0:00 Hey, everyone. Welcome to primary market chatter brought to you by Sunday investing. This is our June 4th week IPOs. We've been very irregular. Sorry about that. But, so have been the IPOs, so it's not really our fault as such. Just want to confirm, can you guys hear me? >> Yep, can hear clearly. >> With that, let me start today's IPO show. Should be quick, 45 minutes or so, hopefully. Uh before we actually get started, just want to highlight like I always do. One, we are not SEBI registered. So, whatever we say or do is not qualified. We don't understand your circumstances. We don't We haven't walked in your shoes. So, please feel free to disregard everything what we are
0:46 saying. I'm going to be bold and please feel Please do your due due diligence. I've got my diligence going on basis where you apply, yeah. May apply again. This is not a recommendation. All we try and do is give them up near his house to him up near fundamental We were talking I'm going to go get it. We had all I gave I gave I gave it to him again. So, definitely disregard whatever we are saying if you feel differently. And always double-check. I've got my research going on research advisor to put you in. And also get this is what I decide to do. Second thing, if you haven't followed our YouTube channel, link is in the pinned comments. Pin comments my link here I've got to get you out of here. Uh YouTube channel go follow them. One very special thing is going to come. So, we are starting a new series which
1:32 is called capital conversations. This series will basically come uh on fund managers where they are so bad coming to we take as ideal whom we look forward to more of secondary market investing. But, if you want to pick up on secondary market investing, this is a great series which we are starting. I will hopefully uh put across the first podcast session uh tomorrow where we have spoken with Mr. Prabhakar Kudwa who is the CIO for Samriddhi Capital and again one of the people whom I always looked up to. So it would be very interesting to get his views. We have spoken very in detail and we have tried to speak also about how does the average IPO investor move from
2:18 applying IPOs to actually investing in secondary market. So definitely go ahead and follow the YouTube channel. I'll then put it tomorrow. With that, let me just set up the order for the day. Three companies getting in. We'll start with Adroit which is your a small main board IPO and then we'll move forward to Waterways and then we'll finally close with Turtlemint. That is going to be the order for the day. So starting with Adroit just setting it up incorporated in 2019. Company is a Jaipur based jewelry company specializing in handcrafted fine jewelry with expertise in Kundan, Polki, diamond and studded pieces under the brand name Rambhajo. So jewelry company here B2B here a
3:04 little about B2C here. Would be interesting to see how they evaluate this. IPO here about 165 crores IPO all of which is a fresh issue. Market cap 632 crores here. FI 25 financials here about FI 26 financials here. Nine months here. FI 25 financials 125 crores top line 25 crores bottom line. FI 25 here about FI 26 FI 26 LM here about LM Holani Consultants here. So with that over to you to talk talk about Adroit Jewelers. >> Am I audible? >> Yeah. >> So Adroit Jewelers Limited is a Jaipur based manufacturer and seller of traditional and contemporary handcrafted fine jewelry and specialized in Kundan, Polki,
3:51 diamond and studded pieces. >> [snorts] >> Uh the company was established out the company but the group was established in 1921. Um so, it is a pretty old group uh under the brand name Rambhajo. Okay, so the this is the fourth fourth or fifth generation if I'm not wrong I know who is doing the business. Uh the company is basically a B2B uh I know operates in the B2B model and they also do slightly B2C. So, what they exactly do is uh you know, they make 100% handcrafted, you know, uh handcrafted from your all karagirs uh in-house and also takaputka manufacturing facility uh which is about 6,500 sq ft uh in Jaipur. So, these guys make uh you know, very specialized jewelry uh which are used in two very
4:38 high-end marriages, you know, luxury kind of a jewelry uh exports will be so like if I want to put in a very recent so there was a marriage recently of you know Gaurav uh Gaurav Puran Kritika Kamra. So, Kritika Kamra was wearing Rambhajo's uh you know, set uh in her marriage. >> [snorts] >> So, Sabyasachi here up to Manish Malhotra all these guys you know, out outsource uh jewelry from Rambhajo and they also supply to very large B2B retail chains including your uh I know Kalyan Hogaya, you know, uh all these big so you know, Nam Diya and so like I know a few names but I cannot put in as it is not mentioned in the RHP. They also support I know uh export of your retailer in Dubai and US uh you know so
5:24 they they are not basically a normal jewelry manufacturer. They you know, it is basically a piece of art. It is not the price you're paying for the jewelry. It is for for that specific designs and in case sari designs are just one one time made. But like a bar or design ban jata they don't repeat that design and it is done. Uh you know, so no one can demand that the same design for the second time. Uh So, yes I'm in Goa. Uske baad uh you know flagship B2C store in Jaipur, which would be of a similar kind. Experience center board and also there would be a B2C. You know, there is a very large ticket size and there's some very super special
6:15 So, there was small metrics I saw which was pretty interesting. Revenue per customer That's it, luck. Revenue per customer which is insanely good. Uh FY24 made this number was around 26 lakhs which has now went to 65 lakhs in the first 9 months. Uh though like it's just almost almost 2 and 1/2 times in 2 years. Talking on the IPO size 165 crore of fresh issue currently. Out of which 65 crores each will go to debt and 65 crore for your working capital. So, debt repayment कर देंगे तो you know books पर थोड़ा ही debt negligible almost uh I mean debt free company रह जाएगी post the IPO. Uh working capital that I think 65 and rest 35 crores is going for GCP. So, you
7:02 don't have pre-IPO big data. About 22.9 crores ka at 2125 rupees per share at 138 per IPO which is about 10% premium over the pre-IPO. This was done about 2 and 1/2 months back. Uh Coming on the financials FY23 they did 46.6 crores top line, 10.4 crores PAT. Uh so great PAT margins about 22 23% FY24 70 crores top line, 14.7 ka PAT. Uh FY25 125 ka top line, 25 ka PAT. So, which is uh again a 22% PAT margin. 9 months they did 124 top line, 25.4 ka at which is so like 9 months when exactly if I 25 get the number key at all. The
7:48 last quarter would be the growth above that number. I got a disco TTM basis because of the full year after I actually got something to top line 33 34 cup at so I just go on their working capital they are suggesting in the Q4 heavy I got and there's one more thing which I saw which I have I feel should support the statement is the volume production. So I feel the problem with the volume production they have done in the first 9 months so I can it is fair to assume key Q4 main winter built up the whole for the first half due to all this marriages and a lot of things coming in also Q4 should be slightly heavier. So like you don't want to put TTM number but I expect to expect 5 to 10 crores in incremental top line about 2 3 2 and a
8:34 half croreish incremental back coming up. 27 in the working capital estimate the problem 246 around figure 250 crores per kilo top line and similar back margins to 25 got a better paying about 65 crores to 5 crores in the back my flow Jaya. So 5 point something to about a couple of 60 crores per kilo 58 to 60 crores per kilo they got. And I feel you know who Jaya is not a big deal because they are also they have they have a print up inventory which has went about 60 crores 110 crores sort of inventory here and you know again looking to put in more money into inventory so it clearly says key if I 27 for them should be pretty large. So again my score been a good
9:19 job that growth be back at the 250 score top line at 126 cup at so coming at around 632 crore market cap 18 times P if I 26 TTM basis and started the score P back there for 27 pay. Up. So I have a disco company to pass it over don't don't treat this company as a normal jewelry player this guy is not a This guy is not a Senko or a Titan or I know any any European It is very specialized I know jewelry player It is into a luxury sort of a thing. Just have luxury companies sort of So if I value this at about 20 times current financial It is an easy doubler. 90 94% So but love I give you price is easy It
10:06 will generate a chain. I know time I feel. blind up There is no no second thought to it. Uh which is I know but I need it though. First is follow Before seeing the risk, one good thing I saw which is which was I know pretty unique in a jewelry company positive cash I don't know before working capital changes though around 37 positive cash about 34 4 crore first time months ago I had. So which is a good thing. They're generating cash. Even though being lot of that inventory while I stuff. One more good thing was being such a old company in people litigation to me. A colleague with 20,000 litigation that is also very small thing to take. I wish That is also against the promoter not against the company.
10:51 So I don't being into that segment being such a old company there is no much litigations. Uh which means clean in car no background. Basically risks to I got to first obviously the commodity I know Uh volatility gold prices in the other order though They also get impacted on the RM but Uh but a simple a 1 lakh other mile use car right 10,000 other to forget any They are not selling you know just for a jewelry They are not selling gold. The the margins They have is a like quite enormous you know. Start start 70 70 percent gross margins to be they are operating in some cases It is even higher. The simple about 80 80 They don't The second thing was the you know
11:36 concentration towards you know geographical concentration Jaipur and in the region which is also fine. Not a big deal. There's a lot of things happening and actually I was in Jaipur about 10 days back. I also very large Ramajo you know store and I was not sure because this is not that is not part of this this company. But I don't know what to do. I can just what I can see there is a one you know flagship manufacturing facility which is in Jaipur which is in the entity of the company is going for going public. What do you store have any better structure? We look at the MC data total of 100 million dollars. So I don't know what kind of structure eventually
12:22 merge or what will happen. We don't know. If that happens then the merge will go you know will go over the roof. Yeah, that's better. More or less nothing nothing much going negative like any more elements or any securities. I don't think it's the correct listing in a better guy you know so the best merchant banker in terms of listing at least. So overall a blind up there from my end. I like the company. It's a double there. >> Got it. Thank you. The question is model guy B2B sale B2C and B2B right? >> B2B and what what company to see that customer is you know pretty large ticket size. >> B2B
13:08 order but >> Let's say let's say Sabyasachi saying actress to say yeah yeah the designer comes in is for design but I guess Sabyasachi Sabyasachi margin is simple. >> Got it. >> It is a simple business model. Generally this is a normal B2B order. 100% that all And I feel still there is a headroom for the margins to go up. I don't know there are very few players doing this.
13:54 Maybe I The B2B guy will also make margins, right? Okay. Simple as simple as that. Okay. Don't know much. But I think At least the business looks good. Yeah, I guess like So I didn't spoke it but yes
14:40 They're specialized with the And what I That artisanal and that craftsmanship is not no longer much quality Jaipur will have a partly Kolkata will have a but you don't get So I feel this is a segment which can go big in future export market but I don't know down the line. And they are also seeing lot of orders coming from European market. But can be can be a big company for years down the line. Got it. At least from listing to there's enough GMP. It can definitely be played. Well, I mean it. So looks It's for listing for sure. In terms the business, it's slightly niche. Plus jewelry, so
15:26 long term we'll have to see, but yeah, it's cheap. It's pretty cheap. Like because loan be square 65 CR that should help with respect to getting the PE. But somehow B2B PS to the margin PE, but then this if this is actually has such high margins and it should get a higher PE. Is what I think. So, they can >> And even I tell you one thing that is called 2017-18 margin that we look at the current PE. As I mean I feel the margin of the current very high margins. >> Got it. Got it. So, and if they have high margins then PE also should be higher, right? It should be higher. >> So, I'll tell you listed space may the highest margin RPG makes before I do it comes in that
16:13 is about 8% that. This guy is making 24% that. You have to have premium and I think the margin is going to be and they are doing it since very, very long. I love the IPO on the company 20 crore top to the current margin. 20 crore also they have reported 3 and 1/2 crores back way back. >> Correct. Uh if they are margin are sustainable that they should get a PE premium to the PS, right? So, let's see. We'll definitely apply and taste our luck. It's such a small IPO key allotment would be very, very difficult, but yeah, let's hope. Uh let's see how we get better. Moving forward, talking about the second
16:58 company, second company we'll be covering is Waterways Leisure Tourism or Cordelia Cruises. Setting it up in corporate in 2020, Waterways Leisure Tourism is one of the India's leading leading domestic ocean cruise operators. I think the only literally the only domestic cruise operator. They have a vessel by the name MV Empress. Uh so, setting up the IPO at 585 crore IPO. 585 crore all of which is a fresh issue. Market cap 5849 CR guy. So, 10% dilution. Around 5,800 crores 585 crores revenue comes at 26. Top line 857 crores. 552 crores. So, looks super expensive on a 526 basis.
17:44 10 times sales, 100 times profit. I think they take I think in this numbers there's an issue here plus they can operate in case of objects to the social media and so how will that impact? In terms of the LM, the LM is Centrum Broking. So, with that over to the Rohit to talk about this company. I somehow feel that this is a good company but bad fine pricing. But yeah. Uh over to the talk about that. >> Yeah, you're able to hear me now clearly? >> Yeah. >> Okay, cool. So, I I'll I'll I'll explain this company. I'll also share a framework at least a framework in my head on how to value this company. It will look expensive on any historic metric but uh I think there is some method to this madness in the price.
18:29 Uh so, broadly like to explain what they do, Manish has given a very quick uh highlight but uh they are essentially India's only domestic ocean cruise operator. They have almost 80% of the market share in India. Uh and all that just from a single ship uh MV Empress. So, this ship has about 800 cabins and can hold about a capacity of of around 2,000 people but I'll I'll explain that number also because that number isn't what it seems and it'll reflect when I talk about the upcoming ships also. Uh so, the main thing is what they are selling is not it's not transportation cruising is never about transportation but it's about the experience. So, it's like a holiday. You go to a country let's say you go to Japan, you go to you know, five different cities in Japan, you go to your your constantly packing,
19:14 constantly moving. You go one day to Disneyland, you go one day to Mount Fuji. Everything is kind of, you know, unless you're doing it through a tour operator like a Thomas Cook or something. If you're doing it yourself, it's a fairly involved and intense process. The idea behind the cruise is that you go, you enter the cruise once, you check in once, and then you check out at the end of the holiday. But everything that you do is handled firstly by the cruise, and it is handled on the cruise. So, whether it is entertainment, whether it is food, you'll have, you know, multiple types of restaurants, you'll have, say, a casino, which is like legal on on cruises in India. You'll have, say, a theme park kind of experience. You'll have like kids play areas. So, you'll have everything you want, you know, in one single place, so you don't have to constantly keep packing and
20:01 unpacking. And you can also these cruises also do day trips. So, you will, let's say it's a cruise from Mumbai to Chennai, and it will stop somewhere in Goa. In Goa, it will they'll they'll do a day trip where they take you for, you know, maybe to a forest or whatever, right? I don't know the specific, maybe to a waterfall. So, there'll be specific things planned depending on which location. Majority of what they do is domestic, but they also do a small percentage of international cruises to places like Maldives, Singapore, and so on. And the new ships that they are getting will do a little bit more international trips, too. So, it's like a combination of like a hotel, a resort, restaurant, and entertainment venue all in one, you know, floating on a single ship. Cordelia will make its money,
20:46 obviously, from the revenue that they charge the customer to actually book, which is your per night rate. But they will also make money from the spends that you do on the ship. This could be, obviously, things like the restaurant and so on, but like casinos and all of those things. The difference between a Cordelia, or at least what Cordelia says, versus some of the international cruise operators, of course, that they've Indianized everything. So, you'll do Bollywood nights, you'll have a lot of Indian food options, you'll have everything catered to the Indian palate. While also being fairly all-inclusive. So, they don't generate as much revenue from the onboard activities. Indians generally prefer a, you know, here is the cost, it's 10,000 per night, 12,000 per night, but it is more or less all-inclusive, barring a few things that you pay for extra. Whereas in, you know,
21:31 these Western cruises generally do the opposite. They'll charge you quite low for the uh cruise, but they'll charge like crazy once you're on the on the ship and, you know, you have nowhere else to go. This is a very, you know, if these guys are able to handle demand and handle their occupancy, this is a fairly predictable kind of business. It's obviously a high fixed cost business, you need to have a certain minimum occupancy, but beyond that, there is a lot of operating leverage in a business like this if you're able to sweat your asset fully. So, today, if you look at their scale and their numbers, they did about 580 odd crore in FY25 and FY26, they just had one one ship. The ship was broadly fully utilized. Probably in March of this year there would have been some impact due to the war and stuff, but broadly the ship was fairly heavily utilized. I think 90 odd percent in FY25
22:19 and maybe 85% or something in FY26. Uh and there but there there's there's quite a large difference in the EBITDA's and PAT's of FY25 versus FY26. This was explained in the uh explained in one of their, you know, pre-IPO interactions by saying that it was because they had made a lot of the expenses or they started some of the different employee expenses and so on for the upcoming ships that are coming this year and next year. Uh so, that is why the PAT numbers compressed. If you look at the growth plans, their idea is to add one ship in from October of this year and one ship from November of next year. The current ship has about 800 cabins uh and it's just 2,000 passenger capacity.
23:05 The next ship has about a thousand cabins. The next two ships both have about thousand cabins and 2,000 passenger capacity. But if you look at their load factor or the way load factor is calculated, it is calculated on the number of cabins into two, not by the passenger capacity. So when they say the current ship has 2,000 passenger capacity, when they say they're 91% occupied, it is not on 2,000 people. It is on number of cabins which is 800 into two into 91% which is actually around 1,600 people into 91%. Why this matters is they've generated about 600 crore of revenue from uh you know, the current ship which is 800 cabins into whatever 91%. The next two ships actually have thousand thousand cabins. And you can make all of your math, you know, if they were fully
23:52 occupied or whatnot on that thousand cabin number, not on the 2,000 uh people capacity. So their two new ships actually have 25-30% higher capacity uh per you know, from a math standpoint than their existing ship. The way to calculate Now, this is a good case. Okay, so I'll just uh you know, this is just math again. This is simply a bull case. This is how you guys can decide, you know, what you think these guys will do this year, next year etc. The way to calculate it is in H2, they will have their next ship, right? Obviously, it's not like the ship will come and then they'll start taking bookings and the ship will slowly ramp up. Their ship will be sold out. On day one, the ship will be sold out because they will be taking bookings for it today. So you will know well in advance whether the ship is being sold out or
24:38 not. Let me put it that way. Assuming they're able to do their job and they're right that this is super under penetrated market, it is a you know, interesting business that way. There is it's a kind of one of one. It's a sunrise industry in that sense. If that is the case, then there's every chance that in H1 H2, whenever their first of their new ships goes live, they will be able to generate at a very high occupancy. They'll be able to generate not not of, you know, 500 600 crores just in H2 alone from their new ship. And the math is that they will obviously have 20 25% higher cabins. And they also these these ships are also a bit more premium. They have far more onboard amenities compared to the existing ship. Like the current ship I think has like three restaurants. The new ship has like 11 restaurants. The new ship has a lot
25:24 more entertainment options. So, it is positioned as a premium option. So, you assume that okay, they're able to charge a little bit higher. Broadly, you will get a sense that they can maybe do, you know, the 600 crore. They'll probably just do 300 crore in H1. Or maybe even lesser because it's a very H2 focused kind of business. But in H2, they'll probably do very very high number in terms of revenue. This business should be a 35% kind of EBITDA business. It can be even higher if you look at the global cruise operators. It's around 35% EBITDA. If you look at Cordelia before FY26, where they're saying they had extra cost, they were at about 35% EBITDA. So, at that number, if they're able to generate 1200 crore this year, the same way if they're, you know, really being able to sweat their assets in FY28, they can do probably north of 2000 crore, 2000 2200
26:11 crore. On that on an EBITDA basis, because this is an asset heavy business, on an EBITDA basis, this company is coming at maybe 11 12 times FY27, 11 12 times EBITDA, and five six times next year's EBITDA. This is the bull case. This is the math. This is not, you know, if they don't if they're not able to obviously utilize on day one, then that's a different, you know, that's a different problem. But that is the justification for the valuation. These guys have also spent a lot of time justifying how they wanted to come at 10,000 crore market cap. You know, it's all a bunch of but they're tried to position this as, you know, we were supposed to come at 10,000. We're actually come at 5,000, whatever, and we are leaving a lot on the table. Again, that's I I don't believe it, but look at this independently. If you think
26:57 this is one of those high-growth businesses, this guy will probably grow 100% this year. He'll probably grow another 100% next year. Then he will have more plans, I'm sure, you know, that that's that's far well in the future. If you like this segment, and if you think it's a unique one-of-one kind of business, I think it's an interesting investment. I was very disappointed with the anchor book. I thought it was like one of the worst anchor books that I've seen for a main board, especially that came with a little bit of hype. Despite that, I still think there is something in this business. It's not necessarily a listing gain thing. I'll tell you what I'll be tracking. In Q1 and in Q2, in the balance sheet, you will there is the other current liabilities column. That basically that number is almost entirely the advances that are booked the the customer advances for their bookings. If you look at FY24, FY25, FY26, they're
27:44 more or less flat, which means that as of today, they've not started taking any bookings for the new ships. It is broadly some 800, 900, whatever, 90, 100 crore, something like that. And that just gives a sign that, okay, next year will be more or less flat. Their their, you know, current ship will run at the same at a full occupancy. Probably in Q1, definitely in Q2, you should see a big spike in the customer advances because the second ship is going live, and they would have started taking bookings for that ship. If that number spikes, I think it's a very good sign that their Q3 will be very good, their Q4 will be very good. The good thing is here, you will get that forward indicator from the balance sheet that they release every quarter. Keep tracking that number. If that number starts spiking, that means you will see the revenue spike in the subsequent quarters. Uh we're going by the assumption that they
28:29 will maintain this 30, 35, 35% of EBITDA, and that the expenses this year are because of, you know, the future expenses, at least that's their justification. But probably for Q3, this can actually be a very interesting bet if we look at their Q1, and especially their Q2 uh balance sheet, and we see that uh jump, I think this could be very interesting because at that point suddenly everything all their metrics will go through the roof. Their Q3 result could be astonishing. And then the market will price that in. So, that's how I would look at it. I don't really think this will get a lot of interest right now or will get a lot of you know listing gain and whatnot like leave all of that. But if you just look at it with a 6-month perspective, this is how you should look at it. These are the things that you have to track. I definitely will be tracking this because I find these kind of businesses very predictable. Uh you know, there's a lot of capacity he's introducing huge
29:16 capacity. If he delivers on that capacity he's very he's actually pretty cheap on a fair like just as a proxy most hotels trade at are not growing this fast and trade at 25 to 30 times a beta. So, if this guy is at 12 times FY 27, there is a point in time where this will re-rate. So, that is the I'd say summary of this. That's how you should look at this IPO. Again, like I said the anchor book was very disappointing, but I think in 3 to 6 months we'll be able to make our not even Sorry, not even see Yeah, barely 3-4 months we'll we'll know whether the H2 is going to be as good as it could be. Uh so yeah, that's the just hopefully that makes it clear. >> Thanks, Rohit. How do you see this business turning profitable? At
30:01 least none of the legacy carriers in US ship carriers are profitable, right? And then they also have enjoyed a lot more tax advantages which this guy doesn't, right? This guy has to pay a lot more tax because he's domiciled in India which is a structural disadvantage compared to all of your >> there are structural uh advantages also. Firstly, he's the only one. Uh it's a very new industry. It's not like he's competing with a lot of people. Uh a lot of Indians go abroad and experience cruises and then you know, it's like a uh very novel experience to have over here. People are also tired of the same kind of three four things that they do. So, something new is uh especially in this sort of premium luxury kind of thing is very well received at least today in India. So I
30:48 And and to your first question like Royal Caribbean which is the largest one is like 20% back business. It is not it is not unprofitable at all. Problem is there is a cyclicity to this business obviously and if something goes wrong with the ship you are screwed. Like those are very fundamental issues with these kind of business. It's like true for Indigo also in a way right like or any airline also. You can't risk risk downtime etc. And when you have only one ship it like is even more amplified. Those are operational risk you live with. I don't think the margin profile and the back thing is really a problem. Global operators with even way more competition are quite profitable at least like Royal Caribbean is very very profitable. So yeah I think here the tax advantage
31:33 thing is nullified by some other thing. Like another thing for example that's different in India is people use these ships for weddings for example or they use it for these corporate events corporate offsites. A lot of the bookings here happen directly. It's a metric that is there in the RSVP which is how 65 70% of the bookings come directly. Whereas only 30% comes through some kind of broker agency or whatever. Whereas in the US it is almost like 90% or 80% or something the other way which means you are paying a huge margin to the broker or that platform or whatever which is not the case here. So there are some things that make this a little different plus I think it's such a new industry here that you're not really competing right. It's not like there are 10 other cruise operators and everyone there's no race to the bottom as of now. So I think for a little bit of time until new cruise
32:19 ships come and people figure this out which is like I think a multi-year multi-year sort of thing. The people have some pricing. >> Got it. And like you said that probably you compared it with some of the peers in the hotel industry right where they traded but there's margin to structurally be lower right? Like, he'll operate at 20% EBITDA versus OPM. >> EBITDA is 35%. 20% is just That's what 20% is a one-off. If he operates at 20% EBITDA, he'll have to shut this business tomorrow. This business with these kind of high capital businesses will never make sense at 20% EBITDA. It'll only make sense for him, honestly, at 45-50%. Like, at some point. 35% is what he's done till FY26. FY25, for example, was 36-37% EBITDA.
33:05 As he gets more ships, he sweats them, his central costs will go down as a percentage. So, I don't see EBITDA really as a problem. His EBITDA was a problem in FY26, and his his claim is that it is because he's already got a lot of expenses for FY27 and FY28, which is a lot of the employee costs and some of the operating team, the team that has to book those revenues and stuff like that, right? He's got all of those costs in already, which will only get amortized once the revenue starts coming in. So, it's a temporary kind of hit on the EBITDA. That's the justification. >> Got it. Understood. >> said, like I said, Royal Caribbean is a 40% EBITDA, 20% PAT business, 20% net PAT business. >> That's the only in one of the three profitable. Other
33:51 Carnival and Norwegian are both >> There is a certain cyclicity also to this. You'll see that suddenly it will be very profitable. Sometimes it will be Suddenly they'll go down. Uh depends a little bit on competitive intensity also. Again, like I said here, a little bit like Ascom, okay? The >> Yeah. Yeah. >> one. And it'll be the only one for the next few years in India. Only pure play one for the next few years. Maybe 20 years from now there'll be like 10 others. But, you're not looking at it then, right? Right now, Cordelia's the only one. It 80% market share. It'll take a long time for another guy to come, get his cruise, figure out, then five other people to come for come. So, I think he's in a low competitive intensity environment at least for some time. >> Yeah. Plus, revenue will always have a step function, right? As soon as you have one more ship revenue double
34:37 double. >> Here the interesting thing is unlike a hotel necessarily which takes time to ramp up. I feel here the selling for the for the additional ships will start way in advance and you will kind of book out most of it like already. They should be doing it already honestly by now. Which is why you will get an idea in the balance sheet of Q1 and Q2 whether he's able to book additional revenues those incremental revenue that he is he'll do for the next few years. So that is the single biggest metric I'll be tracking. >> Got it. That's helpful but yeah, what a horrible anchor book for a 600 crore issue. Like >> Exactly. >> Could have been a little bit better. But yeah, very interesting. Really well keep the business.
35:23 >> I had a small question here. Hello. Yeah, go on. >> Go on. >> Uh so so like when the DRHP was filed there were three merchant bankers, you know, in this IPO. Motilal, Edelweiss and Centrum. Now there's only Centrum in the RHCP. So like at least in last 5 years as far as I am looking at IPOs this is the first case I'm seeing this a merchant banker selling at three months or so. Like just for the educational purpose what do you feel should be the reason or case here? >> I have no idea and if you know someone from Motilal or the other one I feel it was also bad. I agree like that's why I don't see anything happening now. It feels like a story that you can play. See when the earnings comes let's say the earnings comes.
36:09 One quarter or two quarters away at that time none of this will matter. So all you care about is can you predict that earning a little in advance before the rest of the market because the day that result comes in Q3 and that is like a blockbuster result everything is out the window stock will stock will fly. So it's just a framework to analyze that ahead of time. That's all. I'm not going to do anything with this stock for now. I'll I'll I'll wait. And then I'll see in in that Q3 when there is a lot more clarity whether the stock is at this price or lower or higher. I'll look at it then and when I have that comfort I'll I'll play this stock. >> I was actually reading you know how this business was started because I saw it was incorporate in 2019 if I'm not wrong. So like there was a thing because the ship is about 25 to 30 years old. So
36:54 I had read this key 2019 made this ship was operated by the SL group. Which was owned by Subhash Chandra. Take it out but they shut down operations in 2020 and Mr. Potwani took over the business in 2020. And now this is the story which is coming up. So and even before SL group there was someone who was running that ship. So historically there has been only one player. I don't know but this is the only guy who could run those operations on that scale. >> I think yeah it's actually very impressive to do 600 crore revenue like they started started in COVID right? Like they got this ship. The ship came in right after COVID when cruises were like the most hated because they were one of the super spreader like one of those original super spreader the things for COVID. And still in 20 2021 22 23 whatever they managed
37:41 to survive through that and they have built a 600 crore revenue business. It's not not insignificant. So I think there is something here but I'm going to wait. >> Got it. >> Yeah, interesting business that way. Let's see if he can deliver the numbers. We will get to know. With that we will kind of move forward and talk about the third company. Uh Turtle Mint Fintech Solutions setting up the company incorporate in 2015. The company is a technology enabled insurance distribution platform that connects customers, insurance advisors and insurers through a phygital model. So, insurance distribution platform
38:32 Setting up the IPO is 883 crore IPO. 660 fresh share, 200 crores offer sale. Market cap 4,450 70 crores value company. A 525 financials go to revenue 693 crores. Those are 194 crores loss to company. LM about to tell him ICICI, JM, Jefferies, and Motilal. So, with that over to me to talk about Turtlemint. >> I was thinking about it. So, Turtlemint Fintech Solutions is a tech-enabled insurance distribution platform. So,
39:19 Hello. How are you doing actually? I just got a call. Yeah, I got it. >> [laughter] >> So, so what they exactly do is basically do is stack as a connecting platform between three sort of, you know, people. One is the insurance company, second is the, I know, customers who consume the policies, and there is a third party who is called as POSP. This point of sales people. So, what this guy actually does is there is a platform called as Turtlemint in which they onboard or I would say train and make their own POSP people, point of sale people, who might be basically a retired army person, a teacher, or a doctor, or a, you know, any sort of a normal people,
40:07 normal person who has got an interest to sell distribution to sell insurance policies. So, the these guys have got a platform called as Turtlemint Academy. It is also the largest, I don't know, academy for training uh for insurance professionals in the country. So, and it is for free. Like, if you want, I want both can go and get trained ourselves for, you know, selling insurance. Uh these guys come on the platform, get trained for free, and then they are enrolled on the Turtlemint Pro app as an POSP, point of sale person, or the people who are looking to sell the policies to the customers. So, in their platform they get the leads and the policies. And all their platform come with an policies are issued from the insurers.
40:53 This is basically a simple business model. So, what they do different than Policybazaar is uh Policybazaar got platform where customers can like us people can go on that platform and buy policies. Uh but, if you just look at the market, how market dynamics is, the metro market and the metro market is far more organized than uh the penetration for insurance is quite high. Quite high I would say like comparatively relatively higher than your B30+ markets. So, what people education you know, and the model is now getting shifted from that, you know, that those brokers, insurance brokers, to now our direct uh you know, buying of policies from the
41:38 PB Fintech or you know, sort of a model platform create. So, what this guy does is uh it's got 80% of the POSP guys are B30+ markets. Uh you know, let's say top 30 cities to markets out there. All of them are up to POSP persons, point of sale persons. So, yeah, also 75% of platform premium will be B30+ markets out there. So, I will be B30+ markets I want to I don't want to buy a policy and let's say I know Manish and Manish has got a decent size you know education or you know things things related to insurance. He comes in and says me yeah yeah policy which I feel is appropriate for your requirements. I go
42:24 and say Manish he let's go ahead and I want to buy the policy and then Manish goes and put that you know policy or what the requirement on the terminal platform. So it is basically a traditional just after LIC business model agent or that the simple same thing just there is a digital thing which has came on to it to go fully digital in the model that was good digitally converted the same traditional insurance selling you know model. So you can go basically business model. Okay I'll be asking two things you have to go and there in this largest it has in this largest network of POSP I know which is about 5 lakh 7,000 you know people into it. It's a platform premium would 700 crore 520 which has now went to
43:11 3,000 crores in effort 22950 some number and effort 25 and actually has went quite well in the effort 26 also. So it is about 33 and a half percent CAGR for this 5 years and you want this year has been about 34 ish percent. It's got to get up. You look okay in terms of you know policies get the distribute here though effort 23 say effort 20 still 9 months effort 26 which is about 30 months period it this has been around 2.19 crore policies to go volume wise the business is pretty large 2.2 crore policies in about 30 months is a it's a large figure not a small figure. They have generated about 10,100 crore of a platform premium
43:57 which covers about 97.8% pin codes in the country. They have you know a very strong the largest presence in the country in B30 plus markets. They're largest there, even larger than PB in those markets. They have got partnerships with about 45 insurers, insurer partners and all insurance companies which is about 70 to 75% of your life plus general rest all insurers. 60 insurers in the country milake everything you know they have partnerships with about 45 guys. So the company is raising 883 crores. So the IPO size was supposed to be around 1950 crores. Uh which has
44:45 now came to 883. So we'll understand things at a later point exactly what happened. 660 crores out of which should be a fresh issue of 222.3 crores and offer for sale. So about you know pakad ke chalo 75 25 70 30 ka split hai between the fresh and the OFS. Fresh may they're doing all basic things. 190 crore 93 crores is going towards salaries, 123 129 crores is going towards working capital, 43 crores towards lease payments. Uh 5 39 crores towards marketing, 25 crores towards cloud and infrastructure, cloud and night infrastructure. And baki paisa ja raha hai your you know unidentified and inorganic acquisitions plus the general corporate purposes. In the financials may at all you know at
45:32 all FI 23 may about 420 crores ka operating revenue 273 crores ka EBITDA loss and again about 280 crore ka 288 crore ka net loss kiya. FI 24 may the revenue fell by 82% to 79 crores. 171 crore ka EBITDA and 193 ka net may loss. So you exactly get that you have to understand like I will not go much into that but you know thoda sa upar se bata dunga. So IRDAI jo hai apka you know regulator for insurance companies have actually changed the policy towards expenses of management who score you will take E EOM bolted you know and which restricts the marketing expenses and also the commission things so these guys had a you know a parent company and a
46:17 subsidiary sort of a model earlier just because I don't know what to do before 24 was just a marketing entity and they also had a commission entity way back to you know if I 24 with a merger karate ah and also the 33% you know to that top line again back to the normal to a 425 that they did about 662.7 crore top line operating revenue but they continue to stay stay in losses 158 crore negative 194 factor net loss I will go to the 9 months data below the about 741 crore top line and 173 beta loss and 187 net loss in 9 months so if I just look at these numbers so it's going to be 9 months 425 to compare 9 months 426 against 9 months 425 is
47:04 about 81% growth in top lines 425 9 months 425 they had done 411 top line 411 125 beta loss and 155 factor loss the numbers seem to be the similar just the revenue has went up but in case you like internal metric of the service a beta which has actually you know went from about minus 6% to plus 11% but I personally feel this is not the metric which a public market investor should look at I feel total of actually I'm not quite convinced with that metric so I won't be talking much on it it's going to be fully available which is I know equally distributed TTM basis so it should do you know sort of 1050 sort of a top line and a beta
47:51 factor or whatever it is called because I can't calculate actually I I couldn't do it I don't know how to calculate it if 27 I mean number could which is about a 35% increase in the premium which should be around a 45% top line growth considering you know the commission margins go up about 30 bips which is which has been the statistical data piece guy had that should continue I feel for next 3 years at least. I can clearly see these guys should should turn a bit of profitable in this financial year itself because up is going to get going on is going to fix cost which is their platform cost which has stayed sort of a similar range in last from this three three four
48:36 financial years but platform cost as a percentage of revenue which has which was 70% at at the scale which has now came down to about 25% which should go below 20 is going to be 20% like that company turns a bit of proper you know break even simple symmetric which I should I feel should be 70-80% or in effort 27 so they should turn a bit of positive. I even feel the net losses should significantly lower because a bit of the bottom kind of net loss items have any so I feel if they turn a bit of positive card they got a 27 positive sort of which I feel like it is just an assumption but looking at the trend there is a very very highly chance around 30-40-50 crore
49:23 profitability but I thought should be about these people could but should be like around minus 20-30 not more than that which is which is a fine metric. So I feel key these guys actually I have went public about 6 months you know early I say about that I think about the better valuation but talking on the earlier point these guys were earlier looking to raise 1900 to 1950 crores and about 25% dilution which is about 7500 I you know valuation. Now they're coming at about 4,400. So what they have done is OFS has been buy which is half in terms of number of shares. And pricing has also been and went on by went down by around 40% so uh size but I come like fresh to open
50:09 the data 667 earlier figure that is same earlier as per the earlier draft but the OFS has went significantly significantly down Joe to supposed to be around 1,200 to 1,300 crore which has now went to about 222 crores. So OFS come hua hai. I'll be scared of it to the negative but can you have to first is obviously the IRDA regulations and I feel next 20 days we're having one more you know change in the framework there's some some sort of a you know regulation change which is supposed to happen in terms of commissions next 20 days though 15 to 20 days I don't know the exact date this should happen I guess first half of July or this month itself if I'm not wrong. It should be July first half. So what is that we don't know I think this is going
50:56 to be a commission capping obviously related to the regulatory policy commission capping space the government maybe must come in the only 2024 second half they had announced which had the commission capping thing and also there are a few things coming up down the line. What is about the year 90% company public investors VCP in case of that angel investors though the supplier is going to be enormous every 10 days in a block deal to other than that they took out. That should be this similar in let's cut and all all the shadow facts or you know all these companies lot of supply coming up and this should actually have more than the Japan love me to write a 13 in a block deal over the same way it should happen in this also. As the valuation goes up the block deals are surely going to happen. I got here
51:42 obviously the low promoter holding with love you know Um, that's I had more than multi post to show. It is quite less. Uh, which is like quite normal for you know such sort of business models. Okay, but uh, you know that I could risk having at the you know litigation also there's nothing much significant which should which should us investors should be bothered about. Uh, capital T again got to check capital I can say I have an excess of capital list of both side incubators and there's Kunal Shah from credit. All these guys have invested a lot of other investors also. So overall my view is I feel I feel it is a good company. Uh, so like this is sort of a contra view which like I feel there's a lot of negativity towards this company. Uh, but I feel I feel it is a good company. If you just look at uh, current the financial year of sales is compared three times less
52:28 than actually three times. I feel so I feel that I can say that it should go up to 1600 which is what which is what I feel I feel it is going to go up. Cuz 1050 they would do uh, FY26 easily 1020 to 1050. And about 34 35% uh, I know increase in the uh, platform premiums and about uh, 30 pips increase in the you know platform of net commissions post giving the POSP guys. So easily it should be a 45% of top line growth in FY27. That should be about 1550 very easily. I don't feel it should happen. Uh, that that is one thing and also there's a second growth driver which is coming up that started recently is I know cross selling. So they are now going into mutual funds and all that. Uh, you know
53:13 wealth management program. Uh, what sorry what to do to do small ticket not so small ticket but small duration based premium of my insurance products also they are going up. So I feel that should act as a growth driver. Uh, FY24 it was 0% of the revenue 25 slightly point something. 26 has been around 2 and 1/2%. So I feel it should go up to 5% that should act as a a growth driver coming up to fill I know easily growth will happen 50% very very possible highly likely to get 50%. effort 27 so a good business model I feel it could not what sorry or cheesy but yeah we just study this business is a tweaking that a possible near a government so platform to buy the money yeah.
53:59 Others are also offering the same though it's called you would you not look that I think beyond the limit those are there are there is fine but no. Decent business model B 30 plus markets but I feel which I feel pretty untapped and growing at almost three times of the normal insurance market so just look at the metrics 19 to 22% CAGR for next three years at B 30 plus markets though I feel this is quite a good good number and this guy they had gone historically they have done almost three times of the market though. I feel there is lot of headroom for growth good business promoters like I like the movie but but finally there are there few promoters that are very great at work but
54:44 I don't know you don't feel super impressed when they speak but one of those promoters I feel. A child business coming super cheap I feel again my score 77 numbers I feel but that is 70% easily over no time to I feel they should list about at parcel like a straight premium 10% should cool off and it should move at a very good pace post listing but we should have a market cap tomorrow touch 4500 and then we should expect some supply coming up there so we should have I feel small risk takers can apply for listing. But but but I feel medium to market good company. >> So a good question is
55:30 it goes to the business model that I think that they lay a lot of marketing expenses 2024 and I think that they are pure like >> commission based on business. >> And that impacted the valuation a lot, right? >> The valuation will go down so so. >> After 22 men are the funding to do valuation I'll tell you 15 times revenue was a metric given Rohit by actually is a better person to answer this, but you don't mind to I've seen bankbazaars. Number policy PB's you know metrics 15 times sales metric. >> I don't know what you are talking about. >> Natural so if you just look at this platform as such at least that I'll make it PB got to many of you had any. This is a natural value, you know. I got to be so gross revenue they could have should be around 5x. So is off which is
56:17 so so so so hard for you to do you be the greatest net revenue after everything. I know this is so basically in a natural value I know too I feel natural value pay earlier the multiples used to be 10 to 15 times. Now those have came to around 6 to 8 times. This guy is coming at 3 times after 27. So this has been a valuation reset so this has nothing to do with the company. But other policy but I don't know if I have the same funding to turn it down with them in this market 2022 geometric photo. Who is going to do valuation with them which is obvious for everyone even bankbazaars is is looking at they are not able to raise. Next round you know at a good valuation which they were expecting so this has been a reset valuation reset over the industry.
57:03 >> Yeah, we can. Can't compare it to a. Policy but I don't know what you are talking about. >> I don't know what you are talking about. >> Digital model so it's going to require a lot of commission made discount you can pass on after that. >> I don't know what you are talking about in case of business model a lot of difference here we have key. PB has to spend insane amount of revenue on marketing. I don't know what you are talking about in case of Amitabh Bachchan and Kapil Sharma and Shah Rukh Khan and Akshay Kumar and that. So that is. to IPL baby at salon and after 20 salad business to be salad. So, that is a highly marketing driven business to I feel that should be around 15 20% marketing as to sales. But this guy does zero marketing complete zero or is going to
57:51 be always be partner who is the client who is the marketer. And people who is let's say you are a POSP agent who is going to tell me what you are going to do and what you are going to do with the simple about it. So, this is actually a very good differentiator between both of them where the determinant stands out but I mean I need to clear but as the scale goes beyond that you know 1500 crore revenue the economy of scale are going to be insane. But I feel three to four years this guy will operate at 20% margin very easily to policy company by 5 to 7% margin by company by company. Unless they want to tweak their marketing spend then the growth will come down to 15 20% which they won't do ideally. >> [snorts] >> This is a good difference between both of them.
58:36 >> Got it. >> Uh basically like beyond the metros physical model is there to stay right so that is a positive for the company. >> Correct. Correct. Three times 27 sales world over. So I Five times maybe Exactly the number I had in this car. I feel that was going to be a big but I can't stop the growth from 27 should should not be very high to that should see some sort of valuation and I know going down I feel. Uh this guy should do about 8000 or top line 8000 top line 27
59:24 nine times pay. Nine and half times effort 27 sales. This guy is coming at less than three times 2.8-ish. That is a genuine issue. I saw one thing, so like this is unverified. I can be wrong. Whatever his name. I guess the CFO or CEO.
1:00:10 It doesn't look like a promoter buying shares. This guy has came on the management at a later part when company started and he has acquired the shares by his own money to be part of the promoter family. Because he's 0.02 rupees and this guy is at insane number. Cost of acquisition, so I feel more What I feel, I can be wrong. This is just a coincidence I'm putting in. But WCA high didn't want to see that if he was a genuine promoter. Got it. Like
1:00:56 I saw I saw Amansa there. Amansa Rubicon the guy I mean I saw them in CP Plus. Seem good investors. Amansa is good. Janaliata Janar didn't do well post much, but it turned out that was also a double. From the IPO price, so they are good pickers. Correct. Correct. Yeah, I'm quite positive. Let's see, tomorrow would be interesting. What comes
1:01:45 Got it. Perfect. Yeah. Maybe response is okay. Should be interesting. Got it. Do it. Do you have any news and tell me? I haven't said anything. >> I have been listening to some of the interviews. I think I kind of conquered with what I'm saying. I think it is a pretty decent company. Probably coming
1:02:32 Like I'd say it's true value will be unlocked when the company shows a break even quarter or maybe guides for like next quarter will be break even or whatever. Generally markets like that. So it can do what the Zinka has done or what maybe Shadowfax also it took some time like three months it was below IPO price and now suddenly it took two weeks of that price. You show 50, 60, 70% growth and then you show at least break even. You will not trade at a discount at least to new age companies. So it is a pretty decent company from whatever I read just six months early. So maybe the wait here will be longer maybe maybe short but it's unlikely to stay at this price for like like into FY27. Like it will probably go up I think even in Blackbuck we saw that, 8:30 we saw that.
1:03:18 Uh We saw that in Shadow Fights. I I expect something similar here also. Just that it's hard to say whether it'll be at listing or not. >> Mhm. Correct. Correct. Correct. I personally feel this guy's Q4 may be a turnaround. I'm not saying that I'm not saying total turnaround, but a decentest turnaround. No, I feel Q4 should also be very important. We've got ice cream. >> Yeah, if Q4 is good, nothing like it. Some of these guys should >> Uh Q4 only I see. Because I've also seen historically even in PB and all all these guys in kind of first first first half and the later first half of the third quarter is where expenses will load up over there. And Q4 may sub second load over there.
1:04:05 And also this guy is top personal efficiency. I think it's going to be a good Q4 in the coming months. I know what I'm talking about. I know this guy is very good at revenue. I think Q4 should be quite good. It's what I feel like contingent. Not not necessarily right. >> Could be could be could be. Yeah, I expect Q4 to be at least revenue-wise very good. How it will show up and flow into the bottom line and EBITDA. >> Yes. >> We'll see. >> Perfect. With that we can close today's space. Thank you so much everyone for joining. I'll try and upload it to before tomorrow so that you guys can listen if you >> We are not on CSM, right? CSM is there. >> In the meanwhile, just want to highlight
1:04:51 I will probably post a Capital Conversations episode 1 tomorrow with Prabhakar Kudva. And then I'll also post this as well tomorrow. So tomorrow should be a good >> And we are also We also should post this very soon, no? Uh uh we had actually interviewed a main board company for 150 croreish IPO uh yesterday. So we should post that to when the RHP is declared. >> Yep, yep, yep. Waiting for RHP to declare. We don't know the size yet. With that Thank you so much everyone for joining. Have a good day. Bye. >> Bye-bye. >> Thank
