Management Interviews – Saksoft, Sanghi Inds, Escorts, BEML, Welspun Corp, Lemon Tree Hotels, Omax Auto, Bluestar

Saksoft

  • Focused on digital services in following spaces
    1. Fintech
    2. Healthcare
    3. Logistics
    4. Ecommerce
    5. Telecom
    6. B2B
  • Our revenue drivers are
    1. Application services
    2. Digital testing
    3. Analytical services
  • depreciation is good as 90% revenus comes from Europe and US
  • 5 Customers with more than 1 million $ revenue
  • 90% revenues comes from repeat customers
  • Margins can improve 50-100 bps from current 13% odd
  • We keep looking for midsize companies between valuation of 5mn to 10mn in size
  • Expect growth to be better than last year
  • Small debt of 25 crs
  • Promoter % holding has reduced only because of reclassification from promoter to non promoter

Full Interview:

https://twitter.com/CNBCTV18News/status/1006101894152912896

 

Sanghi Industries

  • Not cut off any prices from May in Mumbai
  • There will be impact on price as well as volumes as monsoons will arrive
  • Mumbai forms around 10% of our market
  • A fortnight’s shutdown was taken in month of Feb which was a one off event, growth should return to normalcy from this quarter
  • FY 19 we expect to end at 3-3.2 mn tonnes of volumes sales
  • Typically Q1 and Q2 will see 40% of the years volume and Q3 and Q4 see 60% of the voumes
  • Diesel and Energy prices have gone up and will have impact on whole industry
  • In Q4 no cement company posted 20%+ margins and Ebitda have come down to below 1000 from 1200-1400 range
  • Fly ash availibility shall improve next quarter or so
  • Capex plan is on track as planned, entire project will get commissioned by end of FY 20

Full Interview :

https://www.bloombergquint.com/videos?id=5b1e0126bf48855f66543239

 

Escorts

  • Expect insutry to grow at double digit somewhere around 9-11% is possible on a already strong base
  • Escorts have been supplier to Indian railways for suspension and braking systems, now we are looking to expanding our portfolio going into electrical categories
  • There is an inflation pressure since last 15 months and trend will continue for this year too, so far able to pass on all costs with a lag of a quarter
  • We are expecting 2.5 times growth happening on topline side
    1. Railways – 4 times growth
    2. Construction – 3 times growth
    3. Tractor – 2.5 times growth

Full Interview :

https://twitter.com/ETNOWlive/status/1006099015065165825

 

BEML

  • Order book is around 6700 crs and expecting good orders this year
  • Can see 30% revenue growth this year
  • Mining and construction order book target is 1800 crs
  • Rail and Metro order book target is 1800 – 1900 crs
  • Defence we see 1000 crs order this year
  • Improved margins will come from spare sales in defence, high end equipments in mining and construction, memo orders in railways
  • Margins will be better than last year
  • Capex this year will be double of last year (70 crs) into aerospace, rail and metro, ARV order in defence
  • Stake sale is delayed because of due diligence process

Full Interview :

https://www.youtube.com/watch?v=tbDI0lVfXos

 

Welspun Corp

  • 2 orders one from Latin American market and one from American market which will be serviced in this FY itself
  • Current order book is at 1.64 Mill Tonnes, consolidated order value of 11400 cr rs. These 2 orders out together will add 700 crs odd
  • Both orders will be fairly remunerative as compared to previous orders
  • Margins in American order will be higher than normal margins
  • Very strong demand and prices for oil so American market looks good, till now we have not faced any hindrance
  • We are already booked for 9 months of this year

Full Interview :

https://twitter.com/ETNOWlive/status/1006407074467778560

 

Lemon Tree Hotels

  • Demand over last 5 years have grown 13% a year and supply is only going to grow at 6-7%
  • No one is building hotels anymore due to poor economics at present
  • Huge shift seen in young middle class population with rising disposable income towards branded mid market hotels
  • There would roughly be a 500-1000 bps of difference between Revenue nos. of a hotel chain and a standalone hotel
  • Over 200k hotel rooms in India, over 62% is branded
  • Over time standalone hotels will be under pressure to merge with chains
  • Next 5-7 years – ther will be 5-6 dominant chains in India international as well as domestic
  • Bombay region has highest barrier to entry because cost of land is very high and development approval process is a nightmare
  • Mumbai Lemon tree premier is 671 room hotel, 8L sq ft built up area, will be ready in next 3.5 years. Avg rates will be around 8000 rs. with 80% occupancy
  • Group occupancy rate is at 76-77%
  • Our ability is to re price in better in winters than in summers
  • Current debt is 1000 crs, don’t see debt significantly going up this year
  • In summary we have 6600 rooms, 66 hotels.
  • 300 room hotel in Bombay, 200 room in Pune, 90 room in Dehradun, 140 room in Kolkata and 140 room in Udaipur. All owned assets
  • Also open another 700 managed rooms this year.
  • Bombay will require significant investment of 800 crs, 200 crs already funded, rest will be through internal accruals and little debt. Peak debt will be 1300 crs. Will be comfortably able to service it
  • ARR’s are higher for this holiday season than last year

Full Interview :

https://www.youtube.com/watch?v=0bDYn9i-6nc

 

Omax Auto

  • Indian railways have taken decision to replace conventional ICF designed coaches with German LHP designed coach
  • There are roughly 45000 coaches in circulation today and replacement is planned in next 7-8 years i.e. 6000 coaches per year plus annual demand of 3500 new coaches evey year. So demand will be around 10000 coaches p.a.
  • We make coach furnishing items to support production units
  • Current capacity utilization is at 72% and processing 4800 tonnes stainless steel every year. With capacity expansion in next 2 years the capacity will double
  • Formal production will start in last quarter of FY 19 (Around 15-20% of overall capacity to come online)
  • Last year turnover from Indian railways was 150 crs , tgt for 2020 is to take it to 500 crs, reducing the dependence on 2W business
  • 3 years down the line railways shall form 35-40% of overall sales
  • Ebitda in last year was 4.5%, expecting it to rise to 7-8%
  • Our margins from railway business are better than automotives
  • Looking to dispose land in Gujarat and certain part of Northern India

Full Interview :

https://www.youtube.com/watch?v=RYWHIzNTYsE

 

Bluestar

  • Penetration levels in this country is very low say around 5%
  • Impulse purchase due to summer have not happened this year but market outlook demand has not gone
  • As far as GDP grows by 7-7.5%, market for room air conditioners will grow by 10%
  • Jan to March was a good quarter, April to June is not going to be good but at the year end we see 10% growth.
  • Inventory levels is the one pressure one can see, industry will have 500,000 units as inventory i.e. 2-3 months
  • Good monsoon and festival season is the hope
  • North and West did good in May, South and East sales were down due to rains.
  • Air conditioner is the last durable for many buyers i.e. after 4wheelers
  • Very likely to increase prices in July or Aug

Full Interview :

https://www.youtube.com/watch?v=RTVkVxmlVJQ

 

 

 

 

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