Working capital days in screener shows it's 9 days as of March 24,
And why would you not hold, if thesis is not playing out in next 1 year, since the china is dumping the steel all around the world the steel prices are gonna be subdued for sometime, may be one or two quarter which may be affect this year, performance,
Also you mentioned that there is sectoral tailwind, just now the private capex story has been kicked in, though there is no barrier to entry, setting up the plant and maintaining relationship customer can be difficult for a new player and it would take sometime,
besides there are customers, who are with them for more than 10 years,
My question, why won't you give the runway if temporarily the thesis doesn't play out, or do you forsee any other risk that may play out? curious to know
I have calculated Cash Conversion Cycle = Receivable Days+Inventory Days−Payable Days and I have removed Payable days because companies can easily mask poor working capital position by delaying the payment to suppliers/vendors.
I agree with you that new player will take some time to build relationships and customer confidence but to gain market share they may be competing on price, which can lead to a reduction in profitability across the sector. (especially if new player enters Gujurat with decent capacity)
My thesis is not price realisation as I have already used FY'24 avg per tonne realisation. Important pointers to track is execution of order book, capacity utilisation and volume growth.
Management has historically overpromised and hasn't delivered on time.
New player in Gurjarat, as you may have said will impact the profitability however still it will take few years to to compete with them in such as scale , example for bansal itself, the unit 2, has taken almost 4 years to complete fully, and they themselves facing labour problem and attrition. So i guess the second risk may very be diluted or minor probability.
But if someone is already there whom have set up the plant then it's totally different, have to do scuttle-butt.
However, I do see the risk of over promised and not delviering, one counter arguement would be it was 2018, 6 years has been passed we have went through already one cycle,
and as you have mentioned except Asset Turn over ratio all other metrics have been improved significantly, management has been prudent, hopefully they learned from their mistakes,
but yeah i agree on excusion risk, thank you for clarifying it, appreciate you took time to respond
And let me know if someone has done or planning to do scuttle-butt regarding new players in Gujurat.
Penner Industries have clearly stated their order book. Hopefully, BRPL may also share the numbers for more c;larity. They had mentioned that the plant is booked till October,2024. So we should see these things in Q2'25 numbers soon.
I am not from gujarat or anywhere near to that area, so had to rely on valuepicr community.
Pennar has more debt and pledging right, left and center, Kindly ask about the new player in AGM meeting to the management themselves,
may be how confident on achieving the guidance and what are the risks that they think that are likely to playout for them to not to achieving the targets.
Thanks a lot for a detailed industry overview and thorough analysis of the company
Revenue north of 2 Lkh per ton seems too high, can you cross check?
Because steel prices are usually in the range of 50 to 70 per kg, value added by such business must not be more than 35%.
That should make it something like 67 to 94 per kg.
and if we convert that to ton,
67 per kg to ton= 67*1,000=67,000 per ton or
94 per kg to ton= 94*1,000=94,000 per ton
how company is making north of 2lakh per ton?
let me know if I m mistaking somewhere while calculation.
Thanks & Regards,
Kalpesh Mahajan
Working capital days in screener shows it's 9 days as of March 24,
And why would you not hold, if thesis is not playing out in next 1 year, since the china is dumping the steel all around the world the steel prices are gonna be subdued for sometime, may be one or two quarter which may be affect this year, performance,
Also you mentioned that there is sectoral tailwind, just now the private capex story has been kicked in, though there is no barrier to entry, setting up the plant and maintaining relationship customer can be difficult for a new player and it would take sometime,
besides there are customers, who are with them for more than 10 years,
My question, why won't you give the runway if temporarily the thesis doesn't play out, or do you forsee any other risk that may play out? curious to know
I have calculated Cash Conversion Cycle = Receivable Days+Inventory Days−Payable Days and I have removed Payable days because companies can easily mask poor working capital position by delaying the payment to suppliers/vendors.
I agree with you that new player will take some time to build relationships and customer confidence but to gain market share they may be competing on price, which can lead to a reduction in profitability across the sector. (especially if new player enters Gujurat with decent capacity)
My thesis is not price realisation as I have already used FY'24 avg per tonne realisation. Important pointers to track is execution of order book, capacity utilisation and volume growth.
Management has historically overpromised and hasn't delivered on time.
New player in Gurjarat, as you may have said will impact the profitability however still it will take few years to to compete with them in such as scale , example for bansal itself, the unit 2, has taken almost 4 years to complete fully, and they themselves facing labour problem and attrition. So i guess the second risk may very be diluted or minor probability.
But if someone is already there whom have set up the plant then it's totally different, have to do scuttle-butt.
However, I do see the risk of over promised and not delviering, one counter arguement would be it was 2018, 6 years has been passed we have went through already one cycle,
and as you have mentioned except Asset Turn over ratio all other metrics have been improved significantly, management has been prudent, hopefully they learned from their mistakes,
but yeah i agree on excusion risk, thank you for clarifying it, appreciate you took time to respond
Company has AGM on 21 Sep, I will try to join.
And let me know if someone has done or planning to do scuttle-butt regarding new players in Gujurat.
Penner Industries have clearly stated their order book. Hopefully, BRPL may also share the numbers for more c;larity. They had mentioned that the plant is booked till October,2024. So we should see these things in Q2'25 numbers soon.
I am not from gujarat or anywhere near to that area, so had to rely on valuepicr community.
Pennar has more debt and pledging right, left and center, Kindly ask about the new player in AGM meeting to the management themselves,
may be how confident on achieving the guidance and what are the risks that they think that are likely to playout for them to not to achieving the targets.
Really insightful about the stock - and honestly a great advice !