With this post, my focus would be to talk about companies which have attracted me with continuous out performance over past few quarters and that too, from some of the unpopular sectors.
I have always written about the companies we are following since long, but this time, since I don't have many new updates, am using the opportunity to write about some of the new names I have been following.
Obviously, if any one has any question on our regularly followed companies, please drop a question in comments section and I will reply to it as soon as possible.
1) Shivalik Bimetal Controls:
Came across the name when I was asked for my views on it by one of my friend. Initially because of some personal reasons, I was not able to dig much into it, however have tried off-late and it seems I am in a position to call it one of the companies nicely poised for growth.
It is mainly engaged in manufacturing of Bimetals and Shunt Resistors. The company went through a bad patch earlier when Television technology was growing fast and people moved from usual old school screens to LCDs and LEDs, as it used manufacture CRT tubes.
Starting with current business, first thing is obviously Bimetals as the name suggests, which as per wikipedia means an object that is composed of two separate metals joined together. Instead of being a mixture of two or more metals, like alloys, bimetallic objects consist of layers of different metals. It is used where you need to detect the temperature or current for e.g. fire alarm. It might sound small, but has huge number of applications. The areas covered by the company are nicely listed here:
http://www.shivalikbimetals.com/applications.php?pageId=17
The second important product manufactured by the company are Shunt Resistors. They are low resistance precision resistors used to measure AC or DC electrical currents by the voltage drop that those currents create across the resistance. They form an integral part of Battery Management System or Intelligent Battery Sensor for vehicles as well as Electronic Energy Meter. For more details, follow:
http://www.shivalikbimetals.com/product_details.php?pID=3
For both the products, they have very solid customer base, and this is one area with high entry barrier, hence it is not easier to find much competition that could lead to much of a pricing pressure. Currently, their customers supplies BMS mentioned above to the Electric Vehicle Manufacturers. In future, they are targeting to supply themselves, which could bring them in limelight and hence better market share.
Coming to good and the bad part together, which is their current valuation. The company is already trading around 35 P/E, which is much higher than what we usually expect from small cap company. However, the growth is very attractive and on top of it, the application of their products excites me about the possible growth in future.
Historic growth has been modest, but if you look at past few quarters, the growth is improving by leaps and bounds. For the first 9 months of FY'18, they have posted a sales growth of 28% and profit growth of 90%. The balance sheet seems very stable and reduction of Debt:Equity ratio every year is also appreciable. It is very good dividend player as well. Last year, they declared a bonus of 1:1 which is also commendable for such a small firm.
All readers can go through the company's detail and share their thought on the same.
Once again, this is not at all any recommendation. I have just shared a company name which impressed me with its numbers.
2) Kingfa Life Sciences:
Kingfa Science & Technology is a leading manufacturer and supplier of high quality Reinforced Polypropylene Compounds, Thermoplastics Elastomers and Fibre Re-Inforced composites. The applications of said products is available here:
http://www.hssil.com/frmProducts.aspx
I have always written about the companies we are following since long, but this time, since I don't have many new updates, am using the opportunity to write about some of the new names I have been following.
Obviously, if any one has any question on our regularly followed companies, please drop a question in comments section and I will reply to it as soon as possible.
1) Shivalik Bimetal Controls:
Came across the name when I was asked for my views on it by one of my friend. Initially because of some personal reasons, I was not able to dig much into it, however have tried off-late and it seems I am in a position to call it one of the companies nicely poised for growth.
It is mainly engaged in manufacturing of Bimetals and Shunt Resistors. The company went through a bad patch earlier when Television technology was growing fast and people moved from usual old school screens to LCDs and LEDs, as it used manufacture CRT tubes.
Starting with current business, first thing is obviously Bimetals as the name suggests, which as per wikipedia means an object that is composed of two separate metals joined together. Instead of being a mixture of two or more metals, like alloys, bimetallic objects consist of layers of different metals. It is used where you need to detect the temperature or current for e.g. fire alarm. It might sound small, but has huge number of applications. The areas covered by the company are nicely listed here:
http://www.shivalikbimetals.com/applications.php?pageId=17
The second important product manufactured by the company are Shunt Resistors. They are low resistance precision resistors used to measure AC or DC electrical currents by the voltage drop that those currents create across the resistance. They form an integral part of Battery Management System or Intelligent Battery Sensor for vehicles as well as Electronic Energy Meter. For more details, follow:
http://www.shivalikbimetals.com/product_details.php?pID=3
For both the products, they have very solid customer base, and this is one area with high entry barrier, hence it is not easier to find much competition that could lead to much of a pricing pressure. Currently, their customers supplies BMS mentioned above to the Electric Vehicle Manufacturers. In future, they are targeting to supply themselves, which could bring them in limelight and hence better market share.
Coming to good and the bad part together, which is their current valuation. The company is already trading around 35 P/E, which is much higher than what we usually expect from small cap company. However, the growth is very attractive and on top of it, the application of their products excites me about the possible growth in future.
Historic growth has been modest, but if you look at past few quarters, the growth is improving by leaps and bounds. For the first 9 months of FY'18, they have posted a sales growth of 28% and profit growth of 90%. The balance sheet seems very stable and reduction of Debt:Equity ratio every year is also appreciable. It is very good dividend player as well. Last year, they declared a bonus of 1:1 which is also commendable for such a small firm.
All readers can go through the company's detail and share their thought on the same.
Once again, this is not at all any recommendation. I have just shared a company name which impressed me with its numbers.
2) Kingfa Life Sciences:
Kingfa Science & Technology is a leading manufacturer and supplier of high quality Reinforced Polypropylene Compounds, Thermoplastics Elastomers and Fibre Re-Inforced composites. The applications of said products is available here:
http://www.hssil.com/frmProducts.aspx
If I start writing here, I might make it huge post in terms of length. Instead, I decided to just share the pic listing their clients which I found on google:
I would like to speak more on its numbers. It was one of the loss making companies until FY'15. Even though the company is still not making huge profits, but it has been a good ride up since then. The margins are very very low, but they have been improving each quarter.
The balance sheet also have some positives. Again till FY'15, the reserves were nill against debt of 75 Cr, and at the end of FY'17, they stood at debt:equity ratio of 0.3. From just 200 Cr in FY'15, it is likely to post annual revenues of about 600 Cr this year. Profitability wise as well, this will be one of better year for the company.
Coming to major negative, which is very heavy dependency on crude. The impact is not much seen on numbers because of modest profits in prior quarters, but going forward, it will be interesting to see how company copes up with the situation. Also, if we look at the current valuations, it is trading at P/E of more than 50. It can be called over-valued, but I would slightly differ in saying that it is trading based on forward earnings. The profit growth is likely to be more than 100% for next year or 2, but now with crude challenge, it has come under scrutiny. Let's wait and watch.
I have also been studying few more companies, but not able to reach conclusion yet. Hence thought of posting at least these 2 companies in the meanwhile, so that you guys are start research with me on those.
Discloure:
I am not a research analyst, nor an investment adviser. Through this post, I am only putting my views, and which has nothing to do with any action that can be taken by readers on any specific company.
I am not a research analyst, nor an investment adviser. Through this post, I am only putting my views, and which has nothing to do with any action that can be taken by readers on any specific company.
