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Interview with Gateway Distriparks Ltd

Interview with Gateway Distriparks Ltd
by 5paisa Research Team 11/11/2021

"Domestic demand for good quality warehousing has gone up"

In conversation with Samvid Gupta, Joint Managing Director, Gateway Rail Freight Ltd (Subsidiary of Gateway Distriparks Ltd. GRFL).

What is your outlook on the Indian logistics sector?

The logistics sector in India has bounced back throughout 2021 at a fast pace, as the demand has shot up tremendously with economic activity resuming after the second wave of COVID. Manufacturing activity has continued to increase, resulting in higher volumes for both import and export. Domestic demand for good quality warehousing has also gone up and is expected to rise exponentially. We are seeing a surge in demand for temperature-controlled warehousing of high-value products, for example from the pharmaceutical and industrial products segments. With the National Logistics Policy in its final drafting stages, the cost of logistics in India is expected to reduce substantially and further investments are expected to come in for infrastructure development in this industry.

In Q2FY22, Gateway Distriparks sales rose by 27.89% to Rs 335.74 crore as against Rs 262.52 crore in Q2FY21. Net profit zoomed to Rs 46.91 crore in Q2FY22 as against Rs 3.42 crore in Q2FY21. Which factors have contributed the most to help you outperform?

The main reason for the growth in profits was the increase in business volume and revenue and reduction of costs, especially in the rail segment. We were able to increase our market share due to our service levels and dedicated block train services, and as we have the fastest transit times from our terminals in NCR to maritime ports. The overall market size has grown as well. In addition, the cost of operations has also been lowered due to reduction of imbalance in import and export containers, and lower underframe and empty running costs. Further, the company has also been consistently reducing its debt and prepaying it ahead of time leading to a reduction in interest outflow.

What are your growth levers?

The main growth lever for us will be the Western Dedicated Freight Corridor (DFC), which will allow us to operate faster, heavier and longer trains. This will allow us to have better utilization of our assets and higher double stacking of our rail business which will improve productivity and margins. The DFC will also lead to a shift from road to rail which will help improve our volumes. This along with macroeconomic factors of the overall trade of India and the growth in containerization of cargo will be important for our growth. Going forward, when the Quadrilateral Dedicated Freight Corridors will be operational across India, it will be viable to handle domestic containers as well, and we will then be a full-service rail logistics provider in India.

In addition, under Snowman Logistics we are seeing a very large increase in demand for temperature-controlled warehousing and we plan to double our capacity in the next three to four years.

What are your top three strategic objectives?

1. To establish a large network of container handling facilities across India, to maximize our efficiency using double stack and hub and spoke. This will provide an end to end integrated logistics solution to our customers, from ship to factory and vice versa within India.

2. To continuously innovate in terms of technology to increase operational efficiencies. For example, we were the first container train operator in India to facilitate shipping lines through blockchain technology by TradeLens enabling Electronic Data Exchange and availability of information for importers/exporters. Through initiatives like these, we can reduce costs of operation for our customers.

3. To reduce our impact on the environment and surroundings, by using carbon-friendly alternatives in our areas of operation.

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M&M earnings revenues stood at 15% YoY, on strong bookings seen for SUVs and price hike

by 5paisa Research Team 11/11/2021

M&M reported 2QFY22 net revenue of Rs. 133bn, up 15%, YoY, EBITDA margins grew at 12.5%, and PAT stood at Rs. 17bn which was impacted due to an impairment of Rs. 2.5bn. M&M reported a loss of c32K units of SUV volumes owing to the semiconductor shortage in 2Q FY22 and expects the shortage to ease from Q3 onwards and would help ramp up production.

The company has overall bookings of 160K+ units for SUVs and sees strong bookings for its new launches. The average selling price for the automobile business was up 12% QoQ, supported by price hikes and better mix. Thar has received 50% bookings for the auto transmission while the XUV 700 had nearly three fourths of the bookings for the top variants. Tractor ASP was up 6% YoY largely led by ~8% increase in prices over the last year. The international farm business profitability remains intact.  
The tractor demand in the festive period failed to support the growth. The company still expects festive sales to continue through November, however, expects domestic industry growth to be flat for the rest of the year.

In the quarter, Porter now holds a valuation of cUSD500m (up nearly 4x in less than 24 months). M&M aspires to achieve a 15-20% revenue CAGR by 2025, grow farm revenues by 10x by 2027, become the leader in the target SUV segment as well as the e-SUV segment, generate a ROCE of more than 18%; and reduce material costs and fixed costs by c300bp YoY over the medium term. 

The company has provided visibility on product launches across the farm with 15 new products, SUV with 13 new products and pick-up with 17 new product segments over the next 4-6 years. Electric powertrains will be a key focus across SUVs (eight new products), LCVs (eight new) as well as 3Ws – and aim to be the largest player in each segment. M&M, in competition with its peers, also plans to seek a new partner or on-board an investor to accelerate its EV business plans.

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Kenneth Andrade: Analyzing the stock-picking strategy and philosophy of this market expert

Kenneth Andrade: Analyzing the stock-picking strategy and philosophy of this market expert
by 5paisa Research Team 11/11/2021

Andrade has a disciplined approach and the ability to nurture a stock and allow it to grow - a rare ability in fund managers.

Kenneth Andrade is currently the CIO of Old Bridge Capital Management, an India-based registered PMS. He manages the investment process and leads investment ideation. Along with over 27 years of experience in Indian Capital Markets, he has a published track record of managing Mutual Fund schemes for the last 13 years.

His experience in portfolio management includes the 10 years at IDFC Asset Management Company, which was ranked amongst the top 8 in the Mutual Fund industry in India, the Year 2005 - 2015.

Before he moved to IDFC, Andrade was managing the Kotak MNC and Kotak Midcap Fund of the Kotak Mahindra Group.

Coming to his investment style, Kenneth Andrade follows a simple thumb rule of investing and is known to have a disciplined approach while planning his portfolio. When he enters a new space, he likes to invest in all the leading stocks in that space and then keeps a watch on the performance of these companies. He uses the data put out by all companies in the sector to decide and evaluate how he will fine-tune his holdings. After it becomes clear which company are likely to race ahead, Andrade gradually moves out of other stocks and focuses entirely on that company.

When it comes to cyclical industries, Kenneth Andrade believes that smart capital allocation can make all the difference when it comes to a successful company and an also-ran company. He believes that debt is an albatross on a companies growth margin and so, irrespective of market capitalization, he chooses debt-free companies. Finally, he is not hesitant about paying a premium for companies that operate as virtual monopolies and has a strong fondness for such companies.

In his words, “Equities are all about buying efficient capital delivered by underlying business.” And so, Andrade looks for companies that respect capital. A good example is Shree Renuka Sugars. In 2006, the company had a market capitalization of Rs 3600 crore as compared to the then market leader – Bajaj Hindusthan at Rs 7,058 crore. The promoters of Renuka Sugars were baffled by the higher market capitalisation of Bajaj Hindusthan and felt that they should be on par as Renuka Sugars was strong on all financial parameters.

Most investors made a beeline for Bajaj Hindusthan. But not Andrade. He liked Renuka Sugars because it had set up capacities at low costs and had a scalable model for bigger capacities at half the capital cost. This idea came to fruition after the sugar industry hit a low point in 2009. Bajaj Hindusthan borrowed heavily to survive, it was saddled with Rs 4,500 crore debt and its market capitalization fell to Rs 1,500 crore. However, Renuka Sugars emerged from the downcycle with a market capitalization of Rs. 4,000 crore.

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Buzzing Stock: Thermax rises 14% on robust order inflows in Q2FY22

Buzzing Stock: Thermax rises 14% on robust order inflows in Q2FY22
by 5paisa Research Team 11/11/2021

Thermax's order inflows rose 67% YoY to Rs 1,860 crore - its highest order booking in the last eight quarters.

Energy and environment solutions company, Thermax Limited was the top gainer on the BSE 500 today and was seen trading up by 14.47% after reporting an exceptional set of Q2FY22 numbers.

A key positive which has driven the stock price up today is the company's robust order inflows. Thermax's order inflows increased by 67% YoY to Rs 1,860 crore and the company’s order book improved 26% YoY to Rs 6,520 crore. According to the company's management, this is the highest order booking in the last eight quarters. The company received Rs 293 crore worth of orders for a refinery and petrochemical complex in India and the enquiry pipeline from refinery, cement and metal sectors continues to be strong.

Another highlight of its Q2FY22 earnings was its in-line operating performance. Strong operating leverage led to around a 43.73% rise in operating profit with operating margins at 7.49%, up 54 bps YoY. As for other earnings parameters, revenue at Rs 1,469.32 crore, up 28.75% y-o-y, largely met the street’s expectations. The company reported a 181.43% YoY rise in PAT at Rs 87.92 crore for the quarter ended September 30, 2021.

Regarding the demand outlook, the management said industrial sectors such as food, pharma, oil & gas refinery and chemical continues to perform well. On the other hand, the management noted that the commodity prices stayed high and remain a key concern for the industry. Steel prices continued to remain high thus increasing input costs. Also, raw material costs, including those of chemicals, have remained high.

Headquartered in Pune, Thermax Ltd engages in the provision of engineering solutions to the energy and environment sectors. It operates through the segments of Energy, Environment and Chemicals. The Energy segment comprises Process Heating, Absorption Cooling and Heating, Boiler and Heater and Power businesses and related services. The Environment segment consists of air pollution control and water and waste solutions. The Chemical segment comprises boiler and water chemicals, resins, performance chemicals, construction chemicals and oil field chemicals.

At 3.40 pm on Thursday, the stock is trading at Rs 1536, up by 14.47% or Rs 194.15 per share on BSE. The 52-week high of the scrip is recorded at Rs 1,569.70 and the 52-week low at Rs 765.70 on the BSE.

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Closing Bell: Market extends losses for the third day, Sensex slips by 433 points, Nifty goes below 17900

Closing Bell: Market extends losses for the third day, Sensex slips by 433 points, Nifty goes below 17900
by 5paisa Research Team 11/11/2021

Amid weak global cues Indian benchmark indices ended lower for the third consecutive session on Thursday, November 11.

Domestic equity benchmarks suffered some sharp losses on Thursday, thereby falling for the third trading session in a row, due to weakness across global markets over surging inflation. Losses in IT, financial and consumer stocks pulled the indices lower, but gains in metal stocks lent some support.

At the closing bell on Thursday, the Sensex was down 433.13 points or 0.72% at 59,919.69, and the Nifty was down 143.60 points or 0.80% at 17,873.60. The market depth was negative as 1398 shares have advanced, 1769 shares declined, and 139 shares were unchanged.

On a day when a bloodbath was witnessed on Dalal Street, the major gainers on the Bombay Stock Exchange were Titan, M&M, Reliance and TCS. The top losers on Thursday were, SBI, Bajaj Twins, Tech Mahindra and Sun Pharma.

On sectoral basis, Bank, FMCG, auto, IT, pharma and realty indices slipped by 1-2%, while the metal index ended in the green. In the broader markets, the BSE midcap and smallcap indices fell 0.5% each.

The trending stock of the day was online food delivery platform Zomato which gained 6% to hit an intraday high of Rs 144 on November 11, as its revenue from operations more than doubled to Rs 1,024 crore in the July-September quarter due to a strong food delivery business and a rebound in the restaurant sector. However, its net loss has widened to Rs 435 crore from Rs 229 crore in the same period last year.

Another stock in focus was Thermax which rallied over 10% to close at Rs 1,522 after its profit nearly tripled to Rs 88 crore in September quarter from Rs 31 crore in the same period last year.

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These smallcap stocks should be on your watchlist for Friday, November 12!

These smallcap stocks should be on your watchlist for Friday, November 12!
by 5paisa Research Team 11/11/2021

The market continued to struggle for the third day in a row with BSE Sensex slipping by more than 400 points on Thursday. The metal stocks showed some relative strength while the broader markets continue to outperform.

Followings smallcap stocks will be in focus on Friday:

Inflame Appliances: The shares of Inflame Appliances after breaking out of key resistance areas with heavy volumes making a fresh all-time high for itself. The shares of Inflame Appliances managed to close at its day’s high and were seen locked in the upper circuit in the Thursday trading session. Inflame Appliances shares will be in focus on Friday.

Salzer Electronics: The shares of Salzer Electronics zoomed by more than 9% on November 11, also making a new 52-week high for itself. The stock has given a fresh price volume breakout and will attract good buyers owing to the strong momentum. Salzer Electronics should be on investors watchlist for the Friday trading session.

Jain Irrigation: The shares of Jain Irrigation closed in positive territory jumping higher by 1%. The stock is witnessing some buying ahead of its results on November 13. Keep a watch on this stock for Friday.

Nahar Poly Films: The share price of Nahar Poly Films soared higher by 10% on Thursday. The stock gave a price volume breakout on Thursday and was seen outperforming even as BSE Sensex tumbled by more than 400 points.

Meghmani Finechem: Meghmani Finechem Limited, a leading manufacturer of Chlor-Alkali products and its value-added Derivatives on Thursday announced its expansion plans into Chlorotoluene and its value chain. This is a first of its kind intermediate facility which will be backward integrated with the Toluene Chlorination (Ring Chlorination) plant in India. Along with this Project, MFL is also announcing an investment in setting up a world-class Research and Development centre. Meghmani Finechem will be in focus on Thursday.

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