Some companies that deliver future returns have hair on them to begin with.
#Camlinfine is one ex, has been going a transformation internally (not visible optically at present) and is now on strong footing with installation of commissioning of Diphenols capacity in Dahej.
Diphenols capacity helps them save on freight which was hitherto spent on importing from Italy.
This capacity makes them one of the very few players in the world with captive capacity of diphenols.
The diphenols derivatives to come will have substantially higher margins.
The optionality remains in terms of the bumper outcomes that can come from their agreement with Lockheed Martin for supply of speciality chemicals that go into energy storage( a huge sunrise opportunity) over the next few years as the supplies begin.
Most importantly, no growth can be built on shaky grounds, the diphenols capacity establishes solid foundations for Camlin to now grow on without looking back.
A similar pattern was visible in a number of chemical companies that grew significantly over the course of last decade.

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Saplings Capital

Saplings Capital Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @CapitalSapling

25 May
Great thread. #Garwaretechfilms is one of the few small caps, thats able create a brand in advanced markets. They compete with the likes of 3m in the US and while it gets valued as a commodity company, it deserves to be trading as a speciality consumer company.

Disc: Invested
A barometer of company's brand strength is it gross margins & Payment terms. GM% are at a great 65% at present( vs 38% for the commodity film companies) and the company offers no credit and works on a cash & Carry model.
Hard to find an Indian company that sells in the US in cash
One of the best models is for the company to sell to many small customers & that too in retail. Garware Hitech's customers are the 4000 paint tinters in the US. Their existing brand recognition amongst the tinters for the window films will work well for it paints film business.
Read 5 tweets
13 May
Even for a small cap investor a large % of his PF should be optimized for "Capacity to suffer & durability" rather than for pure upside.

In country like India, if one stays invested long enough the demographics & its upwardly mobile percapita income will take care of the upside.
This calls for a supply side excellence which creates a capacity of suffer through difficult periods or actually demonstrates antifragility and thrives under stress through the strength of its reputation and balance sheet by acquiring assets in distress.
A classic ex of this is APL apollo, over the last decade where most metal convertors have struggled, APL has demonstrated anti fragility thrived by using its superior balance sheet to acquire assets from companies that were in distress like the plant bought from Shankara.
Read 6 tweets
6 May
#PixTransmission is a dominant small cap in its duopolistic market of V-Belts, essential in all manufacturing sectors.
Company due to robust demand has recently approved further capex of 60 crores.
Promoter increasing stake.

Disc: invested from 300 levels.

Much more to come!
Indian Market is dominated by Pix & Fenner, V-Belts has repeatable purchase as the product wears out after a limited time.
Due to its use in every industry, it is required that the manufacturer have v belts in 1000's of sizes and every size has a different mold.
This inventory of molds calls for a significant investment, which acts as a moat for the incumbent.
Since v belts are used across India, the vendor is required to have most of its variants stocked with dealers across the country.Pix has a significant distribution moat in India.
Read 15 tweets
4 May
Investing in Small cap domination eventually leads to big wealth creation, Don't overoptimise for valuations here, in-fact optimize for Moat, if the company's business Castle is well moated, the long runway of opportunity will ensure you make a hell of a lot of money regardless.
The likes of Astral and Page hardly ever traded at conventionally cheap valuations since the beginning of last decade, but have still generated immense wealth for investors who have held it with the scarce commodity called "Patience".
While one might think that we chose the likes of astral and page selectively in hindsight, but the truth is truly moated small caps are hard to come by.
And being lenient with valuations is an act to be committed only with a select few.
When in doubt skip!
Read 5 tweets
15 Mar
A successful consumer tech company should always be valued significantly higher than a normal consumer company.
Opportunity size is large for both but the digital distribution of the tech company services allows it traverse the opp landscape faster than a normal consumer company.
Since capex is not a challenge in setting up a tech business, therefore a tech company has to create alternate barriers, thus the need to drive business velocity as network effect is true barrier to entry.
To get to that scale, tech companies have to sacrifice near term eps.
If public market doesnot agree with this, its the markets' loss, these companies will either stay private or raise equity from Nasdaq.

So in true tech if the public market participants want the alpha, they have to devise alternate methods to assess a company and its valuations.
Read 7 tweets
6 Mar
#Nazara's gamified early learning app, Kiddopia, subscriber base grew from 115,220 paying subscribers in January 2020 at the time of acquisition to 290,508 as of Oct 2020.

Stunning growth!

Another #Nazara subsidiary has 80% market share of Indian industry in esports segment.
#Nazara's annualised Advertisement & Promotion spends has gone from 27 cr in Fy19 to 238 crores this year. They can easily show significantly higher profits by cutting this marginally but its more about land grab at this point. Market should recognise that and value accordingly.
Gaming Vs Movies vs Music, although Movies get most attention due to glamour. But Gaming is bigger than movies and Music combined. Image
Read 27 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!

:(