Azure Power, National Thermal Power Corporation (NTPC), GAIL, GMR Energy Limited, NHPC, Indian Railways, etc.

Financial Performance.

Company reported a topline of Rs. 66.02 cr and a bottom line of Rs. 4.47 cr in FY 2019-20. For the first half of  FY2020 -21 ended in September 30. 2020, it reported a turnover of Rs. 59.96 Cr. and a net profit of Rs. 5.39 cr. Post IPO company’s equity will be Rs. 6.87 Cr ( FV.10) and promoter holding will be close to 73%

ParticularsFor the year/period ended (₹ in lakh)
(Six Months)
Total Assets2,186.191,609.68412.31276.60
Total Revenue5,996.346,601.901,988.13701.01
Profit After Tax538.58447.4568.0426.91


Having said, at present company generating more than 90% of income  from overseas  .It is not a surprise ,considering the fact that still the rules prevailing in India is not strict in case of environment protection and Greenhouse Gas ( GHG)  emissions. . If we consider only the local opportunities at present, this company may termed as one  'came ahead of its time ' as it started in 2011 but at present they concentrating in developed countries where rules are stricter. Nowadays we are in an effort to make our country a manufacturing hub . When the percentage of agriculture reduces and that of  Industry increases, we have no other choice but implementing stricter rules to stay within global standards .We can’t unilaterally move without adhering global treaties and other norms in future and this situation will open up exciting opportunities for companies like EKI .Even in the present situation, many Indian firms who are eligible to get carbon credit not utilizing the opportunity due to their ignorance about it. Company is planning to utilize majority of the IPO proceeds for working capital requirements including strengthening the sales force both in India and abroad. I believe this will surely bring better business going forward provided the promoters are capable to execute. Company expecting market for carbon offsets is set to boom, especially once a solution arrived in the issue of rulemaking for the operation of international carbon markets sorted out among the countries that have signed the Paris Agreement. This is expected to happen at the upcoming conference of Parties scheduled to occur in November 2021. The meeting should have happened in November 2020, but postponed by a year due to pandemic. If there is no consensus in this meeting mainly about the trading of carbon credits earned during Kyoto Protocol regime ,that may affect the entire reliability of this mechanism. The question to be answered is whether the carbon credits earned between Kyoto Protocol and Paris agreement is valid or not for trading. Whether it is valid or not, an early ultimate decision on it will end the uncertainty on this subject that is expected to bring new direction for carbon credit trading worldwide. 

                                                       It is a niche company in this sector and a pioneer in the industry that started operations more than ten years back. The only (somewhat) similar pure play company I could find in India is Emergent Ventures India that is an unlisted firm . If my understanding is correct this is the first listed company from carbon trading space not only in India but  in the entire world. Current price Rs.162

 Company Website link HERE

Points to Note :

Company is a newly listed one and came to my attention only recently , so I have no clear idea about its promoter’s credentials  and their attitude towards minority share holders. In few IPO’s ,companies' shown sharply  improved financial performance in just previous year of IPO through window dressing to attract potential IPO investors , only time will tell what the case here in these above points. Since it is listed in BSE SME with a market lot of 1200 shares , liquidity may be less compared with main board listed stocks. Prepared this short notes on EKI purely to introduce a niche company listed in a futuristic space , no need to take it as a recommendation to BUY or SELL the stock.


      The above note prepared based on the information taken from publicly available documents like Wikipedia, Company IPO prospectus and other sources, few sentences  reproduced without editing.

 You can refer the below links for more info :

Discl: Holding tracking qty shares


Saturday, February 6, 2021


 Many investors are ready to take higher level of risk for multi bagger return. It is not only a game of risk taking but testing our patience and conviction too. Though we are always looking for such opportunities, it came rarely in a market like India due to various reasons. Advanced technology is one sector many such multi baggers may born in future. But unlike US market, number of listed companies operating in upcoming futuristic sectors like Robotic Process Automation ,3D Printing, Genomics ..etc. are rare in India in listed space  .In this background let us look into a listed company which seems seriously venturing into 3D printing space . 3D printing is supposed to be the disruptive technology which will revolutionize ‘how the world manufacture’ in the future. In every bull market many companies change their line of business and attach the tag of hot sectors with their name  to lure investors for higher market cap . But why I look into this company is – It belongs to a business group with more than 100 years of tradition and their other listed company trading at a market cap of more than Rs.17000 Cr. 

The JK Group

The JK group founded by Singhania family in 1918. The family is currently divided into three main groups headed by Dr. Gaur Hari Singhania based in Kanpur, Shri Hari Shankar Singhania based in Delhi and Shri Vijaypat Singhania based in Mumbai .  The three men are cousins who now run independent businesses, which are technically and legally separate entities and have no cross-holdings or common directors and employees, sharing only the family history .( Courtesy : Wikipedia) .The company we are discussing belongs to  Gaur Hari Singhania group  and this group’s only other listed company is JK Cement which currently trading  with a Mcap of over Rs.17000 Cr. There are two other unlisted companies namely JK Technosoft and JK Cotton also belongs to this management.

Recent Developments in JAY KAY Enterprises .

 JK Enterprises ( FV.Rs.1)  may termed as a penny stock till the company announce its new plans  and its 52 week low price is less than Rs.3 with promoter stake of 32 %. Now management decided to hike their stake from 32 % to 52 % by subscribing additional shares and warrants through a preferential offer @ Rs.10. This fund infusion is for the purpose of setting up a 70:30 joint venture with EOS Singapore Pte ( Ultimate holding company is ElectroOptical Systems (EOS) GmbH – Germany.) EOS is one of the world leaders in 3D printing technology especially in metal and polymers. They are well known for Metal additive manufacturing, that is used in 3D printers to produce metal based products. The newly formed joint venture (70% stake with Jay Kay Enterprises and 30% with EOS) will be  named as NuMesh Labs and it is aiming to enter the business of 3D metal design, design optimization, 3D Consulting services, product prototyping and design for bulk printing.  In addition to this ,Jay Kay Enterprises also decided to invest in a print farm and the assets and infrastructure of this print farm will be directly under Jay Kay Enterprises itself .As per company press release “   With this new venture, Jaykay Enterprises will become an integrated player in the 3D Metal Printing market through its cutting-edge manufacturing technology.”

As per study and analysis done by E&Y for the company, In India,  metal 3D printing market is growing at  a CAGR of 33% to reach around Rs.1200 Cr by 2025, and sectors like Defence ,Aviation,Medical equipments ..etc which need high precision will contribute maximum to the growth of this Industry going forward. I believe this is the first listed company in India that took a bold and serious  move to serve 3D printing technology in India .

Points to Remember

Industry is at nascent stage in the world or at least in India .Though there is great hope about 3 D printing, technology is fast changing around the world and disruptions may happen even beyond our imagination. How our businesses adapt this technology for production  is a point to wait and watch , but I feel increasing wages and government’s aim to make India as a manufacturing hub for the world will aid faster adaptation of such technologies here. JK group not jumped into 3D printing technology overnight, in 2018 they acquired 27% stake in Nebula 3D services which is operating in 3D design , scanning and modelling services. I feel ,they studied the potential of this industry during past few years and now this  decision  for forward integration is a well thought one seeing the future potential . Promoters hiking stake substantially and the joint venture partner’s credibility and experience in this field are added positive points . Considering the huge potential of business (once more are more companies turn to  3D printing route in India) , support of well known JK group, personally I prefer to take some risk on Jay Kay corporation. With long business experience  of promoters, I believe , after gaining sufficient experience in component manufacturing using 3D printing technology , the print farm under the direct control of company may utilized for supplying parts for end user industries in future.

Whether this is worth at Rs.70 Cr market cap is upto you .Personally I believe  this stock is not for faint hearts or those checking the results on a quarterly basis (at least for next few quarters/years)  or taking investment decisions based on past performance , but only for those willing to forget even  the entire capital invested and with lot of patience for a potential multi bagger in an emerging industry in India. Current Price Rs.28

You can read recent company announcements in the following links :

Link 1 ( 4 Pages) 

Link 2

Since 3D printing is relatively a new technology , at least few of you may think  it is printing something on paper but it is a new production technology for manufacturing different things in a different way . Lot of articles and videos available in web about this and I am attaching link of few below.

Link 3

Link 4

Link 5

This is my personal thoughts on this company and not at all a buy recommendation. Do own due diligence /consult a SEBI registered advisor before any action.

Discl: Holding few shares , hence my views may be biased. All information (otherwise specified as personal views) taken from publicly available documents and company filing to stock exchange .

Saturday, July 11, 2020


Till few years back Mayur Uniquoters was the  darling of investors and one of the biggest wealth creators in the history of  Indian equity market . Later, colour  of  this artificial leather manufacturer faded  due to reasons like muted growth in business and some family feud. It seems, after a gap of  few years , now situation again turning in favour of the company .

                                    Mayur is the largest player in the artificial (synthetic) leather market in India .Company’s products are mainly used in Automotive and Footwear industries. As a testimony to their product quality , this is the only Indian company supplying products to US and EU  based marquee OEM’s like Chrysler ,Ford, .etc .Its Indian client list includes who is who in the automobile and footwear industries like Maruti Suzuki, Hyundai motors (recent addition) ,Honda ,Mahindra, Tata Motors,Yamaha, MG,Bata,Relaxo,Paragon,Action, Khadim’s ,VKC..etc .  Share of exports to total turnover increased more than 150% in last 10 years . Strong R&D , fully integrated operations , concentration in supply to  quality conscious OEM’s helping the company to keep its margin at higher level and a strong balance sheet.

Global synthetic leather market is expected to reach $31 bn by next year .If we take the top five (on the basis of capacity) players in this industry , three out of five players are from China and Mayur is at second place only behind China based  Anhui Anli Material Technology Co. Because of its successful effort to concentrate in high margin products, Mayur is  one of  the most profitable companies operating in this sector in the entire  world. Synthetic leather are mainly two types- PVC based and PU based . Till now Mayur was present only in PVC based products with an 11 % market share in local market in an industry where lot of small players are competing . Even if the pricing power is limited in this Industry  ,Mayur generating good margin due to  their success in client selection who are willing to pay premium for quality .

                                               Mayur started its initiative to diversify into PU based artificial leather in 2014 . Rs.3500 Cr is the estimated market size of this product in  India as of now and this demand is mainly met through imports . Out of this figure 90% is imported from China alone. This is a huge opportunity Mayur is looking to tap. After facing many hurdles in project implementation and deadline changes , Mayur just started the production of this product now . This is high margin and  low competition product compared with PVC based artificial leather .Considering company’s already established good relation with customers ,Mayur is expected to capture sizable market share of PU product in coming years . Other than Mayur , there are only three small manufacturers in India for PU based products whose capacity all together is less than half of the capacity of Mayur.Anti China wave in many countries due to various reasons are also expected to act as a catalyst for a faster transformation.In last few years company lost few of its south based big customers mainly due to logistic related and other competitive disadvantages as its plant is located in Rajasthan. This is one reason for muted top line growth in past few years . In order to overcome this situation and increase the efficiency of service to south based customers , now company is planning to start a plant in Anantapur, AP

Major Headwinds :

·       Though the company reported better than expected performance in March quarter, there might  be some negative impact on business in recent times due to Covid Pandemic related production and demand disruption.

·       Family feud is an issue and one of the major reason for under performance of this stock. Son ( holding 15% stake ) of the major promoter resigned from the company in 2017 and now son-in-law is acting as next to  Suresh Kumar Poddar ( Chairman) . Any truce among family members will surely re-rate this stock.

Major Tailwinds

·       Integrated, R&D driven company in a growing Industry
·       Strong balance sheet with cash /Cash equivalents on book
·       There is lot of unorganized small players in PV based synthetic leather  segment, pandemic related issues will surely affect them most compared with companies like Mayur with strong balance sheet. If this situation prevail for a long time , it may result in consolidation in this industry and ultimately help the organised players in the longer term.
·       PU leather segment is a big opportunity and it may change the fortunes of the company going forward. Though the ramp – up may bit slow due to Covid issue,after many extensions , now they started the commercial production of this product
·       New customer addition – many major players in auto sector  in India are customers of Mayur, but not  Hero Motocorp . Company is in discussions with Hero and expecting positive outcome in a couple of quarters. In the export market, for the past five years or more  they are trying for first shipment to Mercedes. It got delayed due to various formalities like plant inspection. Approval..etc . As per latest con-call, this will happen  by last quarter of ongoing FY and it will be another feather in the cap of this company. Company is also in discussions with BMW and expecting positive outcome in near future
·       Government recently hiked the import duty of artificial leather from 10 % to 20 % ( 22% including surcharge) , this will surely help Indian companies to compete  in a better way with Chinese counter parts .
·       Cost of major raw materials are related with the price of Crude . Due to various reasons, crude price is expected to move in a range which will result in stability of RM cost.
·       In case of raw material, to avoid import dependency, company planning to start own production of P U resins in another one year.


 CMP Rs.221

Link to company website HERE

This is my few thoughts on Mayur Uniquoters and the decision is your’s  

Data source : Publicly available documents , con-calls and interviews of management.

Wednesday, May 22, 2019

Be Positive and Vigilant ....

We are now ready to welcome a new government. Whether it will be the continuity of the previous one or formed by new faces is the question in everyone’s mind. The last five years were mixed for investors. The first half was excellent with all round enthusiasm, participation from FII’s, Institutional and retail investors..etc. but the last one and a half year was no so good for market especially for retail investors due to signs of weakening economy, liquidity crisis, global issues..etc.  Unexpected currency note ban, implementation of GST without proper preparedness, introduction of long term capital gain tax , election related uncertainties, serious liquidity crisis in our economy ,  rise in crude oil price, trade differences between US and China ..etc are some of the concerns which affected our market in the second half this government. Though we are still not fully recovered from such macro headwinds, we can’t forget the strength of an economy with more than 130 Cr population if properly managed , supported and utilized by the upcoming governments. From the point of view of investors in equity market, we have passed many such acid tests during the past many years and many of our corporates weather the storm of such macro factors and emerge as winners.

                                                                                   The success of any investor depends on his/her ability to foresee the upcoming opportunities and make timely changes in their portfolio to gain out of such opportunities. Unfortunately one section of retail investors still believe, buy some stocks and wait for a long time is enough to make money out of it . We have discussed this subject many times in the past and advised to take investment decisions based on the changes happening in the company. It is a fact that  holding a stock without proper periodic review will not give any gain  and it may even results in enormous wealth erosion especially  in case of debt laden high risk companies which we invested with an anticipation of debt restructuring, asset sale..etc ( Though I am not recommended directly ,Ess Dee aluminum is one such stock we have discussed earlier in this genre ) .Having said  , debt restructuring was the investment rationale of few of these companies but it didn’t go through as expected mainly due to the sudden withdrawal of various types of debt restricting schemes  by RBI ( Read details HERE) .Then encouraged debt resolution process through insolvency and bankruptcy code taking too much time due to various reasons and this delay adversely affecting such troubled companies ability to survive. In case of small companies, resolution through IBC facing lot of challenges due to red tapism, lack of clarity in procedures, legal matters  ..etc resulting even in winding up of such companies itself . Situation of negative net worth for consecutive three years is really a bad sign and we should check the annual reports and foot notes of results of such vulnerable companies and act accordingly without any delay in order to save   at least part of our investment.
                                                                                            In my opinion, whatever be the macro factors, the stock market is here to stay and investors in growing companies will ultimately gain in the long term .So short   term opportunities should be utilized with a long term view and hold stocks which qualify your periodic checks and balances. Always prepare the portfolio according to your risk taking capacity and not based on the portfolio of your friend or neighbor.( Personally I advise  a balanced portfolio of stocks with  Compounders, growth companies ,deep value ones, high risk opportunities ..etc and the ratio of each category should depends on ones’ risk taking capacity)   . If you feel something wrong is going on or against our calculation or feel  we took a wrong decision ,exit at the earliest even in a loss without any hesitation. Better to avoid leveraged positions especially at the time of important macro events like election outcomes..etc

Happy investing        


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