@Sameermpatel wrote:

Title : ADF FOOD LTD : Ready to ride Upcoming Growth of Urban Consumer Spending in Processed Food like Ready to eat and Frozen Food Market in India and International market.

1. Started in 1932 ,on Mar 1992 the company was incorporated as public limited company.

2. ADF Foods Limited (ADF), promoted by the Thakkar Family, is a manufacturer and
   exporter of food products primarily to US, UK and Middle East. Its product offerings include pickles, chutneys, spices, ready‐to‐eat meals, sauces, frozen snacks/ parathas/vegetables/ samosas, mango pulp and slices, and cooking pastes. It markets its products under the brands of Ashoka, Truly Indian, Soul, Nate’s, PJ’s Organics, Aeroplane and Camel.

3. ADF exports its products to almost 52 countries with the help of 180 distributors. Its offerings in US constitute of core brands like Nate’s, Ashoka, Truly Indian and PJ’s and in UK as Brand Soul. ADF has been successful in launching new products in major supermarket chains and natural grocery stores across US. Similarly, its brands Camel and Aeroplane have strong presence in Middle‐East.

4. ADF has proven track record of developing domestic brands like Mothers recipe (Sold off in 2005) which today is 200 Cr brand. It has re‐entered the domestic segment under its umbrella brand SOUL and is available on most traditional outlets. This segment currently is ~5% revenues and is incurring losses at EBIDTA level. However, management is confident of ramping up the domestic business with special focus on distribution and product extensions.

5. Last 4 years Company Top Line growth was almost nil ( 208 Cr in FY 18 compared to 207 Cr in FY14) However PAT increased from 4.5 Cr to 18 Cr on Improvement in Operating & net Margin due to Product Mix &Product sale strategy change. Stock has not performed in last one year , Now with Topline Growth with Improved Operating Margin and Net Margin , Company can be multibagger.

6. New CMD Bimal R. Thakkar who have taken change in FY2018 is more aggressive for growth and looking for More Opportunities is Domestic as well as International Market.

Mr. Bimal Thakkar (MD) is a Commerce Graduate and has done a Course in He has played an instrumental role in ADF IPO, subsequent private placements, settings up of factory at Nasik, expansion of factory at Nadiad, introduction and promotion of the ADF’s products in domestic and international markets, development of Brands and new products, tapping new markets for the products,international acquisitions, setting up of subsidiary companies in U.K., Mauritius and U.S.A.

7. Promoter Stake decreased from 51% in FY16 to 30.3% in June-18 Quarter in open market sale hence stock was continuously under pressure in last 1 year. Reason for selling of share by outgoing Management /Promoter Families due to person fund requirement.

8. However Present Promoter and CMD willing to increase Promoter stake. In Last Buyback offer in FY2018 promoter didn’t participated hence promoter stake increased to 32.31 % in SEP2018 from 30.3 % JUNE2018.

9. Very Important :- NBFC company “mentor capital limited” promoted by Sanjay Dangi has 9.45 % stake in SEP2018 & it is continuously increasing stake in company in last 4 quarters,

10. Also Many Individual like Sanjay Dangi ( 5.83 % stake in SEP2018 by Wife Name Alpana ) and Elite invetors like Lashit Sanghvi, Ashwin Kedia has 2.5 % stake Total & All these have taken Good Stake in companies in last 1 years during Promoter stake sale

11. Many Recent Launch of Ready to eat & other product and Launch in ecommerce sites like FlipKart online supermarket , Bigbasket, Grofers will provide explosive growth in coming years.

12. Frozen Product has good Margin and % share of this product is increasing in Domestic and international market , In last one year it increased from 25% to 40% of Total Revenue.

13. Present revenue comes from International market (95%) , Domestic account for (5%) only. New management is very aggressive to increase revenue share in Domestic market as well and part of that strategy they launched product in Ecommerce like flip kart supermarket, big basket

14. Many Ready to eat & Frozen foods Product of ADF food which have high margin business has now also listed in Many US, UK and Middle east Online grocery website recently which boosted sales and further Sales may rise.

15. Promoter are honest and Reward Shareholder in Form of Buyback of Shares or Dividend consistently. It is Debt Free Company.

16. Present Market Cap is only nearly 488 Crore at CMP@ 244, So smallcap company having Good Growth scenario ahead

17. The Company has launched new products under PJ’s Organics and Nate’s brand in US.The Company’s US operating subsidiary i.e. ADF Foods (USA) Ltd. has engaged a co-manufacturer in California in addition to the existing co-manufacturer in order to enhance the production capacity

18. International Business: The appointment of new country managers for Europe, Canada, GCC, Levant Countries, Asia Pacific & Africa has strengthened the Sales team and the same will expand our reach to these markets.

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Risk Analysis :-

1. RAW MATERIAL PRICES :- Business margins depend on favourable Raw Material prices In the past due to seasonality, ADF have faced significant challenges on account of volatile RM prices due
   to poor availability or adverse demand‐supply situation in its key RM like raw
   mango spices, sugar, oil etc.

2. Effect of exchange rates on Export Revenue
   since 95% of business is exports denominated in USD/GBP, exchange rates play a key role in safeguarding margins.

3. Tough Competition from other Organised player in Domestic Market

Tough Competition from other Organised player in Domestic Market has been there from ITC, Kohinoor, MTR, Gilts in Ready to eat Segment and From Tasty Bites in International Market.

Disclosure :- Invested 10% of Portfolio

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@pradhansp wrote:

Affordable Robotic & Automation Ltd

Affordable Robotic & Automation Pvt Ltd (shortly ARAPL)
Incorporated in 2010, Pune based company engaged in the business of providing turnkey automation solution to automotive, semi-automotive and manufacturing industries.

Key business it operates in:

The Company programs and automates the functions of machines used in manufacturing process of the automobile industry.
The Company is also in the business of assembling and installing driver-friendly automatic multilevel car parking system. (their system elevates cars upto 30 levels/floors !!)
This system is preferred by high-rise residential complexes, shopping malls, and commercial buildings. It has a presence in Mumbai and Pune in automated car-parking business.
Further, in FY 2017-18, the Company has set-up a new line of business, Secondary Packaging, which is aimed at FMCG industries by way of providing automation service in container packaging of the final packed product.

Recently listed in June 2018, this is the objective of the IPO:

1. Purchase of New Plant and Machinery
2. Repayment of certain Long-Term Borrowings availed by the Company
3. Funding the Working Capital requirements of the Company
4. General Corporate Purposes

Results before the IPO:

One can observe that the revenues & profit has started growing significantly (but need to see if this growth sustains further as the increase in revenue & margins could be a common technique where they are “inflated and flashed” by the promoters to boost investor sentiments prior to going public)

Screener:
https://www.screener.in/company/541402/

Many videos on their business segments and promoter interviews are available on their website home page:

Video: Multilevel Car parking business:

Video: Automation Business using robotics:

Any mavericks invested:
Vijay Kedia is one of the top public shareholder having bought a massive ‘10.5% stake’ of the whole company.

Details of latest order book shared by company on 14-11-2018:

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Pros:
-In niche business, robotic automation is the next big thing
-Operates across industries (as mentioned above - automobile,construction & FMCG)

Cons:
-Still a micro cap, a long way to go to realise its full potential
-Listed in BSE only

Disclosure:
NOT Invested. Yet. Fellow value pickers, please share thoughts.

Disclaimer:
I am not a SEBI registered analyst or a financial adviser. This post is not a recommendation or endorsement in any way. Please exercise caution before making an investment decision.

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@utkarsh1311 wrote:

Background – DPL, promoted by Kolkata-based Dhanuka group, operates like a holding company with cash & cash equivalents of INR 222 crore as on Sep 30, 2018 and 50% stake in two operating PET resin unit along with the world’s largest PET resin manufacturer (Thailand-based Indorama Ventures Public Company Ltd). The details of two operating units in which DPL owns 50% stake is provided below:

a) IVL Dhunseri Petrochem Industries Private Ltd: operating 696 ktpa PET resin capacity in two locations – Haldia & Panipat

b) Egyptian Indian Polyester Company S.A.E: operating 540 ktpa PET resin capacity in Egypt. Restarted operation in August 2018 onwards.

Investment Rationale

1. Limited downside risk – DPL holds unencumbered cash & cash equivalents of INR 222 crore as on Sep 30, 2018 in its standalone balance sheet as against current market capitalization of INR 400 crore. Please refer to the audited balance sheet and H1FY18 result for reference purpose.

2. Second largest PET resin manufacturer in India (after Reliance) and top 15 PET resin manufacturer in the world

3. Highly profitable Indian operation (IVL Dhunseri Petrochem Industries Ltd) – The company owns 50% stake in a PET resin manufacturing operation in India, which is a cash generating business. The Indian business unit is generating quarterly profit of around $6-7 mn, translating to around INR 50 crore.

For FY16 & FY17 – please refer to http://www.careratings.com/upload/CompanyFiles/PR/IVL%20Dhunseri%20Petrochem%20Industries%20Pvt%20Ltd.-01-19-2018.pdf and

For quarterly data – please refer to quarterly MD&A section of Indorama Ventures: http://www.indoramaventures.com/en/investor-relations/downloads/mdna

4. Restart of operation of Egyptian subsidiary ( Egyptian Indian Polyester Company S.A.E): The Egyptian subsidiary restarted operation in August 2018 and currently running at 50% capacity utilization. The plant is expected to run at full utilization by March 2019. At full capacity utilization, the plant is expected to generate topline of $500 mn and generate profit in the range of INR 100-200 crore.

5. Promoter accumulating stock from open market since June 2016 and near to 75% holding limit - https://beta.bseindia.com/stock-share-price/disclosures/insider-trading-2015/523736/

6. Valuation
   Replacement cost model: The replacement cost of a new PET plant is estimated to be $600/t. Based on that the replacement cost of the Indian & Egypt JV unit is estimated to be INR 5400 crore. DPL has 50% stake in Indian & Egypt business, which comes to be INR 2700 crore. In addition, the company hold cash & equivalents of INR 222 crore. Egyptian subsidiary has no term loan and Indian subsidiary has limited term loan. Thus, the company’s valuation comes to be around INR 3000 crore. Assuming 50% holding company discount, the company can get a valuation of INR 1500 crore vs current market cap of INR 400 crore.

P/E model: The combined PAT of Indian & Egypt JV unit is estimated to be more than INR 300-400 crore in FY21, of which 50% DPL stake is estimated to be INR 150-200 crore. Applying 10x P/E multiple, DPL can get a valuation of around INR 1500-2000 crore. Assuming 50% holding company discount, the company can get a valuation of around INR 1000-1200 crore vs current market cap of INR 400 crore.

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@shyamutty wrote:

Automotive Axles Ltd., a JV between Kalyani Group and Meritor Inc., is a leading player in the manufacturing of automotive axles for Medium & Heavy Comm. Vehicles (M&HCV), esp. the rear wheel axles which is an integral and load bearing part of the drive line. It has been the leader in domestic axles industry (~30% market share) and is now all set to benefit manifold from rising share of multi-axles vehicles, post implementation of GST. The implementation of BSVI and vehicle scrappage policy or cash for clinkers will together bring about a multi-year demand for the Comm. vehicles industry benefitting both OEMs and ancillaries.

Automotive Axles Ltd. would be big beneficiary of the rising CV demand driven by

• Improved road quality & implementation of GST
• Implementation of overloading ban and stricter loading restriction
• Shift towards multi axles commercial vehicles in wake of changing ‘Hub & Spoke’ model of logistics
• Better fuel efficiencies following higher utilization levels

Investment Rationale

• Improving Commercial vehicle demand
• A big beneficiary of shift towards multi-axle commercial vehicles
• Expansion of Margins
• Rising exports opportunity
• Vehicle scrapping policy to push CV demand
• Implementation of regulatory norms

Automotive Axles Ltd. to benefit from association with OEMs growing faster than industry

Automotive Axles Ltd. is a leading supplier to Ashok Leyland; it accounts for 65% of Ashok Leyland’s requirement (as per the AR CY2017- Meritor Inc.). Ashok Leyland has gained market share in M&HCV space for last 4 years- from 27% in FY14 to 34% in FY18 and 38% in H1FY19. Over the same period, when the overall industry has grown at CAGR of 7.7%, Ashok Leyland has grown at CAGR of 18.6%; when the M&HCV Ind.s has grown at 14.4%, Ashok Leyland has reported volume growth of 21.5% in M&HCV segment thus grabbing the market share especially in the 31T to 37T multi axle segment. As the segment matures, the industry is moving towards launching higher tonnage CVs. The market leader has already unveiled a product in 40T segment, followed by Ashok Leyland and VECV who have recently launched their products in this nascent space which is expected to see slice of vigorous action.

Sales growth from 2015 to TTM
459 1,086 1,172 1,519 1,849

Net profit growth during same period
11 35 49 84 112

Net cash flow is positive

Sales growth 5Years: 18.78 %
Profit growth 5Years: 45.86 %

Zero Debt company

Improving ROCE and ROE over last 5 years

Reference: https://simplehai.axisdirect.in/images/ReserachPDF/November2018/21Nov2018/AutomotiveAxlesLtd-InitiatIngcoverage21112018.pdf

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@Balki wrote:

DE NORA India is a niche zero debt, small cap MNC, with a tiny equity capital of ₹ 5 crore of which 54 % is held by the parent oronzio De Nora of Netherlands. This firm has 3 divisions 1) electrode technologies 2) water technologies 3) Anti corrosion systems. This 30 year old company was in corporated in technical & financial collaboration with De Nora group, by erstwhile MD & their families of Alfa Laval India & Hoganas India, mainly to cater to re coating of electrodes & replacement of damaged electrodes in chlor alkali industry in india, which required re coating of electrodes every 2 years, in the then mercury cell process. In the past 10 years, the entire chlor alkali industry in india has migrated to energy efficient membrane cell process, which requires recoating every 6 to 8 years, which implies that Denora India will have work only for 2 years & will have to sit idle for the next 6 years. That’s exactly what has happened & Denora India has mastered the art of hibernation, with annuity model income from AMC as well as interest income from fixed deposits of ₹40 crore. However the major obstacle was the prolonged tussle with the Indian promoter Devika Khanna family for the past 8 years, as a result, the parent refused to supply technology & support. Ultimately with the threat of cutting oxygen supply to the Indian subsidiary ( it was done) the Indian promoter was declassified from promoter quota & they sold their shares on the bourses in late 2017 at ₹250 levels, which was fully absorbed. This is the reason, why returns on all parameters for Denora India has been poor, for the past 10 years. Now the parent has taken full control & its anticipated that with the support & control of the parent, technology will flow, as also the Indian subsidiary will be able to seamlessly import, knocked down kits, components & spares on credit from Denora subsidiaries worldwide. (This was not possible earlier). Now on the bourses, with cyclical quarterly spurts in profits, it has surged to life time high of ₹560 in 2016 & ₹633 in 2018. Now coming to the 3 divisions 1) Electrode technologies, worldwide Denora has electrodes repair & electrode manufacturing in the same plant for synergy, but in india major role is for re coating, while manufacturing of electrodes is limited to chlor alkali industry, however presently exports of electrodes pertaining to chlor alkali industry is being undertaken, as cost of manufacturing in USA plant is high. Worldwide, Denora manufacturers electrodes for all applications, including those used in fuel cells for industrial & electrical vehicles in joint venture with AFC energy plc. So in india, we can expect manufacturing of electrodes for all applications, in future, as its only plant in Goa has land bank, for future expansion.
2) water technologies. Denora India manufacturers standard as well as those catering to client specifications, All types of electro chlorinators for water purification for drinking water in railways, townships, residential flats, hotels, industries, swimming pools water theme parks etc. Electro chlorination is the most convenient & cost effective process for commercial water purification. After parent, taking full control, De Nora India bagged tender for industrial electro chlorinators from Bhel in Tamil Nadu for ₹12 crore. Now industrial electro chlorinators are a must in coal, power, steel, nuclear, oil & gas, & all industries that use sea water. Typically Desalination is done, followed by electro chlorination,which kills microscopic algae in sea water, which otherwise grow & occlude equipments & machinery, resulting in sudden shut downs & extensive repairs. Now these projects typically have a gestation of 12 to 18 months, after approval of drawings, for installation & trial runs. The Bhel order is now in the last phase of execution & Denora India typically plans to bag 2 to 3 tenders for industrial electro chlorinators every year & steadily grow in the segment. Now these industrial electro chlorinators are imported in knocked down version from Denora subsidiaries in Singapore or China & assembled & installed in india, along with AMC, spares, maintenance & after sales services. I don’t think these industrial electro chlorinators will ever be manufactured in india, as dedicated plants in China & Singapore do the same thing. However because of imports, forex & dollar rupee comes into play. Further the company caters to entire spectrum of waste water treatment plants for industrial waste, Municipal waste, river purification etc, These kits & components & spares, are again imported from Singapore & China.
3) Anti corrosion systems are used in steel, construction, marine, ships, industrial etc for prolonging life & durability. Further immense potential as, anti corrosion coatings are used in oil & gas pipe lines for prolonging life, as also railway tracks & structures, bridges etc.
Risk factors. The management is trustworthy, with integrity & unalloyed passion to electrochemistry. However the parent & all its subsidiaries in Italy, Europe, Netherlands, Japan, Canada, USA, Singapore, China are privately owned & not listed on the bourses. The only exception is the Indian subsidiary. Therfore its difficult to get info on Denora India from the management, also no quarterly concall, only limited material is revealed in AR & AGM. With parent in full control & immense potential for its products in india & neighborhood nations, Denora India is a potential multi bagger, if all goes well. Even delisting cannot be ruled out at a future date, as the Indian subsidiary is the sole listed subsidiary in the world. Being a small cap, No mutual fund holdings. Share is also volatile, with volumes from less than a thousand to 3.5 lakh per day on strong cyclical quarter results. With focus on all 3 divisions, volatility in profits should iron out. However all depends on the intentions & will of the parent to focus on the growth of its only listed subsidiary. I would request one & all especially, Rohit Balakrishnan & sri Krishna bhutra to provide perspectives. Thanks & regards.

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@sachinabhyankar wrote:

Hi,

I have been in market since 1993 though started developing on portfolio since 2010. in last 8 years realized the magic of compounding. I expected markets (particularly small/mid caps) to crash in 2017 so sold several multibaggers like National Peroxide, Tata sponge, Ashok Leyland, Camline Lifescience with decent return.

My capital allocation is 50% FDs (need secured cash for kids education), 30% equity (15% MFs, 15% direct equity mostly mid/small caps), 15% real estate, 5% gold.

I am focused on building a portfolio for coming cycle where first selection gate is management quality then growth potential with focus on cash generation to be bought at decent pricing (rarely buy stocks at >15 P/E). I expect some more correction/volatility over next 6 months due to election while I am also carefully watching global macro environment. Hope to add on some value stocks over coming 6 - 12 months.

I regularly read ValuePickr to gain insight on stocks and am highly impressed by thought process of fellow boarders. I request you to analyze the current portfolio and provide feedback.

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@Sameermpatel wrote:

Sakar Healthcare - Tiny Pharma Company for promising Growth ahead…

1. Sakar Healthcare Ltd established in the year 2004, Sakar is engaged in manufacturing of Pharmaceutical products providing Liquid Orals, Cephalosporin Tablet, Capsule, Dry Powder Syrup, Dry Powder Injections, Liquid Injectables (SVP) in Ampoules and Vials & Lyophilized Injections. Current portfolio of 123 product registrations(28 in pipeline) comprises mainly of 58 antibiotics, 10 analgesics, 6 anti-histamines, 5 anthelmintic and 5 anti Malarial drugs

2. It is Microcap company , having Mcap of nearly 85 crore at CMP of 65. Presenty listed on NSE emerge and Company planning to move it to NSE main Board.

3. Sakar Healthcare an ISO 9001:2008 BVQI certified company. Total four state of art manufacturing units which are certified by WHO-GMP, cGMP, in addition to the approvals by ‘National Drug Authority, Uganda, Kenya, Yemen, Ethiopia, Congo, Ghana, MCAZ (Zimbabwe), Namibia, Nigeria & Cote D’Ivoire.

4. It also cater to Srilanka, Philippines, Vietnam, Cambodia, Sudan, Myanmar, Mauritius, and Costa Rica, Panama, El-salvador, Paraguay, etc. in Latin America.

5. Company increased Operating & net margin by Increasing share of Direct Sales and Export( 62% to 78%) compared to contract manufacturing(38% to 22%) in last 3 years.

6. Products :-
   a. ORAL - LIQUID SYRUP & SUSPENSION
   b. LIQUID INJECTABLE (SVP) - VIALS & AMPOULES
   c. CEPHALOSPORIN - DRY POWDER INJECTIONS
   d. CEPHALOSPORIN – ORAL SOLID
   e. LYOPHILISED INJECTIONS (IN VIALS)

7. Following are clients of Sakar Healthcare for contract manufacturing

Zydus Cadila, Torrent Pharma, Intas, Claris, Merk
Indoco Remedies, Cipla, Stride Arcolab Ltd
Abott, IPCA, Biochem, Wockart

8. Manufacturing plant
   Total Four Plant Plant-1, Plant-2, PLant-3, Plant 4 in Changodar, Ahmedabad.GUJARAT
   Total area -10022 Sq M2

Plant-1 ORAL - LIQUID SYRUP & SUSPENSION

Plant-2 LIQUID INJECTABLE (SVP) - VIALS & AMPOULES, LYOPHILISED INJECTIONS (IN VIALS)

Plant-3 CEPHALOSPORIN - DRY POWDER INJECTIONS

Plant-4 CEPHALOSPORIN – ORAL SOLID

Overall Utilization around 57%.

9. Company willing to Venture in Oncology Generic Drugs with New Plant , Company has bought recently Land adjacent to Existing building for this new plant.

10. Promoter Increased Stake on capital infusion by buying 27.5 lac Share recently by Preferential offer @65 ( 55 Premium on FV10). Promoter are willing to spend this amount for Oncology Project.

11. Promotor has high stake of 71.82% in company & 10% stake are with big HNI/Institution investor so share is tightly held.

12. Promoters :-
    Mr Sanjay Shah Managing Director Holds a degree of Master of Business Administration from Vikram University, Ujjain, Madhya Pradesh. Apart from that, he is also qualified in plastic technology.
    Mr Aarsh Shah Jt Managing Director He is a Pharmacist and holds a degree of Master of Business Administration from University of Cardiff, UK.

13. Financial.

• Good Revenue Growth with EPS growth.
  -Debt is reducing.

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Risk Analysis :-

1. EU GMP registration still pending.
2. Tough competition in Domestic Market for local Brand.

Disclosure :- Have in Portfolio (5%) bought during IPO.

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@Pratik_Patel9 wrote:

Introduction :
It is one of very few product based IT company in India having it’s big set of Patents and Intellectual property. It spends good percentage of it’s expenses on R&D which is also very rare.
It is involved in design, development and maintenance of it’s optical data network products.
They manufacture what they call as “Software Defined Hardware” which means hardware that can be programmed to easily upgrade technology. Typically, product based business is a hit or miss kind of thing. It takes lot resources to develop a product but if it works out and is accepted by the market then it can become huge very easily, especially the technology products.
They have successfully completed many projects domestically as well as globally. Globally, their products were deployed in data networks in Mexico, Bangladesh, Algeria etc. and locally they have been involved with BSNL, Sterlite Technologies (Integration partner) etc. They were part of BharatNet Phase 1 and were awarded for their good work too. It is expected that they will receive order in Phase2 as well. They also recently received an order from Sterlite Technologies for network contract from Indian Navy.
This shows that their product is being accepted. The products are cutting edge technology and provides flexibility to upgrade easily. Given the kind of tail winds data network sector is facing, this business will also gain from it.

Numbers :

tejas networks.PNG1869x873 95.3 KB

http://www.ratestar.in/company/tejasnet/540595/Tejas-Networks-Ltd-210859
https://www.screener.in/company/TEJASNET/consolidated/

1. Sales growth since last 5 years had been 15% and 24% since last 3 years. Please note that sales growth for product based company of this kind is usually very different. It takes time for sales to pick up but if products are successful then the growth rate can be very high very quickly.

2. PAT Margin has improved from 4.3% in 2016 to 18%

Risks/ Negatives :

1. Many of the clients are PSUs or GOI which increases working capital cycle.
2. ROE and ROCE are low

Disclaimer:
Invested

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@Gaurav62 wrote:

KMC(Kauvery) Speciality Hospitals (India) Ltd., incorporated in the year 1982, is a multi-speciality Indian Hospital Chain operating in Tamilnadu. Their hospitals are located in Trichy, Karaikudi, Hosur and recently inaugurated one in Salem.All their hospitals are well equipped and have several care centers. From 40 beds KMC now turned into 1200+ bedded hospital.

KMC Speciality Hospitals (India) Ltd. key Products/Revenue Segments include Hospital Services which contributed Rs 39.85 Crore to Sales Value (72.68 % of Total Sales), Pharmaceuticals which contributed Rs 14.64 Crore to Sales Value (26.70 % of Total Sales), Others which contributed Rs .19 Crore to Sales Value (0.33 % of Total Sales), Other Operating Revenue which contributed Rs .13 Crore to Sales Value (0.23 % of Total Sales) and Scrap which contributed Rs .02 Crore to Sales Value (0.03 % of Total Sales)for the year ending 31-Mar-2017.

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The company’s top management includes CA.S Chenthilkumar, Dr.S Chandrakumar, Dr.S Manivannan, Dr.T Senthilkumar, Mr.A Ganesan, Mr.A Krishnamoorthy, Mr.B Pattabhiraman, Mr.N Bala Baskar, Mr.S Aravindan, Mrs.Jayanthi Narayanaswamy.

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@nilwadmalwar wrote:

Hi, I am newbie and below is my portfolio. I just started 4-5 months ago and focus is on small cap. Plan to hold for long term but may restructure demand on my learnings.

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@rishabhkaul123 wrote:

I tried to find a thread on Mahindra & Mahindra (though there were plenty on the various Mahindra Subsidiaries).

It has obviously faced pretty big drop in October (from 950 odd to low 700s).

The last few quarters numbers look good, OPM improvement. I believe in Mahindra for a few reasons:

• The management is quite ethical and it’s a solid foundation and they good leaders leading each of their verticals.
• They are quick to adopt to the EV space. I sense each of their models will come with a EV variant. They are also innovating with digital transformation (esp in their tractor business, experimenting with Uber for Tractor model, which yes competes with their traditional sales business, but is much more profitable due to lower capex)
• While their revenue growth has been ok (~10% TTM) viz is higher than their previous 5 years, their profitability growth has been much better (66% increase in TTM), and the PE is also decent compared to a Maruti over the last couple of years.

1. How would you look at Mahindra & Mahindra:

• For a 5 year investment?
• For a 10 year investment? (10 because I feel that for the EV revolution to fully kick in, it will need a decade).

2. Is now a good time to buy? (I’d like to think so, but wanted opinions of others).

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@AmitContrarian wrote:

The promoters never diluted equity -
Mar 2007 Mar 2008 Mar 2009 Mar 2010 Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018
Share Capital 13 16 14 14 13 13 13 13 13 13 13 13

CMP	38
P/E	2.5
P/B	0.3
P/E*P/B	0.6
Div Yield	7.9%
Market Cap	249

Cash+Investments 491 = 2x Mcap 249.
FCF/CFO 89%

Trading terribly cheap PE = 2.5 earnings, P/B = 0.3, and Cash is almost 2x of Mcap.

Now company is almost debt free ( massive deleveraging happened) -

Has always been making > Rs 100 Cr yoy and Mcap Rs 249 Cr.

Company looks terribly cheap but it has always traded cheap -

• Historical PE 10Years: 3.27
• Historical PE 5Years: 3.03
• Historical PE 3Years: 3.56

I am confused why its trading this cheap and always been trading this cheap.

Would love to know views of folks here. To me looks like company is not fraud - Has made CASH , which can be seen in balance sheet. Promoters have shared profits with minority shareholders in terms of dividend.

Total Div 10 Yrs 107

but i am not able to understand what markets hate about this company ? Was it the debt which was too high years ago , which has now come back. should we see the rerating on the cards ?

Disc - Not invested.

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@bharat19 wrote:

Simmonds Marshall ,
Market Cap : 96 Cr ,
March 2018 Sales : 190 Cr ,
Profit : 10 Cr
Promoter: 57%
Sales Growth 3 Years: 9.21%
Profit Growth 3 Years: 10.38%
Sales Growth 5 Years: 13.93%
Profit Growth 5 Years: 23.24%
ROE around 15%
ROCE around 15%
Promoters Remuneration : Around 11% of Profits

Incorporated in 1960, it is promoted by Mr. Shiamak Marshall. It manufactures nuts and bolts for the automotive segment and caters primarily to commercial vehicle and two-wheeler manufacturers. The company’s manufacturing unit in Kasarwadi (Maharashtra) has capacity to produce 5,500 tonnes of nuts per annuum.

In 2011-12, Simmonds Marshall acquired M/s Stud India, which manufactures studs and supplies mainly to heavy commercial vehicle manufacturers. During 2013-14, Simmonds Marshall entered into a joint venture with Francis Kirk and Son Ltd (Francis Kirk; UK) to manufacture fasteners for the UK market; the manufacturing will be undertaken at Simmonds Marshall’s Kasarwadi plant and the products will be marketed by Francis Kirk.

Company has one associated company “Formex Private Limited” where it holds 49% share. Total investments in this company was around 12 Lakh while it reported a loss of 9 Lakh in Consolidated Statements of March 2018.

Financials :

Marshall.png1206x506 31.7 KB

Pros:
Established position in the domestic market and has healthy relationships with its customers for the last 10-15 years. Key clients include Honda Motorcycle , Ford , Fiat , Ashok Leyland Ltd , Mahindra , Suzuki.
Promoters have not sold any shares nor diluted the equity in past some years. Also they usually acquire around 20000 Shares every year since 2016 last being done in October 2018.

Negatives :
Very low Equity Float of 1.12 Cr shares of Face Value 2 each. Any Market crash or bad news makes it difficult to take an exit.
Limited Market Size as it provides only Nuts and Bolts to 2W and Commercial Vehicles and no mention of any diversification in Annual Reports.
Dependence on the auto sector and any downside in auto industry will directly impact the business of the company.
Working capital-intensive business due to higher inventory requirements as well as high receivables though the Receivables to Sales number are stable around 25% .

Rational For Investment:
At CMP , it is trading around 9X TTM PE. Annual Sales around 190 Cr and is available at Market Cap of 95 Cr. Increased consumption and favorable demand from Auto sector may aid growth for the company in future.

CRISIL Rating has more details on the company Prospects :
https://www.crisil.com/mnt/winshare/Ratings/RatingList/RatingDocs/Simmonds_Marshall_Limited_September_07_2018_RR.html

Disc: Invested

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@AmitContrarian wrote:

The promoters never diluted equity -
Mar 2007 Mar 2008 Mar 2009 Mar 2010 Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018
Share Capital 13 16 14 14 13 13 13 13 13 13 13 13

CMP	38
P/E	2.5
P/B	0.3
P/E*P/B	0.6
Div Yield	7.9%
Market Cap	249

Cash+Investments 491 = 2x Mcap 249.
FCF/CFO 89%

Trading terribly cheap PE = 2.5 earnings, P/B = 0.3, and Cash is almost 2x of Mcap.

Now company is almost debt free ( massive deleveraging happened) -

Has always been making > Rs 100 Cr yoy and Mcap Rs 249 Cr.

Company looks terribly cheap but it has always traded cheap -

• Historical PE 10Years: 3.27
• Historical PE 5Years: 3.03
• Historical PE 3Years: 3.56

I am confused why its trading this cheap and always been trading this cheap.

Would love to know views of folks here. To me looks like company is not fraud - Has made CASH , which can be seen in balance sheet. Promoters have shared profits with minority shareholders in terms of dividend.

Total Div 10 Yrs 107

but i am not able to understand what markets hate about this company ? Was it the debt which was too high years ago , which has now come back. should we see the rerating on the cards ?

Disc - Not invested.

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@ananth wrote:

Kennametal india:

Kennametal India is a 75% subsidiary of the US company Kennametal Inc.
Kennametal india is a part of cutting tool industry where it manufacturers machines and tools used for metal cutting. Metal cutting tools is used in wide variety of industries including automobile manufacturing, infrastructure mining etc.

Industry:

As per india machine tool manufacturing association machine tools is roughly around 3000cr industry.
As per reports, it is dominated by Sandvik, Kennametal and Iscar. With sandvik and Kennametal having higher share. There has been recent entry of some Korean/Japanese players which is putting some pricing pressure.
One can go through the IMMTA site to understand the industry size and structure information.

http://ictma.co.in/wp-content/uploads/2016/04/17_WCTM2-2.pdf

The main raw material used in cutting tools is Tungsten carbide which is not available in india. Hence the industry is dependent on imports of cutting tools and raw materials.

Company:

	FY15	FY16	FY17	FY18
Sales	570	580	695	793
Operating profit	60	46	58	101
OPM	11%	8%	9%	13%
PAT	34	21	24	52
EPS	15	9	11	23

The sales consist of both machines and machine cutting tools made of tungsten carbide.

Dual brand strategy:

Most of the players include Sandvik, Kennametal and Iscar are going to market with Multibrand strategy. Most of the end-customers go for multiple brands in their shop floor and each brand finds some space. Similarly, Kennametal is going to indian market with two brands Kennametal and widia. Kennametal brand provides more customized solutions where as widia is more a B2C play with own distribution distribution.

Kennametal india has been introducing newer products continuously in indian markets.

Widia strategy:

To continue focus for widia in india, company is forming a new subsidiary. It can apply seperately from kennametal brand in many of the tendors floated by govt or by MNCs.

Widia is a old brand in india and had a leadership in position in india in the past. Widia is historically a german brand. After acquistion by kennametal in 2003, this brand got bit sidelined. Now again, there are efforts to revive the brand. Widia is the fast growing segment under kennametal india.

Widia has strong solutions for aerospace. The manufacturing for widia was underinvested in previous years. This is being corrected now. The company is also planning to increase sales and distribution for widia and increase the reach. There is lot of focus on channel partner development and availability of products through increasing distribution reach.

Kennametal Inc the parent company has total widia sales of 200m$ globally. This is manufactured in multiple facilities around the world. In future, Kennametal Inc wants to make Kennametal india a manufacturing hub for widia worldwide sales . This is evident in the world wide head of Widia Mr Alexandar sitting on the board of Kennametal india.

As per Kennmetal Inc presentation widia india sales have grown at north of 30% in last two quarters.

Kennametal Inc strategy:

Kennametal inc is cost rationalization mode and is projected margins to go from 16-18% ebidta to 22-24% ebdita in next two three years.

The strategy includes strategic sourcing, modernization of plants and factory rationalization. Some of these benefits will flow to indian subisidiary.

https://kennametal.gcs-web.com/static-files/50ce8424-0b19-4a86-8392-e27186148964

Capex:

Kennametal india india has been in capex mode last 3 years and investing a lot in plant automation and increasing manufacturing capability/capacity. Lot of investment has been done in EHS.

	FY16	FY17	FY18
Fixed assets purchased	44	50	60

This capex mode may continue in next few years as per the management in the AGM.

Exports:

The exports are growing at a fast pace though it is still a small part of the sales.

	FY15	FY16	FY17	FY18
Exports	46	56	86	130

Kennametal india being a net importer. The currency risk is getting less due to exports growing at a fast pace.

Margins:

Kennametal india had peak operating margins of 20+% in the previous cycle.

Last quarter Kennametal reported 18% OPM but there may be some one offs in the machines division leading to higher margins.

There may be scope for improvement of margins although company has started seeing increased competition from some Korean players.

Working capital:

There is very little debt on balance sheet of Kennametal india.

Debtor days are continuously reducing.

	FY16	FY17	FY18
Receivable days	76	61	57
inventory days	72	60	71
Payables days	45	46	48

Risks

1. Higher valuations
2. Tungsten carbide cutting tools are imported.– risk of raw material price fluctuation as well as currency fluctuation
3. Any change in royalty policy
4. Significant part of sales come to auto industry which can be highly cyclical in nature.

Links:

https://www.crisil.com/mnt/winshare/Ratings/RatingList/RatingDocs/Kennametal_India_Limited_November_17_2017_RR.html

AGM presentations:

https://www.bseindia.com/corporates/anndet_new.aspx?newsid=46f59048-b665-4275-b28d-298ebba401c4

Tungsten carbide

https://www.kennametal.com/en/about-us/news/kennametal-buys-emura.html

https://www.kennametal.com/en/about-us/news/global-carbide-recycling-facility.html

Disclosure: invested. No transaction in last 30 days.

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@Vinay_Taparia wrote:

CMP : INR 111 (As on 4th Jan 2019)
Market Cap : INR 29.87 Cr.
TTM P/E Ratio : 7.83

Pee Cee Cosma Sope Limited is a Agra based company engaged in manufacturing of laundry soap, detergent powder, detergent cake and utensil cleaning cake. The company has three manufacturing units in Madhya Pradesh, Uttar Pradesh and Rajasthan. The company sells its products under ‘Doctor’ brand and enjoys good brand value. The company is not witnessing any growth in topline. The topline is same as it was five years ago in FY 2013-14. However, company‘s margins are improving. The company is managing its working capital very efficiently. It seems that the company does not sell its products on credit or the the credit is given for ultra short term period and the payment terms are very strict This is reflected from the fact that during last five years, the amount of receivables does not exceed 2-3 days ‘revenue of the company This fact may be the reason for no growth in topline. Low level of receivable also indicates the continuous demand of company’s products.

Financials:-

Company’s performance is satisfactory on bottom line front. The company has posted disappointed set of results for quarter ended 30th Sep 2018.

(in Cr.)	Sep-18	Jun-18	Mar-18	Dec-17	Sep-17	FY 17-18
Income Statement
Revenue	18.84	20.57	17.69	20.27	19.74	78.51
Other Income	0.01	0.01	0.02	0.00	0.00	0.02
Total Income	18.85	20.57	17.71	20.27	19.74	78.53
Expenditure	-17.82	-19.09	-16.29	-17.88	-18.24	-72.29
Interest	-0.02	-0.03	-0.03	-0.06	-0.05	-0.23
PBDT	1.03	1.49	1.41	2.39	1.50	6.24
Depreciation	-0.14	-0.14	-0.19	-0.16	-0.17	-0.68
PBT	0.89	1.35	1.22	2.23	1.33	5.57
Tax	-0.28	-0.46	-0.46	-0.74	-0.44	-1.90
Net Profit	0.61	0.89	0.77	1.49	0.88	3.67
Equity	2.65	2.65	2.65	2.65	2.65	2.65
EPS	2.30	3.30	3.10	5.60	3.30	13.90
CEPS	2.83	3.87	3.62	6.23	3.99	16.42
OPM %	5.47	7.23	7.99	11.79	7.59	7.95
NPM %	3.21	4.31	4.34	7.37	4.48	4.67

Source : www.bseindia.com

Company’s share is trading at trailing PE of less than 8 which is very reasonable for the company engaged in FMCG business with good brand value. Any slight improvement of performance will result in rerating of the company

Share Holding:-

The promoters’ holding is 74.70% which is very excellent. Rest 25.30% is held by public. Around 1/3 of total public shareholding is in physical form. It is interesting to note that small cap investor Mr. Dheeraj Kumar Lohia is continuously increasing its stake in the company since 3rd quarter of FY 2017-18.

Dividend History:-

Company is regularly and generously paying dividend. The company is continuously increasing dividend payout since FY 14-15.

S.No	Financial Year	Rate of Dividend	Dividend Amount Per Share (Rs.)
1	2013-14	12%	1.2
2	2014-15	15%	1.5
3	2015-16	18%	1.8
4	2016-17	25%	2.5
5	2017-18	30%	3.0

Credit Rating:-

Crisil has assigned ‘BBB-/Stable’ as long term rating with the suffix 'ISSUER NOT COOPERATING’. Since the company has negligible debt, this rating does not have any significance.

https://www.crisil.com/mnt/winshare/Ratings/RatingList/RatingDocs/Pee_Cee_Cosma_Sope_Limited_August_30_2018_RR.html

Summary:-

Positives:

• Well Experienced Management
• FMCG product with strong brand value
• Strong balance sheet with negligible leverage. Debt equity ratio is 0.07 as on 30th Sep 2018
• Efficient working capital management
• Very low equity base
• Return on equity is 18% in FY 17-18 and is expected to improve considering the continuous debt reduction and increasing dividend payout.
• Negligible Receivables
• Regular and generous dividend payment

Negatives:

• No growth visible in topline
• Increased competition from large players
• Illiquid Share

Disclosure: - Invested

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@varun037 wrote:

Focus Lighting & Fixtures limited is an SME company traded on NSE emerge platform. They sell focus lights under brands PLUS & TRIX. Trix brand is Chinese imported products and PLUS brand is manufactured by associate firm Shantilal & Bros.

Their financial performance is awesome.

(Data in Rs Lakhs)

Profit Growth rates at 60% plus on any time frame, sales growth of 40%, ROEs of 30%+ consistently.
Such a company trades at a PE ratio of 10.5.

Technical Collaboration: Strategic collaboration with Bartenbach AG for cutting-edge innovations and technical development.

Exports: Started export operations in the Middle East and Italy with an office in Dubai

Clients: AND, Tata, Raymond, Shoppers Stop, Inifinty Retail, Reliance, Addons etc
Source:https://www.indiamart.com/plus-light-tech/aboutus.html#factsheetdata

They have about Rs 4.34 cr capital work in progress for the upcoming factory at Ahmedabad. The facility which spans 40,000 sqft will house Design & Development, Experience Center, State-of-the-art Testing Laboratory and Production and Assembly.

Negatives:

Loads of transactions with Related Parties:
Salary of Mr. Jigar Bharat Ghelani (Father in law of promoter MD, Country Sales Manager) is higher than that of Managing Director (Rs 54.00 Lakh) and Executive Director (Rs 42 Lakh) at Rs 58.50 lakh. Also, consider that they pay their CFO Rs 19.50 lakh. Their other country sales managers are Santosh Prasad, Amit Raj & Jitesh Doshi but their salaries are not mentioned.

Arion Online Pvt Ltd: Loan Rs 22 lakh, Sale to them Rs 25.68 lakh. Not even a single rupee of sale amount recovered from them.

Shantilal & Brothers: It is their manufacturing unit. Not the part of the company. Almost 80% of the material is sourced from them. Even for exports around 80-90% is sourced from them. Nature of their contract with them is not known. I feel this is kind of financial engineering. Profits can be easily shifted to the manufacturing division. Also, without checking the financials of this entity, one can not say if the profits shown in the listed company are genuine or not.

The company has started exporting to the Middle East and Italy, however, instead of wholly owned subsidiaries they again chose a model of associate entity there. Focus Lighting FZE & Plus Light Tech FZE are associate companies who do not remit any sale proceeds. There was some Rs 1.20 cr sale to these entities but only Rs 20 lakh has been recovered. Are these sales real? If these sales were real, why did not they pay back the amount to the company?

Such a kind of financial structure is a deal breaker for me. Still looking for more insights. I want to give the company benefit of the doubt as they are now building a manufacturing plant. Their margin picture should become clearer then. I would also have prefered if the company were to set up an office in Dubai themselves (instead of associates) or through an unrelated third party.

Disc: Tracking. Not invested yet.

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@anandsharp wrote:

InfoBeans Technologies Ltd (ITL) is engaged in software development services, specializing in business application development for web and mobile and operate at Capability Maturity Model Integration (CMMI) level 3. ITL services can be broadly categorized as storage; Virtualization, Media & Publishing and eCommerce. In India it operates out of 2 facilities in Indore and Pune employing more than 600 people across locations. As the company has prominence in exports, it has established local presence in the North American market by way of a 100% subsidiary, which has 2 offices located in California Georgia, USA. ITL is ServiceNow partner for implementing their software

This company is listed on NSE SME. It’s CAGR is >20% in last 5 year.

It’s topline increased

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from 23 cr to 100cr in last 5 year.

it’s virtual debt free company.

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@Vinay_Taparia wrote:

Kanchi Karpooram Limited

CMP : 483 (As on 11th Jan 2019) Market Cap : INR 200 Cr.

Kanchi Karpooram Limited is south India’s largest producer of variety of terpene and paper chemicals. The company’s main product is camphor. Besides camphor and its derivaties, the company also produces Gum rosin and Rosin Derivatives. As per latest annual report, “the Directors find it potential to go for an increase in the capacity of production of its products as well as add few more new value added products in its list in the years to come. The market study for the new products is encouraging.” The company is undergoing major expansion plan which is expected to be completed by June 2019. The company has already acquired land for expansion. The company has already submitted expansion plan to environment clearance. http://environmentclearance.nic.in/writereaddata/Online/TOR/16_May_2018_1845028975T3IZAYRAnnexure.pdf.

Camphor prices are increasing due to higher demand and the same is reflected in financial performance of all the camphor manufacturing companies. Demand of camphor is likely to be strong. The major raw material is imported which exposes the company to forex risk. Raw Material prices have also increased. However, company is likely to pass on the increased cost to the customers due to increased demand of its products. To fund its expansion, the company has issued 222220 share warrants @ 360 each (Including premium of Rs 350 ) on preferential basis to promoters. I see it as slightly negative for retail investors as the warrants has been issued at significant discount to current market price. However, it also indicates that promoters are .confident that the changed business scenario is here to stay for long.

Financials:-

The financial performance of the company has improved significantly during last six quarters. The same is reflected in the share price of the company.

(in Cr.)	Sep-18	Jun-18	Mar-18	Dec-17	Sep-17	FY 17-18
Income Statement
Revenue	54.87	46.56	34.06	30.33	29.79	117.07
Other Income	0.02	0.01	0.22	0.42	0.01	0.72
Total Income	54.89	46.58	34.28	30.75	29.80	117.79
Expenditure	-42.16	-32.23	-27.32	-24.48	-23.36	-93.87
Interest	-1.25	-0.23	-0.25	-0.29	-0.40	-1.45
PBDT	12.73	14.35	6.96	6.27	6.44	23.91
Depreciation	-0.24	-0.23	-0.21	-0.21	-0.21	-0.85
PBT	12.49	14.12	6.74	6.06	6.23	23.07
Tax	-4.39	-4.08	-2.09	-2.25	-2.21	-7.89
Net Profit	8.10	10.04	4.66	3.81	4.02	15.18
Equity	4.14	4.14	4.14	4.14	4.14	4.14
EPS	19.56	24.23	11.24	9.19	9.69	36.65
CEPS	20.13	24.79	11.75	9.70	10.20	38.69
OPM %	23.20	30.81	20.42	20.67	21.62	20.43
NPM %	14.77	21.56	13.67	12.55	13.48	12.97

Source : www.bseindis.com

Company is enjoying ROE more than 50%. Company has reduced its debt from INR 23 Cr to INR 18 Cr during first half of FY 18-19. Company’s share is presently trading at trailing PE of less than 8. There seems to be some inventory gain in June quarter resulting in abnormal jump in margins.

Shareholding:-

As on 30th Sep 2018, promoters hold 41.67% in the company. Low promoter holding is a negative point. However, the company has issued warrants to promoters on preferential basis. The promoters’ shareholding will increase to 44.64 % if all the warrants are exercised. Approx 1/3rd of public shareholding is in physical form.

Dividend:-

The Company is regularly paying dividend since FY 2012-13. Company has increased dividend payout for FY 2017-18.

S.No	Financial Year	Rate of Dividend	Dividend Amount Per Share (Rs.)
1	2013-14	15%	1.5
2	2014-15	5%	0.5
3	2015-16	15%	1.5
4	2016-17	15%	1.5
5	2017-18	20%	2.0

Credit Rating:-

Crisil has assigned long term rating CRISIL B+/Stable with the suffix ‘ISSUER NOT COOPERATING’. Similarly, India Ratings and Acuite Ratings have shifted the company to non-cooperating category.

https://www.crisil.com/mnt/winshare/Ratings/RatingList/RatingDocs/Kanchi_Karpooram_Limited_May_14_2018_RR.html

https://www.indiaratings.co.in/PressRelease?pressReleaseID=31495&title=India-Ratings-Migrates-Kanchi-Karpooram-to-Non-Cooperating-Category

The above observation is considered very negative for and large or mid size company but for a small company, it may not be negative in all cases. Sometimes, small businesses with good credit profile do not want to spend money and efforts on review of credit rating. One should analyze the financial performance of the company before arriving at any conclusion on the above observation. Since the company is doing well, we can ignore the above credit ratings.

Summary:-

Positives

• Well Experienced Promoters
• Small Equity Base
• Return on Equity @ 53%
• Increased demand from user Industries
• Significant expansion underway
• Increased dividend payout
• Comfortable leverage. Debt equity ratio is 0.33 as on 30th Sep 19
• Share price trading at PE less than 8
• Plant strategically located near Chennai seaport

Negatives :

• Low Promoters’ Shareholding
• Share already moved up during last one year.
• Major raw material is imported. Any major depreciation in currency may lead to increase in input cost.
• Low Liquid Share

Disclosure :- invested.

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@lingalarahul7 wrote:

Vertoz Advertising is a programmatic advertising company listed in NSE Emerge.
Digital advertising category is in a high growth phase due to strong penetration by Jio. Programmatic advertising is a category in it.

What is programmatic advertising? How does it work?
Programmatic advertising is buying digital advertising space automatically, with computers using data to decide which ads to buy and how much to pay for them.
When a user enters a webpage, to create content in the ad space, his data is sent to the SSPs (supply side platforms), which is then sent to ad exchange and an auction is run on the bids allocated by various brands to the DSPs (demand side platforms).

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What is DSP? SSP?
A DSP, or demand-side platform, allows advertisers to buy impressions from a wide range of publisher sites that are targeted to specific users based on things like location and previous browsing behaviours. A DSP ‘plugs in’ to an ad exchange, where publishers make their inventory available.
An SSP, or Supply-side platform, is used by online publishers to automate the selling of their advertising space, or inventory. It’s basically the same as a DSP but from the other side. While a DSP used by marketers to buy ad impressions from exchanges as cheaply as efficiently as possible, SSPs designed for publishers to maximise prices they sell impressions at. They’re both powered by similar kinds of technology.

What are the different kinds of programmatic advertising?
Real-Time Bidding (RTB) and Programmatic Direct.
RTB is like an open marketplace allowing businesses to serve ads on a wide variety of websites to only people that meet their buyer personas. Essentially, the software says to advertisers “This is what we know about the person visiting our page based on their browsing history, behaviour, device type, etc. What are you willing to pay to show your ad?”

Programmatic direct method is closer to traditional media buying method. This process allows advertisers to purchase a guaranteed number of impressions ahead of time. Often, publishers will often reserve their most premium placements - on home pages for example - for programmatic direct deals with top-tier advertisers. On the other side of things, advertisers who want to guarantee placements on a valuable publisher can do so in advance.

In the earlier days of programmatic advertising, RTB looked appealing to everyone. The benefits were plenty, and there seemed to be little downside to bidding for impressions across a wide variety of publishers. As an advertiser, as long as you were reaching who mattered, what did you care?
Well, you might care if your brand’s advertisements began showing up next to animations of domestic abuse, or if you were unintentionally funding terrorist organizations by awarding them chunks of your ad budget.
But programmatic direct isn’t ideal for all parties either. It’s transparent but this method has similar issues to traditional media buying:

1. It’s slower. Programmatic deals are brokered ahead of time, which means impressions can’t be bought as readily as they can on the open marketplace.
2. It’s more costly. Programmatic deals aren’t available directly through all publishers. Mostly, it’s premium publishers who sell their ad inventory this way, which means you’ll pay premium prices for placements.
3. It’s not as targeted. If you purchase a set number of impressions on the homepage of the New York Times, you’re paying to show your ads to all visitors to the NYT homepage, not just the ones with the demographics of the target audience.

Self-Serve vs. Fully managed:
Running a self-serve digital advertising campaign allows advertisers to have direct access to their campaigns. Advertisers are able to keep real-time track of their campaigns from the jump, allowing for maximum control and the ability to make changes on the fly such as: Ad group adjustments & creative changes, Site list & target optimizations, budget & bid adjustments. One major benefit of running a programmatic campaign through a self-serve platform is the opportunity to execute everything in-house. The advertiser is within arm’s reach of everything and everyone they need in order to run a campaign, significantly cutting down on turnaround times. Also, the cost of running digital advertising campaigns is almost always more cost-effective than fully managed.

“Managed service” however is quite the opposite. In the case that digital advertising is fully managed by an outside source, be it an agency or otherwise, advertisers can adopt the “set it and forget it” type of mentality. Running a campaign through a fully-managed platform puts the campaign responsibilities in the hands of that platform’s media strategists. The media strategists are the ones who upload everything needed. This can be viewed as a more appealing option to those advertisers who don’t believe they have enough time or resources to run a programmatic campaign in-house through a self-serve advertising platform.

How was traditional digital advertising done before?
Before programmatic marketing, ad space was bought and sold by humans. The process was slow and inefficient, taking RFPs, meetings, and negotiations before an advertisement could be manually published. Online, it worked like this between two parties: publishers and advertisers. Publishers could promise advertisers a set number of impressions to a target audience, and advertisers would purchase that ad space if the target audience was one of their buyer personas.

Lots of online resources agree that programmatic advertising is the future in the digital advertising space. In western countries, 80% of digital advertising is programmatic while it is just 32% in India.

Vertoz Summary:
So with programmatic advertising set to boom, this company seems to be a good beneficiary. Vertoz operates in the RTB part of programmatic advertising which is more popular compared to programmatic direct.
Their consolidated revenues are growing have grown from 11.86 crores to 36.83 crores in from 2016 to 2018 and profits from 36 lakhs to 5.73 crores. This high growth company is currently available at a P/E < 15 with price around 180 and consolidated EPS around 14.
The company also has subsidiaries in US, UK and UAE. It recently setup two step-down subsidiaries in New York, AdZurite and AdMozart.
Promoter group holding is high 70%+.

Vertoz deals with both advertisers and publishers creating an online marketplace. It offers self-serve DSP and SSP to advertisers and publishers respectively, which seems to be the future of programmatic advertising as it offers more transparency and control to brands.
Revenue recognition info from IPO filings:
“We generate revenue from advertisers and publishers who use our solution for the purchase and sale of advertising inventory respectively. We maintain separate arrangements with advertisers and publishers in the form of master service agreements, which set out the terms of the relationship and access to our solution, or insertion orders which specify price and other terms. We recognize revenue upon the completion of a transaction, which is when an advertisement impression has been delivered to the consumer viewing a website or application, subject to satisfying all other revenue recognition criteria. We are responsible for the completion of the transaction. We invoice and collect the full purchase price of impressions from advertisers. In some cases, we generate revenue directly from publishers who maintain the primary relationship with advertisers and utilize our solution to transact and optimize their activities.”

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Business Risks:
Technological disruption - Ad Tech is a fast moving space. Companies should always keep running.
Competition - An attractive and booming space can invite lots of players.

Need to understand the competitive landscape further yet, but kicking off the thread with some initial research.
Further questions:
How is the relationship with its partners?
Who are the competitors and how do they fare when compared with Vertoz?
What is bargaining power with Brands, Publishers and other partners?

Resources to learn further - Most of the above info is just taken and compiled from these:

Disclosure:
No holdings yet. Need to understand more.
Not a SEBI registered analyst.
Not a buy / sell recommendation.

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