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Feb 24, 2023 27 tweets 9 min read Read on X
#Syrma #Kaynes #Dixon #PGEL

#EMS market is set to grow at +30% CAGR for at least next 5 years from ₹1,469Bn to ₹6,000Bn by FY27.

🧵 on some spl. business insights from Q3FY23 concall & other sources

@soicfinance @ishmohit1

1 can't miss this decadal opp.

Retweet♻️ & Like👍 Image
There are 2 models that business generally follow:

1. Low Value High Mix (LVHM) - eg. consumer
2. High Value Low Mix (HVLM) - eg. Industrial

This data suggests both type of businesses are set for long-term high growth. Image
This is a crowded space with Indian and large MNC players. However, the industry as a whole is set to grow exponentially and established players who can achieve scale & offer wider capabilities stand to win bigger + mgt. are saying they are just scratching the surface ryt now. Image
Different players & verticals they operate in Image
#Kaynes Segments, Customers, Products supplied
#Syrma Segments, Key Customers & Products
Some tracking variables for both businesses from Q3 FY23 concall. #Kaynes #Syrma

- ODM (IP/designing is developed in-house) & Exports are higher margin

- Box build - is generally high margins but depends on type & segment Image
P/E on Screener can be misleading:

#Kaynes guidance based on current order book:
FY23 - Sales 1200 Cr./ PAT 86 Cr. (P/E 62x)
FY24 - Sales 1700 - 1800 Cr. (Fwd P/E 37x E) Image
Similarly based on the order book one can come up with estimated sales & PAT and TTM P/E for #Syrma.

Your homework (Hint - its cheaper than #Kaynes)

Kaynes may grow faster. Image
#Kaynes New segment - Clean Energy

1. Hydrogen fuel area for non-automotive purposes.
#Syrma New segment - Clean Energy:

1. EV Charging infrastructure
2. Energy storage Image
#Kaynes Old Narrative China +1, new narrative "Minus China + One" wah !!!

Very interesting insights on large deals taking place (final discussions) with huge tech transfer and shift from China/Europe.

Even Syrma is adding clients but didn't share such details. Image
There are several other details that I am not sharing here. Read DRHP & Q3FY23 concall.

This space seems very interesting with long runway, as Syrma mgt says, "this is a huge industry and we have barely even touched the surface of this industry"

"Y2k moment"
Given huge growth🏃way, large TAM, 30% CAGR industry level growth, and no barriers 4 est. players to enter new segments -> likely that every player will deliver nos. what may differentiate one is efficiency, WC mgt., Inventory mgt., scale & capabilities, facilities near customer.
One may take a bet on EMS co. or could also consider electronic component proxies like #SBCL #XPROindia. I have been looking at #PGEL since CY21 when #Dixon the Indian's "Universal Champion" & #Amber where flying but its High Debt keeps me away.

Dixon's Moat👇
Sources: DRHPs, Research Reports, Concalls, Investor Presentations.

This should give you an idea of where to look for info. when researching co. DRHP is the sweetest place to understand the Industry. Look for the most recently published DRHP of a co. in that industry.
Discl: Closely tracking/studying #SBCL #XPROINDIA #Kaynes #Syrma, may have a position in some.

#Cyient is another one. Looking fwrd to @soicfinance Sunday video on that biz.
Just to add:

Dixon, Amber, PG Elect WC days & CCC

Theres a stark difference compared to Kaynes & Syrma.

Industry is heavily dependent on electric components imports, not sure how inventory days are kept so low. Commonality, these are all consumer heavy biz. with low CCC.

Adding more value to 🧵

No. of Customers #Kaynes #Syrma

Reading both co. DRHP & Concalls, its clear Kaynes is more open to sharing details with shareholders. Image
Another eg. of how open is #Kaynes mgt. in sharing details that #Syrma didn't.

They even shared no. of Orders Cancelled (OC) in FY. However, not sure of value of such order.

OC % - 7%, 3%, 1%, 1% in FY20, FY21, FY22 & Q1FY23 respectively, seems reasonable. Image
#Kaynes Capacity & utilisation %

FY22 - Majority achieved 90% utilisation Image
#Syrma Capacity & utilisation%

FY22 - Achieved 80-85% utilisation Image
Asset Turnover ratio: measures the efficiency with which a company uses its assets to produce sales

For the period ending FY22
#Kaynes 4.79x
#Syrma 4.43x
#Kaynes Workforce in various dept. interesting no. compared to Syrma Image
#Syrma Workforce in different dept. Image
#EMS stocks have rallied ferociously, starting valuations not cheap but this story is at very early stage. LT earnings CAGR could deliver good returns.

Only problem, my style doesn't allow me to take big bets here, but one could have some exposure post some correction. Image
#EMS Latest growth estimates & valuations

#Dixon #Syrma #Kaynes #PGEL #Amber #CyientDLM Image

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More from @mmali09

Feb 2
High level case study

Incredible transformation results in 20x returns in 1 year for this co.

Sales - more than doubled
OPM% from 3-4% to 12%
Interest exp - fell over a period due to deleveraging
PAT - from consistent loss to 600cr.


1/ Image
2/ Huge Deleveraging:

Balance sheet transformations are some of the strongest signals of potential turnarounds Image
3/ Interesting fact about the co.

Its into DI pipes & Specialised Ferro Alloys

Their Ferro Alloy realisation is incredibly high & probably the highest in the industry at +1.70L/ton, here's comparison to Shyam & Sandur.

P.S - I don't track the industry closely

Read 9 tweets
Feb 15, 2023

Interesting development: Partnered with #Foxconn in 2W EV

- Foxconn is a large key component supplier to many OEMs globally
- Focus is mass production
- Achieve economies of scale = cheaper production cost per unit
- Fully integrated solutions

So why is this imp ?🧵


2021 news - Foxconn aims to build EV factories in Europe and India by 2024. Not sure if there has been any developments on ground but it gives an indication towards their ambition…

Longtime iPhone assembler Foxconn has been stepping up efforts to expand its presence in the booming EV industry since its new chairman assumed position in mid 2019.

Their chairman was in India last year discussing opportunity in India.
Read 10 tweets
Feb 11, 2023
#Specialsituation #Spinoff #Demerger #AARTIPHARM🧵

- Business overview
- Financials
- Valuations
- 1 year Concall highlights (Q1 FY22 to Q1FY23)

Took long to compile this
Retweet♻️ & Like👍

For wider reach
@soicfinance @itsTarH @Shubham_TLI @ValueEducator @Gautam__Baid

1/14 Image
2/ Co. overview
3/ Segments:

APIs & Intermediates for innovators & generic firms for a variety of applications like anti-cancer, anti-asthmatic, antihypertensive, oncology medicines.

Xanthine derivatives are used for beverages, as well as nutraceutical and other pharma applications. Image
Read 20 tweets
Dec 30, 2022
Craftsman Automation

Diversifying Powertrain vertical: Interesting insights🧵

Sharing my notes on recent "Dr Axion India pvt." acquisition by #Craftsman

Buy price - ₹375 Cr
Axion FY21-22 Sales - ₹716 Cr
P/S - 0.5x

Adds >30% to the +₹2000 Cr Top line


1/n Image
Powertrain vertical (Cylinder Heads is part of this segment) - 52% of total revenue

Leading player for:
- CV (#1 position) - 54% revenue
- Off highway - 20% revenue
- Tractors (among top 3-4 outsourced players) - 18% revenue

Whereas, PV is only 8% only

2/n Image
Within Powertrain vertical, Cylinder heads & cylinder blocks make up the major chunk at 60% revenue

3/n Image
Read 14 tweets
Jan 2, 2022
1/ Its been a while since I last posted🧵

But when your mentor asks you to read a business you oblige. Thanks @ishmohit1, please add your insights if you find any gaps.

#Taskus 🇺🇸 $TASK
"Outsourcing reimagined for the innovation age"
🔥60% Revenue CAGR over past 4 years
2/ Background: Founded in 2008 during recession by 2 high school best friends, Jasper Weir & Bryce Maddock
3/ While all major competitors in the industry were occupied serving traditional telco clients, they focused efforts on the emerging digital economy. Most clients have 3 things in common: they are truly customer obsessed, they've grown faster than nearly every other company
Read 63 tweets
Sep 21, 2021
#Heranba Anti-Thesis (Regulatory Risk)

1/ Started reading about the co. since it has one of the best ROCE in the AgroChem Industry with decent margins and reasonably valued.

Although growth levers are in place one long term risk stood out for me. Here's a 🧵on it

2/ About the co. - Great export biz - almost 50% Revenue from sales in 60+ countries (Exports). No client concentration risk with top 10 making 23% sales only.
3/ Leading forward integrated domestic producer of Synthetic pyrethroids & has has presence across its value chain (intermediates, technicals & formulations).
Read 16 tweets

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