Vikram Solar, GEM Aromatics & other August 3rd Week IPOs : Apply/Avoid? Primary Market Chatter

0:00 Hey. Hi everyone. Welcome to Primary Market Center brought to you by Sunday Investing. This is our April 3rd week IPOs edition. Uh we didn't do a space this time on Sunday. Uh because there was no IPOs which were closing and we just wanted to wait till we uh actually figured out how the anchor books were, what the demand is like and then probably do our uh reviews. So that is why you are seeing that the episode is being done in the middle of the week. Uh sorry about that. And also like it's slightly inconvenient for us as well because uh we are in Kolkata uh the city of joy and it's a lot of fun to uh be in a different city. Uh so if you are in Kolkata definitely like type in comments we'll love to say hi if time permits but uh having said that what we'll do is we'll probably just keep this uh space

0:47 rather short. We will introduce uh the fire companies that we want to talk about and get straight into it. Before I actually do that, just a couple of uh housekeeping announcements that I wanted to do and I kind of do every time. One, if you are haven't joined our YouTube channel, the link is in the pinned comments. Definitely go ahead and uh join the YouTube channel. Uh second thing which I want to highlight is that none of what we discuss is a qualified opinion. Registered analyst. So this is nothing but what we are planning to do with our IPO strategy. uh nothing we discuss here cannot be constructed as an investment advice. I repeat nothing that we discuss here is an investment advice. I do not know your circumstances and please do not treat this as nothing

1:33 more than what our thoughts are with respect to uh what we are doing and just want to highlight one more thing. These thoughts are subject to change without notice. Like we may do something else than what we are saying because we also look at the market in terms of like how it is evolving but just want to make sure that uh we are doing in the spirit uh that we started it best case review without uh having any incentives assigned. You do your own work. Consult your financial advisor. These this is not research. uh this is not qualified opinion in uh any way, shape or form. With that, let me just uh set up the agenda for the day by highlighting that if you haven't joined the YouTube channel, go ahead and do that. We'll talk about five main board companies

2:19 today. We'll start with Patel Retail Patel Retail Mangal Shipping for Gem and last Vikram that's the order for the day. So with that maybe we can go ahead and uh set up let me set up Patel retail. Setting up Patel retail it's started in 2008 company a retail supermarket chain primarily tier three cities and nearby suburban areas operate. Uh the store offers wide range of products including food non-food general merchandising and apparel and they do both white labeling as well as selling of other brands. uh setting up the IPO it's a 242 cr IPO tot mainboard IPO 242 crores out of which 216 crores

3:04 is a is a fresh issue from what I can see yeah ofs so 216 cr is being going into the company and 24 cr is a promoters taking a part exit market cap that is 850 crores IP 242 crores so close to 20 25% dilution revenue The top line is 826 crores and fat is 25 crores. This make which is your market cap to sales. So it's coming at like 1 1k market cap to sales or close to 32 33 I think 34 LM FedEx FedEx securities. So with that

3:51 maybe over to you uh Sachin to talk about Patel again what we'll do is we'll do our reviews and then towards the end talk about what we are planning to do between all of the companies and today since it's an impromptu space we haven't really like spoken to each other so we'll you'll see that we are also figuring out on the go who is doing what uh so with that over to you Sachin to talk about patell >> uh am I audible >> yes >> all right So uh Patel Retail as you mentioned is a regional supermarket chain and they mostly operate in Tane and Ryard in the Mumbai region. So they also have one uh processing thing for their uh agricultural products and they also do trading uh activities as well which was their prime focus in FI23 the

4:37 sugar trading part. So currently they have around 43 stores with 1.8 lakh square ft of area. So uh if you average out it's around 4,000 ft² per store. uh in just for comparison, Demart operates at around 40,000 square ft² per store and Vishal is Vishal Megawatt is at 18,000 square ft per store. So a lot of SKQs they have around 10,000 11,000 SQS and 38 to 40 uh different product categories as well. They also have their own brands uh Patel fresh for these pulses ready to be ready to cook items. Uh there is one Indian cheska as well for this ghee and papad stuff. in the apparel they have launched one blue nation brand uh though this Indian cheska and some some of their own other own brands as well so they are under

5:23 ongoing litigations of the for the trademark thing so that trademark thing is uh isn't yet finalized yet so it's under litigation so in FI25 uh the retail came out at 45% of the revenues which was via stores and some online channels as well and the processing and manufacturing part came at 44% and the rest was trading ing part uh they also do uh exports uh to Sri Lanka, UK, Canada etc. uh which was uh which is around 30 33% of the revenues. This was earlier around 60% in FY23 and FI24 but now it has reduced. Uh they have around 230 employees on payroll and around 1200 contract workers as well. uh coming to their financials in FI23 they did around 1,000 CR of revenues uh 1019 to be

6:10 precise and when they did majorly trading so trading was around 50% of the FI23 sales in FI24 the sales dropped to around 817 cr and this was primarily uh reduced due to the trading activities which uh was uh reduced due to the sugar export bans that the government of India uh made so the so that led to the reduction in the revenues in FY25 since They tried to launch their own brands and new store setup as well. So the revenue was marginally up around 826 cr with 7 and a half% aid and 3% bat. Going by their projections, they are saying around 1,000 CR of revenues again in FI26 with plans to open around uh 10 to 15 stores per year. In other uh primarily in Mumbai region but in other regions as well like Gujarat, Karnatak,

6:57 Telangana etc. So currently for the capacity they have around three facilities with seven units. This is v for various items like pulses, masalas, powders, flowers etc. So for the facility one and two the capacity utilization saw an increase in F25. But for the third facility uh they said that the capacity utilization in some of the units had reduced. Now no specific explanation was given for this. They primarily said that due to nonavailability of raw materials uh the utilization didn't scale up. Uh don't know why they said that in the IP meter also they said the same. So uh if you look at their average revenue per store it's around 8.8 CR 8.9 CR per store and this is stagnant from the last two years. So even if the new store sales

7:44 are growing uh the it is being offset by the uh old store sales is not going at all if I see that because the relative uh revenue per store is almost flat. Uh in the same region if we take as visal mega which is which is grow growing at 11% uh of the revenues for the same stores and even the giant demart is growing at around 2% for the uh same stores revenues. uh their inventory turnover is absolutely pure poor uh around five to six times around 5.5 times is their inventory turnover uh which is by far very less compared to the vishal mega which is around 7 to eight times and demmart almost rotates it inventory around 11 to 12 times in a year. Uh this question was repeatedly asked in the IPs

8:30 but they care to they just ignore the question at times. So that is one thing to note. uh the risk guys uh just I mentioned that the inventory management is poor. Uh they also have some litigations on the food safety regarding the description and quantity of items that they sell. So that is under process and they also have 199 CR of unhedged forex thing for the exports that they do. So this is a deliberate practice that they do. So they don't do not hash their uh forex uh uh receivables and tables and competition is obviously uh inherent for this retail sector. So coming to the IPO use 59 CR is for debt repayment which will reduce the interest burden. Uh 115 CR is for working capital and the rest is for GCP. Uh to the pricing it's it has an OFS of about 25

9:17 CR. Uh they also did a preipo around November 24 for 300 rupees per share which included mostly HNI. Now the IPO is around 255 per share. So this is primarily due to the lesser growth that they saw in this FY25 compared to FI24. So it comes at around 30 33 times trail traing and around 27 to 28 times on forward basis. So I think that since it's a main board so it's a general notion to price near 30 times. All of the recent issues have been in the same line. Uh the peers Vishal is there DMAT is there some other agri product companies are also there and they have also shown u madusan masala which is an theme which primarily deals in masala components but they have shown that as peer as well. uh lead manager is here

10:04 FedEx which is more like an SM lead manager but has brought in some prior mainboard issues as well like Moka proteins and Deepak builders which are not trading below their issue prices. Uh the anchors for a 43 cr of uh portion are not quite good because we see only ODI funds and SM anchors there in so it appears like it's just to make fill the anchor book the anchors are put in there. Uh the relative positives are here is that the retail sales are growing year on year. Uh trading revenues are uh getting reduced and they this company might also benefit from the recent news of consumption focused by the government and uh we have also heard about the GST cuts as well but I do not see them commanding a premium valuations like Vishal or maybe a demart type. So

10:51 that was about it. Thank you so much Sachin for the concise review and covering the company. I also felt same uh like the quality of the company is not compared to what you will feel but it's just that the segment this FMCG segment and modern retail segment tends to get a higher PE which is what we have seen like it's a small size issue so uh game happening is really possible. So kind of look into this if this is something uh you feel that you are uh if like I would look into this because I will feel that this can give some listing pop but I will only look at it from the listing point of uh view. I'll also like figure out but again not

11:37 interested in the company simply because it's tier three uh uh retail stores. So one question for the Sachin is like which is this metric that you look at it's called something along the lines of same store sales growth right SR or something right right which is a really important metric when you are evaluating these modern retail chains restaurants etc right about is my understanding Correct. >> Uh like a purana store maybe it's it has matured now. So what is the revenue that we are trying to get from that store even after maturity because in new

12:22 stores we can bring in more people more customers. The store is under uh recognition as well. Uh or public initially uh revenue is higher but when it matures the crowd settles down. So same stores if the mature store is able to generate more revenues then we can see that the uh retail chain is functioning well. Understood. Understood. Thank you for your review. uh such uh again I also felt that this is a void company unless someone knows something which is not in public eye or because this is a small size IPO there is a chance of just whatever you call it float game momentum game something happening because of which it just opens high but I'm

13:07 honestly not looking at this company from a long-term view we'll try and see if I can flip it uh with that maybe we'll move forward and talk about the second company the second company we'll cover Mal electrical electrical setting up the company Mal 2008 and it manufactures transformers distribution and transmission of electricity in power sector. It processes transformer components including lamination, cig slit coils, core assemblies, moon cores, etc. SM company in fact JB and Vasuni. It seems like the main board beer of uh those companies and like who else who better to talk about this company than Rohit who who has been tracking this sector for quite some time for good or

13:53 for bad is what I will let Rohit kind of talk about. But setting up the IPO IP it's a 400 CR IP all of which is a fresh issue companies coming at a market cap of 1,550 crores market cap so they are diluting like close to 25% again 24%. FI25 financials 551 CR top line PAD 47 crores so just on PA level it's coming at again like 32 33p it's but it's very consistent like all the issues are around 400 smallest issues other than vicram and all of them are coming at like 30 32p something like that at a high level we'll still see in terms of the LM the LM is systematics so with that over to Rohit to talk about Mongal electrical >> thanks Manish I hope I'm audible

14:40 Yes. >> Yeah. Okay. I'm on the laptop for a change. So, good. Uh, yeah. So, this company is stirring up some makeers some bad memories, but let me let me cover the I'll cover it quickly. It's a fairly simple company to understand and we've had a couple of years like you said uh in the theme space. Uh, so there are fairly good comparables also. Uh so this company is slightly different in that they manufacture so they principally manufacture transformer components which is stuff like those uh the laminations and the slit coils the cores the core assemblies and so on which are the largest part of a transformer maybe 30 35 or 35 to 40% of the cost of a transformer is these components but apart from that what they also do a little different is they also make some manu sorry manufacture some transformers

15:26 themselves these are uh low voltage uh single single phase 5 KVA to 10 MBAs. So low to medium. So you can say these are more of distribution and like the lower end of power transformers and then they also do a small amount of uh EPC work also which is the kind of work that a trans rail or a Rajes power do but that's a again a very tiny part of the business. So if you look at their overall business, 70% is this transformer component business, 25% is the transformer distribution, low-end transformer business, I'll say, and then 5% is the uh EPC business. Today, this company has five different production facilities. Uh from a capacity standpoint, they have about a 16,000 metric ton capacity for the transformer components, the core components, the

16:12 laminations and so on. they have a 10 lakh KVA for regular transformers and a small amount of course ETC does not have a capacity but some of the other small thing they have a little bit of capacity but that doesn't really move the needle uh so the most important thing for this company uh and and what is important for the valuation of this segment is that they have a lot of certifications and approvals that uh and I I'll lay out where the others are also on this but they have a lot of certifications approvals that allows them to do work or get work get orders that have lesser and lesser competition. So simply making transformer laminations is a fairly low margin somewhat commoditized business but as you become larger as you get more certifications as you set up your own in-house testing labs you get say PGCL

17:00 approvals for different uh rating classes of transformers. So for example what these guys have said uh in the interviews is they have uh the PGCIL approvers up to 765 which is the highest class. So 400 KV and 765 are these uh the higher end of power transformers for they have the ability to supply even for that. Uh for instance a JB laminations has this approval only till 400 KV which itself is actually very good whereas a transcore actually only has approvals till 220 KV. So logically speaking these guys would have the the the more they can do from this higher KV class the higher their margins will be which is where the differentiation comes because there is less competition as you go higher up this chain. Uh they have uh a

17:46 as a company they have very very good clients they work with almost everybody all the major transformer players. One thing is their largest client is uh who had acquired I think another competitor of theirs. I'm forgetting the name now but they had acquired a competitor. So because they are the largest client, I don't know how uh this will affect their business or if they if it will make some dent to their topline if Terrell decides to source that in house. Uh but that that is not something I could see being covered anywhere. Uh overall this business like each segment operates a little differently from an order book standpoint. Your uh laminations and transformer business. So lamination business especially has is more of a spot ordering kind of business. uh the transformer and the EPC

18:31 business they have about a 290 odd cr uh uh order book which is okay I mean it's it's it's uh the the EPC for example is just five 5% of their business so it doesn't say too much because clearly they executing these projects slowly uh so just coming to how we can value this uh or before that let me just say one more thing they are using their funds for three things the interesting or good thing about this is it's a mainboard company with uh no offs which is extremely rare. All of the money is going to be put back into the company. So 100 cr is being used to pay debt uh where there will be a small PAT improvement of say 6 to 7 cr uh at a bottom line level. Another 100 cr is being used for working capital and 90 cr

19:18 is being used for capex. So the their current capacity which is the transformer uh components the lamination stuff they are at about 16,000 they are taking that to around 30,000 uh mtpa today their capacity utilization here is around 57 58% so they basically when they take it to 30,000 there's a lot of room and this will sort of take care of their growth for a decent amount of time this uh capacity will go live by the this particular transformer lamination capacity will go live by I think January of the coming year so Well, this will kind of show in their revenue and numbers or should show in their revenue and numbers quite soon and they don't have to worry about additional capacity. The other bits that they're doing which is creating transformer tanks which is a completely new component as well as their core transformer manufacturing

20:04 that will take some more time. It'll be only end of next year. So I'm I'm not really looking at that currently. I'm not even sure exactly how much that goes up by. It is not specified. Uh so this company has shown very the P&L is great. uh they've grown healthily around 20 25% uh year on year last year that is a 525 they did about a 550 540 cr topline with about 47 cr pat they did around 14% aida 8 and a half 9% pat which is uh which is solid which is like better than the two peers that are there uh Vas and JB uh which again shows the impact of your PGCI order uh the PGC segment which had come in FI25 uh there is some worsening in the balance sheet and the cash flows which uh I'm not sure why it doesn't I'm

20:50 not sure why in this year it has gotten worse but you can see that the same thing has happened for both Velas and JB also where till FI24 they all had pristine balance sheets and cash flows but you can see that the cash flows have suddenly worsened in FI25 so I'm not too sure exactly what the reason uh I was mentioning about the margins one thing the promoter said in a call is that this business typically is an 8 to 10% AIDA margin now with the higher classes they are moving to 12 to they can keep their business at a sustained 12 to 14%. In FI25 they did 14 and a half%. But he's saying it'll be in the 12 to 14%. So and this is in line with what uh the JB lamination will ask like all of these guys are are saying that broadly this is the range that it'll be but it feels

21:36 like the next year there may be a reduction in margin if it comes back to this uh 13% 14% or 12 to 12 to 14% range. is something to uh watch out for. Uh this company will grow 20 to 25% yearon year as per the promoter. This is low for theme growth hungry investors but reasonably strong for mainboard investors. I think there will be good visibility. This is a sector which at least for the next 5 to 10 years there is no shortage of demand and when you have some mode in some of these approvals and you're not competing with every other you know mom and pop player uh you can grow while maintaining your margin. So I think it is fair to assume that these guys will be able to show 20 to 25% growth at least for the next three three years or so. Uh on the

22:24 valuations valuations are a little all over the place and this is where my concern personally is. So this company is coming at around 32 times trailing that is on FI25 and probably around 25 times on FI26. If you assume that some amount of uh debt is also uh repaid little bit of that goodness will also come uh it comes around 25 times FI26. The twome peers JB and Vas uh JB trades at 20 times trailing and 12 times FI26. Vas trades at 37 times trailing and 22 times FI26. Uh so and and I'm keeping these as the main pair because 70% of Mongol's business is just a onetoone business with JB and Velas with an addition of say the 765 KV class which say JB

23:11 doesn't have there are many transformer companies today uh mainboard SM all of them trade at around 2728 or 2526 let's say at the lower end like an Indoch or a supreme power to a 30 to 34 33 34 for for a Danish initial chart. The only exception is Tarl, but that's a different league, you know, in terms of what they do and the growth that they're forecasting for a transformer component player to come at 32 times uh trailing with 25 times one year forward. I know Velas is at a similar valuation. Part of that is also because Velas has a very very strong balance sheet. Uh but yeah, whatever. I I don't fully understand that. Anyway, uh I feel this for a

23:57 transformer lamination player, it is a little too expensive. The only player honestly that has anything left on the table is the one that gave the worst results last time. So it continues to be battered. But maybe you know someday that will also reflect some of the other valuations in the segment. But these guys are these guys are definitely coming at slightly higher than I would feel comfortable with. I feel this is a fair place for it to trade for some time and then it will there's no real rerating left and it will only move with uh results. So uh yeah I think the the my view I will give at the end one more point is I think abacus is the largest anchor which is good which is in sunhana's fund but most of the others were very very normal funds you know I'll share my view at the end but this is summary of the company and the business uh hope this is

24:43 helpful. Thank you so much. main race almost similar race get a higher valuation slower growth yet people are just okay simply because they feel like >> yeah I mean >> to be fair see even even the pure transformer players even the ones with very strong margins a decent mo with like 25 30% growth projections are actually getting in this 27 28 32 34 like Indoch is at 27 times uh this um shell chart is like what 33 34 it's not like I think volt is also not trading at gold time of course is a much slower like is is not guiding for

25:29 such uh like is guiding for far lower growth but most of these guys are trading in the 25 to 30ish 30 at max 33 34 times it's not like they're uh the the core transformer players are trading at 40 45 times like they were not long ago few months a couple of months ago they were actually fairly expensive uh but post these latest results they've all normalized quite a bit so maybe the Q1 numbers for Mongol will normalize as 32 to maybe 28 or something 28 29 but I still feel personally it is a little high for a lamination player I mean this is a proxy to transformers which itself is a proxy to the power segment so it should logically always trade lower unless they're promising exceptional growth like a veas whatever it is is the one guy who's uh guiding for 60% growth

26:18 which is what gives it premium on a one year or a two-year forward basis. That's not what I hear from the promoters for for this particular company. So I am a little I mean I'm giving my view but I'm honestly quite neutral on this. I mean I don't think you can you'll go wrong if you apply and hold it and I'm just willing to you know ride the 25 30% kind of earnings growth or 30 35% earnings growth over the next one two years. If the company if the overall segment does not derate uh there's no harm I mean this business should do okay but there's no rerating left is in my view >> understood >> jump that you'll get yeah >> makes sense >> makes sense so you're basically saying that since it's a proxy to transformers it shouldn't it should get slight discount to your transformer players can you also talk a bit about the promoter

27:05 group I saw that the promoter group had a listed company so how does that help does this help in any possible way or something like that or you because it's the same industry right end of the day. >> Yeah. So the promoter group is the same promoter group as dynamic cables which is a 2,000 cr listed company that company trades at 27 28 times. Uh and it's not like that segment of that company has done that well. It has of course done well over over a long period of time. It has done very very well. But in the recent uh months despite actually doing well giving good numbers that segment itself has gotten slightly derated. It was trading at anywhere from 35 to 40 times. It has come down to 25 27 times now. Whether you look at this company, Universal Cables, BLA cables, all of them are in that range. So, uh we've seen a couple of recent one,

27:51 Badora that came recently. Uh one more is coming. Uh JD cables. So, these are all it's not like this segment is getting a very high multiple either. So, probably the promoters understand the markets. But beyond a point, I'm not I don't put a lot of weight. It's still a smallish company. uh it's not like dynamic cables is a 10,000 15,000 cr market cap company. So I don't see any reason why dynamic trade at 27 times and this should trade because of which this should trade at 40p or something. Understood. Super helpful. So maybe with that we have covered the second company. second company which is electrical

28:39 electrical. Go ahead and follow the YouTube channel link to which is in the pin comments. We look forward to seeing uh I will post this video audio with video summary there tomorrow. Uh so give us some time we'll post all of these companies there with that. But let me move forward and talk about the third company before I actually introduce third company. Just want to introduce and welcome Sor on the panel as well. uh Sor is someone whom I have been following for quite some time does very good work in terms of just posting one pages I know I have stopped posting one pages so in a way he has picked it up so uh thank you so much uh Sorup for everything that you are doing uh and like if everyone can just follow Sorup as well he kind of posts good content uh but with that let me just quickly set up uh Sorup you'll have to go on mute while I kind of introduce because it's a eco

29:25 uh thank you uh let me just quickly set up uh Sri G ship shipping global uh 1995 company start and it's a shipping and logistics company focusing on dryable cargo and primarily focuses on m non- major ports and jetties especially along the west coast of India like bha nagar magdala naki etc. The company presently operates a fleet that exceeds 80 vessels. So company basically shipping company logistics. setting up the IPO it's a 410 cr IPO all of which is a fresh issue IPO market cap 4105 crap which is like $500 million and companies which is rather less tering

30:16 which seems better than the the two companies that we spoke about like all the different segments so Understand in terms of the LM the LM is beline so LM but decent repute with that over to you S to talk about CG. >> Hi thanks Manish. Uh am I loud and clear? >> Yeah. >> Hey uh so thanks for the introduction first of all. Uh getting on with the IPO. Uh this is a flagship company of the Shivi group of Jamnagar. So this is a 30-year-old family-owned business group. It's a fairly diversified. They have about 20 25 uh group companies in various businesses but uh their main focus is on shipping uh marine logistics

31:02 through this company. So it's actually a quite uh respected name in Jam Nagar. I think they have some political connections as well. uh the family does uh the group was started by two brothers Ashoke and Jitendra Lal and now the second generation is kind of uh starting to take over. So that is about the company. I actually spoke with a few people who have worked with the group uh and the feedback is quite positive. Uh they everyone seems to think the promoters are quite sincere and you know above the board in all their dealings. uh you know little things like paying vendors on time you know helping develop vendors uh develop their business grow with them those sort of things. So in

31:49 that way some positives about the uh promoters the the main business that they do is dry bulk cargo handling. Uh so dry bulk cargo for those who don't know is you know uh solid commodities uh that are transported in like large quantities without any packaging. you know they are this directly loaded in open containers into the ship's hold uh you know like coal, cement, sand u those commodities. So these these guys uh work in around 20 non- major ports uh in India and one port in Sri Lanka. So the non- major port is uh I mean it sounds something like they're doing some some kind of inferior business but it's just that uh

32:35 smaller ports that are run by the state government. So there are about 270 non- major ports in India and around 12 major ports. So they do offer some services in major ports but it's like very small part of their business and I don't think they're focusing on that as well as of now. Um like you said they have about uh 83 vessels and 370 plus heavy earth moving equipment. In one of the interviews I think the promoter mentioned that uh this fleet is like the largest size for competitors in this space. So that's uh that's another positive I think. Uh they have about 1100 uh permanent employees on the roles.

33:21 Uh so this cargo handling business is about 80% of their business uh in FY25. Uh another part of their business is transportation. So what they do is they don't just uh uh do the cargo handling at the port itself. They actually bring the uh the commodity that they've unloaded right to the doorstep of the uh receiver. So it's kind of like a uh additional service. They have their own warehousing, their own logistic network that uh the driver cargo is delivered right to the premise and they also pick up and deliver to the ship. So this cargo handling that they do, I'd like to talk a bit about that. It's uh something called a light ridge uh

34:07 service. So what happens is when your big ocean fairings, deep sea fairing ships come into the ports, they might not be able to dock. uh they'll have to anchor somewhere in the deep sea and because of the uh depth requirements and the draft or maybe the tide uh not being conducive they'll have to hire these smaller ships or barges to come and unload part of the load or all the load and take it to the port. So they'll make like multiple uh trips to and fro and unload and uh get the um load uh from to the port. So that's what they do. It's quite a specialized business I feel. Uh there are some companies uh which do this. Uh but

34:53 nobody is really specialized in this business. And they also mentioned in RSVP there's no listed tier uh doing this. So all their competitors are unlisted and they are probably the biggest among them. They're primarily in Gujarat which is good because uh Gujarat is like uh handling more 60 65% of the total cargo that is handled in non-peria ports happens in Gujarat. So talking a bit about the IPO the like you said the IPO size is small they are just uh diluting 10% of the 4,000 cr market cap. uh they're using 250 crores of this to buy something called Supra

35:38 Max drybulk carrier. So this is like those huge barges like uh 50,000 65,000 dead weight tonnage barges and this is kind of a vertical integration for them. So with this vessel they'll be able to transport the goods in the deep sea as well. So not just taking the goods from the port to the deep sea but taking it to the point where it is going to be unloaded or loaded again. So this could be like a coast to coast, east coast to west coast kind of uh route or maybe even um Sri Lanka is one of the export that they do. They might even go to like uh east coast Africa something like that. They haven't specifically

36:24 mentioned but it looks like this is what they want to do. So going to the financials. So one red flag I saw here is that revenue has actually declined year on year. So FY23 they were doing 827 crores and ended up doing 610 crores in uh FY25. So quite a significant drop. There's a reason for this as well. I the promoter wasn't really forthcoming in any interview about the reasons but uh going into the RHP it feels like they lost a couple of customers every year. So they lost one customer in FY24 they lost another customer in FY25 and I think this is one of the business risk that they have like

37:09 uh they most of their top 10 customers are about 60% of the revenue and their top customer is 20%. So uh you know they might lose business in some year the revenue might be a little volatile but the good thing is their PAT has increased year on year about 10 15% every year they've increased PAT uh mostly as per the promoter it's mostly from you know operational efficiency is you can see in some of the metrics as well uh like the average fleet idle days has come down from 79 to 58 which is quite quite significant and they've kind of reduced their workforce as well. And one more thing I get got to know from

37:54 their one of their suppliers is that they used to do repair and maintenance for their fleet. Uh they used to outsource it and now they do it in-house. So they've probably been reducing costs over there. So in terms of uh the industry itself right the industry itself uh it's a growing industry definitely and at the end of the day if India has to grow at 6 7 8% GDP growth uh this industry needs to grow by 10 12%. So you can the u cargo handling tonnage uh industry for example grows at a c of 10%. They expected to reach 28,000

38:41 uh million tons million metric tons by fi30 from 1500 currently. So uh industry is good. All in all, I think this company has carved out a niche for itself in a good industry, a growing industry. They don't have really any listed peers. So valuations are a bit tricky to understand. 29x uh trailing and with some debt repayment like you said it might come to 25 26 um sounds a little at the higher side because if you see CMAC transferred all these other uh logistics and shipping companies uh they're in the 1520 range right but they've traded in the past at 4050 uh PE so uh can't really say can't

39:31 really take a call on the uh valuation front. Other than that, I think uh as I like I said, the business is good, the promoters are good, maybe a good company to have in the portfolio and see how the story plays out. So, yeah, that's about it. >> Thanks. Thank you so much. I somehow got super turned off with respect And somehow at the same period of time, right? So there's this concept of mean reversion where like your margins are already going towards the higher right margins

40:17 increase by definition they need to revert back to the mean right. So because of which I'm slightly negative on the company for the lack of a better word. In fact, this reminds me of that company if you saw and like there was a justification Gujarat based company they were able to better utilize their machines etc. But somehow that doesn't play out and we saw listing was relatively pretty weak. It was a smallish issue. I feel somehow this is like very similar to a Banana. Maybe better. >> Definitely. >> Definitely. I think uh

41:10 Right. But again like uh one of the explanation is it could be a one-time thing that happened twice. So they lost one customer in FI24 and another customer in FI25 but they added others. maybe the revenue needs to kick in you know uh on on the growth front they one of the interviews they were asked directly you know where the growth is going to come from and I think uh the vertical integration right by buying this uh supraax carrier they'll be able to offer it's like a vertical integration for them so might be able to pull in more customers and higher value contracts from there so yeah you're right Falling revenues are never a good

41:56 sign for any business and margins also 33% a bit 23% pat remains to be seen. Got it. Uh one more question I'm not sure if you know but SuperX what do you think is the potential uh like in terms of percentage of revenue over the next 2 three years or like is there any guidance which is available or is it something which is complete guesswork right now? or no uh so there it's complete guesswork right now on uh the the promoters claim that this is a demand from the existing custom ones so they say that once the like the ship is commissioned they've already taken quotations I think ship commission

42:43 immediately customer ready say in terms of uh I don't know what contribution it will give to the revenue but yeah I this year maybe half full impact half year impact to maybe 10% like uh contribution this year and 20 25% next year is what I feel personally >> got it but that should then essentially lead to increase in receivables ideally right >> yeah yeah balance sheet is strong uh cash flow >> got it promoted group is also decent right plus a small size issue. So if I am not super positive

43:28 options so I will probably avoid and I've been doing the liberty of talking about the views as well also although we said we'll kind of say towards the end but yeah anything else that you have sort of on your >> uh no that's about it. Yeah it's a iffy iffy IP for me also. >> Perfect. Perfect. Thank you so much for covering this. Uh thank you for joining us uh today as well and doing this really means a lot for us. What we are trying to do is panel and just say like it the IP becomes enlist independent and we just kind of review and if there are more people there are more conflicting opinions and it just becomes a slightly more constructive uh discussion right because we don't what we don't want to do is

44:14 just open discussion in terms of like the IPL which are coming people who are slightly like interested in that space it's nerdy discussions on that so thank you for joining Sure man. >> Yeah. With that let me move forward and talk about the fourth company. We're running slightly short on times go. Uh it's J aromatics. Jam and Vikram is where a lot of confusion is. So maybe just setting up GE incorporated in 1997 company manufacturer specialty ingredients like essential oils, aroma chemicals and value added derivatives in India. uh company products oral care, oral care, cosmetics, nutri neutrauticals, pharmaceuticals, FMCG, pain management. So it's in like aroma and like uh perfumes, flavors, etc. Uh smells that

45:01 is what the company manufactures for the lack of a better word. Setting up the IPO, it's a very small IPO 451 crores, 175 CR fresh issue major 275 CR FS. So just 175 CR is going into the company and most of the uh raise is essentially a secondary where promoters taking a part exit market cap 1700 cr so 1700 451 so close to like 1734 51 so like 22 23% FI25 financials about revenue 55 cr and PA 53 crores 53 crores pad it's coming at like 32p again the standard similar pad. It seems like

45:47 15 remember Alenbury was a shoe. So with that maybe over to you Yash you are also back after a long long time. Happy welcome back. And if you can talk about gem aromatics. >> Hey Manish, is my voice audible to you? >> Yes sir. >> Cool. Uh so this is the main board company. Uh but I'll not take much time. I have specific few pointers on what I like and what are the uh negatives for

46:33 the company uh which I have found. Uh so company is a manufacturer of specialty ingredients which includes essential oils, aroma chemicals and other value added derivatives. They have very vast history of their uh operations in India uh more than 100 years. Uh they have also very comprehensive and very large customer uh base. uh mostly they serve wide range of industries uh oral care, cosmetics, neutrauteticals, uh pharmaceuticals and personal care types. So the company has established a very dominant position in

47:20 terms of the DMO which is demethanolized mint oil uh clove oil and egg oil and eucalyptus oil in India. in ter in terms of how I would like to see this companies in terms of mint which is crude mint oil from mentha awareness chemical 3% market share 15% is by harbbo to one of the large producers of mint oil in India scale facility mint derivatives through backward integration or sourcing

48:08 awareness or GEM has one GEM is also one of the largest processors of DMO and among highest producers of pepa by volume. The another product which they have is methanol, personal care, pharmaceuticals, beverages. uh they also have key uh uh I would say key position in India's methanol marketing mint oil various mint based derivatives crystals basically% market share then DMO is one of the you know highest

48:54 product portfolio market share market then there is flow 28% market share alternative medicine flavoring gem is participant in this niche segment and operating at a very good scale as I told 28% market share time chemical processing capabilities supply side which is the crude and the value added derivatives. Then there isol

49:39 which is in which gem holds 65% market share. This iggonol is derived from guasacol and clove oil and this is used in pharmaceutical fragrances and to preserves food also preserv this is vertically integrated and this is produced by using clean methylation from guacolology inhouse R&D they have I guess as As far as I remember 10 to 11 senior scientists bet now another product which is one of the futuristic product for them is guacol

50:26 which is important chemical precursor to egonol to egon already market share 65% they hold it or precursor market share clean science 82% market share hold science 13% market share. The idea is already derived by using raw material and sourcing sourcing it from other vendors. So it's highly likely that they'll be very successful by using their own guacol and say margin be better company forward. Okay. Then there is any tool which is used in fragrance and pharmaceuticals. by volume 16% market share

51:15 35% eucalyptus oil medic share is dominated by gem by holding 58% market share how would I like to value this Majority of very cosmetics, medicine, personal care, uh then toothpaste, Colgate in also fifth generation promoters doing business from last more than 100 years, 50 plus years.

52:06 So the stickiness is I'm seeing the stickiness in the business already investment global signm agreement to to supply till 2028 which which will enhance both of their companies future growth essential oils India I have already explained chemicals and what is the percentage market share of forward

52:51 integration margins better CDMO enter they also have option for the pep peptides which are which are again uh you know very futuristic in terms of the use case of the uh of the chemicals. Uh last 3 years say there is not much growth in terms of the profit and the revenues of the company. Uh these are because uh the capacity are being utilized uh very well. peer comparison to lean science is one. Uh I have also I have also seen Yeshu Industries in few of the chemicals and yes is holding majority of the market share. Uh in terms of uh future earnings

53:40 price uh what I have heard is key 15% 15 to 20% is what their target is to grow next 2 to 3 years. Okay. So base valuation around uh motor 28 20 30 times FI 27 times which uh no sorry so FI26 they'll grow 15%. and FY27 they'll try to grow 30 to 40% with the new capacity which they are bringing in with some uh some inorganic acquisition which is their own company

54:26 fresh capacity they'll try to grow 30% FI 27 this company is uh valued at 15 times FI 27 given the stickiness market share at such small market cap and MNC stake MNC lease agreement. So multiples should be taken care by the market and I think is a a very good apply in terms of anyone who can hold for a long period of time should apply and accumulate from screen as well. At 1,700 cr valuation, I don't think this company is very bad. At 1,700 cr valuation, this company is looking like a a very good investment

55:11 opportunity for the long-term investors. >> Perfect. Thank you. Yes, for doing it. You seem slightly tired. >> Also, I also Manish, I forgot few negative points which I had in my mind. Uh the first one is uh uh some promoter uh group willful defaulter has done something I did not write in a more detail because I was obviously very fantasized by the business of the company and how they running things from so so many years. Uh or the second and the second thing is Supreme Court. And the third point

55:56 and the third point is the impact of uh that Supreme Court while litigation is not very clear to me. But still overall uh I like the company and I'm very positive about it. So wishful defaulter. So there was a relative of the promoters who was a wishful defaulter in a I guess proprietor or LLP matter and it was proved to Sebi Praasal we have no relation with the guy it's an arms length you know relation to you

56:42 know sei had cleared that and uh so I feel that's not a concern yes wishful default always markets react negatively but I feel that there's there's no concern on that Thank you. Yes. Uh came in from my phone. Uh but yeah, thank you for covering the company. I also kind of like the company. Very small market cap. FMCG proxy. FMCG just get tends to get a higher PE because it's a like the length of uh that business it's is generally understood to be higher like people just

57:28 give it the long longit uh multiple key business will be around so that because of it just trades at a super abnormal P even with lower growth now that capex would come in or like uh so that growth should essentially be factored But just want to highlight the IPOs are not popping. It's a very choppy market. So I'm not expecting crazy gains or even for that matter a lot of gains. But I'm I would be making a position in this company at or around IPO price. I will definitely be applying for this IPO uh on my own personal land. You do you. But that is what with our review was with respect to uh gem aromatics. Just one thing I saw uh in ankor book was also pretty pretty decent for the kind of uh size of the IP. It's a 400 CR IPO so

58:15 very small anchor book end of the day right uh around 100 CR but then there was Nepon on it which which had sat in with some 30% of the anchor book then uh uh there was sage one which is uh fiio was holding close to 20% then there were a few other uh names as well which seemed pretty interesting and uh I definitely liked the anchor book so that is also good like there were very few uh for the lack of a better SM flippers uh which are usually there. Uh Sansi had also taken a uh stake from Mulagraal's uh fund but that is something which is very common with respect to a lot of new IPOs. Uh but yeah it's interesting uh this company I kind of like the

59:01 valuation but again want to highlight that these are very choppy markets and choppy markets are good for building positions over long term. This end of the day is a FMCG proxy right so should be probably valued at a FMCG multiple I feel because like these are sticky businesses right just a polegate in client for from what I understand close to 50 years that's not changing right so it's like a uh continued revenue and that will continue for quite some time uh and uh will go on and like this growth which will come in that will give it a even more further like I feel grow discount like it's forward earnings discount is what I feel so I'm interested in the story it could have been slightly cheaper but against a

59:47 small size IPO not thinking more of it u I don't know how it will pop but I'm definitely interested in it uh for the long-term view and anything in short-term in a choppy market is anyways very difficult to say right so that is what I would be doing I would be applying to this company we'll still kind of create a end list at the end but yeah that let me move forward to Vicram Solar uh and talk about the last company for the day. In the meanwhile, if you liking the space, if you something uh you enjoy, please definitely tell us uh your views about the space in in comments. Uh we're slightly tired after a long day. So, uh you would see that. But yeah, uh just let us know if it's something which you enjoy. Uh will really help. And then uh definitely follow the YouTube channel as well and follow all of us here on uh uh Twitter

1:00:34 as well. With that let me just quickly move forward and talk about Vikram solar setting of Vikram solar company 2006 it's a solar photo voltage uh PV module manufacturer company comprehensive EPC solution or O&M services but majorly it's a module manufacturer solar module manufacturer manufacturing facility Kolkata or Chennai manufacturing facilities uh setting up the IPO it's a 2100 crores IPO 2079 out of 1 1500 crores fresh isue around 580 crores FS so 1500 cr 2100 total IPO market cap so they're diluting like 18% of the company IPO so the promoter st should be

1:01:23 much lesser but at this stage 20% dilution FI25 financials revenue 3500 crores 3500 crores revenue pat 140 40 ka 140 pay this is coming pretty expensive if you think of it like uh like 85 86p but then these this is a classic business which you don't look at trailing P this is a business which you look at forward P I had said the like we had said the same thing during premier energies as well is it premier is it not probably yes probably no but that the market has really changed premier got a lot of novel novel TP rerating Will this get probably not but yeah there is something which you need to find out in terms of the LM. The LM is JM Nama

1:02:09 Equirus UPS Philip Capital. So with that over to you Tme uh to talk about uh Vikram. >> Am I audible? Uh so Vikram Solar Limited is a Kolkata based leading solar module manufacturer with an installed capacity of 4.5 gawatt out of which 2.85 gawatt is an enlisted capacity as an ALM. So what is ALM? It is an approved uh list of module manufacturers from the government. The company has two facilities. One in West Bengal which has 3.2 2 gawatt capacity and another capacity in Tamil Nadu in Chennai which is 1.3 gawatt. The company

1:02:55 has a panindia presence uh which is in 19 states two union territories uh 83 distribution uh distributors with 250 plus dealers. The company is raising 279 crores 2079 out of which 1,500 is a fresh issue. Out of that 1 1500 1365 crores will go towards the capeex and the rest 135 will be the GCP and this 579 cr is an OFS. Now coming on its financials the FI23 the company did a revenue of 2073 crores and a PAT was 14.5 crores. F24 revenue was 2511 crores with a PAT of 79.7 roughly 80 crores and F24 revenue was 34 3423 crores and PAT was 140 crores. uh so it is coming at a

1:03:40 valuation of 12,9 crores. So if you just look at the P multiple it looks like 86k PPR and eway bit up at 24.5 times. Now I'll just give you a highle comparison with the three peers which are given in the RHP your first is VI is at 43 * 25 and 21 EDA premier is at 47 * 25 on P level and 20.8 at Eida webs is at 38.2* two times 25 and 19 times almost double in at least on the P level but now you need to understand Q I'll back it by two three different things first is the capix if you look at current state

1:04:30 in FY26 current financial it will go from 4.5 to 15.5 G so they are doing one Kix in Wam Tamil Tamil Nadu which is 5 gawatt 5.4 4 GW and uh Gangai Kundam in Tamil Nadu for 6 GW. Okay. So this will take your total module manufacturing uh you know capacity at 15.5 GW. Cell is zero at this point. In FY27 they are doing another 5 G module but the sale from zero will go to 12 GW and they have already started IPO capacity they are also doing an integrated module cell manufacturing unit to they are going to spend money and the company's doing another 5 G 5 GW in BSS battery energy

1:05:16 uh solutions storage solutions. This is the first thing your capacity is almost I would say happening three and a half times in 26 and it will be almost I would say four and a half times in 27 and cell will be from 0 to 12 G and your base is 5 G but how are they going to really you know build that big cex in that given time timeline the time will tell we have no answer on this part. The second point which you know talk more on the valuation I feel that is a more relevant part and you should listen that very carefully at this point vicram solar as a order book of 10.3 gawatt in terms of cr I'll just give one break

1:06:03 up a gaw you know I'll just do the parts the first would be top console with a solid realization with a good facility. There is second which is topcon with lower realization types. Third your bi focal or monop focal at good realization which is at 14 1450 types and one is monoper and your bif focal at lower realization types. So these guy at this point comes between second and third. They don't have topcon but they are building topcon in current financial maybe next 3 to 6 months and but they have decent I would say decent to good

1:06:48 realization second third category which is appro 1400 types 1400 cr for 1 gawatt realization in your solar modules and this sell part yeah I'm not considering this is pure play module to if I just extrapolate 10.5 g into even worst case 13.5 1350 that is the worst I am considering 10.5 is like 14,500 top line $1.6 6 billion. You have heard it right. And this order books for 15 to 18 months order. What this means still if you consider

1:07:35 revenue should be 7,000 crores which is more than double of your 25 and this is on lower end. And if you just consider your very very normal you know margins which is approx I would take 7 and a half% pat and appro 16% aid without considering sell China they can make 16% aida and like 7 and a half% pat 7 and a half% your iida comes at roughly 1200 to 1300 crores and pat comes at 500 to 650 50 crores. This is like very normal and just I'm doing the efficiency by taking the proportional depreciation and interest cost. Yes, I have considered

1:08:21 the interest cost for the next loan credit line estimate cost they making like 450 450 500 to 650 cr in current financial year. So if I just put that in the multiples solar say B 16 to 20 * P FR 26 and 12 * C bida if I talk on the peers at this point V if I'm not wrong is trading at roughly 32 times 26 yes this doesn't have that holding company if I consider that and premier sitting roughly at 33 times FR26 And this is coming at roughly 11 times

1:09:08 okay 10 and 11 times what I feel if the things go great market will value but but there are many risk for I'll tell one thing at this point have no sell people will treat this company at this point as a module manufacturer only but eventually they are going to sell and it is not a very distant thing I feel what I know is Q2 of next financial sell capacity of 4 and half which the promoter said in an interview. It's not my own imagination to I'll talk on the risk and you should hear those you know very carefully. First litigations and this is I would say the biggest risk uh just I'm reading it out or just hear it carefully. Four litigations or proceedings against the company. Two criminal litigations

1:09:53 against the companies. two actions takens actions uh taken um by the statutory auditors against the company. Five litigations against directors and managing directors. three against promoters, five against key manag people, 45 tax litigation total val and two by the way at least 10% of them should material and that is very obvious So I don't know how is the market going to you know take this and I'll tell you

1:10:40 a story. This is my personal thing. Okay. uh so in 20 I would say 4 24 appro I would say March April preip around that time I had also got an offer to we did not do that but uh the demand was very subdued but what happened it garnered lot of demand lot of demand you know eventually I guess that was seven four 4500 types in I'll just read out the names of Plutus Nveshai GVA Dalmia family office karnavad ventures fin avenue roenupta caprise wara financial sake dhanuka

1:11:28 agrch family office shinst star all these are investors in the preip which gives a confidence but but when the preip had opened the confidence in the market for this company significantly lower but it changed what changed I don't know so June okay and now IP is coming after 14 months at at roughly I would say approx 400 number so and another two three risks top five customers contributes to 78% of the revenue and that is you know Not a big risk but yes for sure revenue concentration surely risk but I feel

1:12:15 they're more into B2B and B2C is lesser this apply to your government institutions NLC various government inst you know I have don't have the exact numbers but they work with lot of government institutions another one red flag not red flag but a risk after out of 100% raw materials they use to manufacture 81% is imported from China, Southeast Asia and you know Middle East Asia to you know uh that risk for sure China, Thailand, Vietnam that has a different risk and we don't know how when it is going to you know uh uh become a big risk for the company

1:13:02 I'll tell one more thing is key audit statuto auditors have given three observations in FI25 which I Two are like differences in quarterly numbers between banks in terms of working capital limits and the books of accounts of working capital two are sameending And one more small risk not small I would say it's a it's a decent risk

1:13:47 capacity 8.66 is domestic okay which is 85%. 1.6 gawatt is export and if you just look at I'll just tell you the past here FR24 this company had 60 or 70% of export and 30% or appro 35% which was in domestic revenue. F25 in 98% came from India and one and a half% from export one and a half I guess one and a half.45 was your USA America. So I I assume 1.6 number USA and which is very obvious to 1.6 6 gawatt say that in translates into a revenues of roughly so 2300 20 2200 2300 crores for next I would say 15

1:14:33 months or 18 months uh whatever they take to execute and another risk is like of course you know execution of the orders and the delay in production delay in sell line that is obvious uh industry wise or company wise risk to another And there were like of course some I guess uh uh if I'm not wrong there is some corporate guarantee given by multiple promoter entities to you know get working capital there were some defaults during the default so it's a risk but that it's it's a past and I feel that was a very tough period for everyone in the industry so that's a different matter so uh if I summarize everything the past

1:15:21 had lot of issues some issues the future looks bright but but in an IPO the future for every company looks bright to be very frank uh so I would take in a this way key let market discover the value and we as an investor should not tell but at IPO price I feel it's not a very bad deal like if I just take the 27 capacity man is not a small thing you know and 26 Sorry module and 27 that's a big story you know that is really that takes you near and know the past has been you know

1:16:08 different tangent and we don't know you never know because globally the you know renewable energy companies have struggled in terms of multiples you know It has happened in China. I'm not saying like almost three times valuations of China. Even if I take that is I would say very normal. It's not a we are saying it is it is a very doable task you don't know market or cell energy company we don't know how is going to get exeuts

1:16:53 and buts so I feeling I would say only high risk takers can to see I feel they have left scope even on listing I'll be very frank but you know it is the market who will tell listing but I have a feeling but for how much for what valuation market earnings that is I feel the going to be 400 500 to I feel this is this company is for small to medium risk takers but it is

1:17:40 not going to be multiagger I'm happy for everyone but there are many ifs and buts it's a good company but the I would say the past was on a bad note I'll be very frank it was on a bad note the present is on a neutral note and there there are decent chances that the future is on a bright note but but future is always uncertain we have no answer to what is h going to happen so I would company but uh neither I or anyone in the space have the answers future so you take your own call but isn't bad but neither super good you know that way I have better options available outside listing I feel you never know I I don't have idea but I

1:18:26 have feeling and on long-term uh let markets decide their own you know valuation for such a company is very complex for anyone either me or anyone in the panel or either anyone of the followers who are subs you know listeners who are

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