Wonderful #racl geartech concall. I loved it. Key takeaways below:
1. RACL is EV ready
In b/w lines: EV require higher precision gears. Very few cos can make. Much higher gross margin.
Already doing tech investment in capex to be EV ready. Investment requirement in tech is much higher for EV gears. EV components will be 3-4% of topline in FY22.
2. Working with ZF on a BLW series 7 car for next year launch. Working on e-scooter or european company
In b/w lines:
1st marks RACL foray into premium luxury passenger vehicle transmission gears. 2nd is 1st time they designed entire drive train or kinematics.
For the 2nd, RACL will be sole supplier for next 10 years. Already have some visibility about volumes. Customer came to RACL 2-3 years ago, they co-designed the drivetrain.
3. What differentiates RACL. Why does it have 25% OPM in an industry which has 10-15% OPM?
From 2007-8 for 7-8 years they invested in building technology capabilities. They silently worked on acquiring skills and technology expertise which makes them indispensible for the client
They work on co-designing solutions with customers. Customer comes with requirement & drawing, then RACL suggests best possible way to realize highest value added for client while maintaining margins for RACL. Because they are able to provide end to end soution for engine gears..
because they provide such high quality work, client/customer do not negotiate too hard on the price. This is why they are able to command better margins.
If you like the thread, please RT so maximum investors can benefit.
Typo: BMW 7 series. :-)
Not comparing:

But sona comstar trades at 13x revenues, and racl at around 13x earnings accounting for the covid lockdown related bad earnings in q1 fy21.

You do the math.
As always standard disclaimer applies: I am invested and biased. This is not buy or sell reco. Request everyone to do their own research. 🙏🙏 Please consider joining vp as well. wonderful research happens on Vp specially for smallcaps :
forum.valuepickr.com/t/racl-geartec…

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More from @sahil_vi

1 Jul
On popular demand and @LuckyInvest_AK sir’s guidance, here is the thread to understand the business of #mastek
If you find it useful, please retweet _/\_ so that other investors can also benefit.
@LuckyInvest_AK Before mastek, let us understand the industry it operates in. Broadly speaking, the IT industry is an enabler for all businesses, automating those business tasks for them which are somewhat incidental to the core business. As an example, consider #ITC & their ITC store.
@LuckyInvest_AK ITC has its own ecommerce store from which products are ordered. Building out this IT product: the backend & the app, are incidental to the core business (FMCG brands) of ITC. Some companies choose to build and maintain in-house IT teams. Others, outsource it to IT companies.
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1 Jul
#SequentScientific 🐶🐱🐦🦒🦒🦅🐓
Q4 results. My key takeaways:
1. Medium term guidance of mid teen growth and no margin expansion.
Reading b/w the lines:
Co is investing heavily in upgrading and upskilling people, processes, creating capacities all with a focus on changing the terminal value of the business. Trading off Short term pain for long term gain: necessary characteristic for both co & investors.
2. Sequent 2.0 vision: Being executed under guidance of advisory board.
In b/w lines:
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Evolution takes effort, up front investments.
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30 Jun
Watched this recent interview of @SamitVartak sir with @PMS_AIF_World. Brilliant interview. Always learn so much from Samit sirs public sharing. My key takeaways:
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My thoughts:
This is one of the key things I've learned from Samit sir and other fellow investors, it is most important to understand the business and focus on compouding that knowledge by incrementally understanding more businesses rather than get bogged down by valuations.
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Planning to live tweet the #Angel AGM. In case anyone is interested.

Company description in the quoted tweet thread. Image
In 2016, were among the first BFSI to launch digital KYC.
Nse active clients has grown at cagr of 23% between 2014 and 2021.
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20 Jun
what better way to start sunday than a #kilpest thread: a classic peter lynch pick & shovel investment for the diagnostics sector. If you like the thread, please retweet this tweet to help educate max investors. 🙏🙏
Before I dive into Kilpest, some words on microcap investing. Everyone **needs** to be aware of what they are signing up for.
Two interviews from @varinder_bansal sir’s Omkara capital with very successful microcap investors (one with @iancassel sir: ...
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14 Jun
Which #microcap company should I create the next thread about? Follow the thread to vote!

Please read their screener.in pages and company websites before deciding. I'll also add a few lines for those who don't want to do that.
1. RACL geartech
A precision gear manufacturer (Soma Comstar rings a bell?) supplying to BMW, kubota, Yamaha, KTM. Sticky client relationship built over years. Aiming to grow topline from 180cr to 500cr in next 4 years. Industry leading margins of 15-20%. EV unlikely to disrupt.
Co is also undertaking 50cr capex which is likely to commence soon.
High precision gears are requirement for EV so that noise levels are low since RPM and torque are higher. RACL could benefit on margins whenever clients move to EV.
Read 13 tweets

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