Unknown, Undiscovered, Emerging Leader in Auto Ancillary, away from social media gossip groups.
Micro Cap Multibagger Pick of Apr'22 : Kranti Industries Ltd (BSE: 542459)
Note: This stock idea was published in Apr 2022 to all our PAID subscribers of Mentoring Program where we identify 10 best-in-class micro-cap multibagger stocks from micro cap segment in a year. To join WhatsApp to +91 9354179604 (Sanjay Gupta)
🌟🌟🌟 Unknown, Undiscovered, Emerging Leader in Auto Ancillary, away from social media gossip groups. This stock follows Vijay Kedia's SMILE Principle ~ Small in size (just 55Cr market cap), Medium in experience (2nd generation entrepreneurs), Large in aspirations (working hard to fulfill dreams of their late father) and Extra large in market potential (addressing billion dollar manufacturing, EV & precision industry).
✅ Kranti Industries Ltd (BSE: 542459) ✅
🏆🏆🏆 Market Cap ~ 55 Cr | Best Proxy Play on "Manufacturing MEGA Trend, EV Theme & Precision Engineering" | Market Cap / Sales ~ 0.5 while peer trades @ 1.5-2x Sales | High Promoter holding ~ 74% & Low PE ~ 13 | Revenue from Electric Vehicle ~ 20% | Annual Sales almost doubled during last 12 months | Revenue due to Incremental Capex Reflecting in FY22 (TTM) Sales & Major Capex Operational from Q3FY23 | Margin Expansion Likely | Expecting Sales to Double in next 2 years | Good Management seems Ethical, Honest & Ambitious | Clear Visibility of Future Earnings due to 4 Key Developments.
✅ Proxy Play on "Manufacturing MEGA Trend, EV Theme & Precision Engineering" ✅
👉 Kranti Industries Ltd is a precision machining company with presence in Auto ancillary and allied sectors. It supplies to Indian and global automobile companies. It has also started supplying to the Electric Vehicles Segment.
👉 Company won the 'The Machinist Super shop floor Award 2021' for Excellence in Quality under SME category presented by 'The Machinist' Times Of India Group.
👉 Original equipment manufacturers (OEMs) are the users of company’s products. They are end-to-end solutions provider offering precision machined castings for Transmission, axles, chassis, engines and other parts for Automotive Industry.
👉 Demand for auto components is expected to pick up as the scenario improves for Indian players owing to globally lower costs, ongoing diversification of global supply chains (China +1), higher domestic demand, Government policies like PLI and Automotive Mission Plan (AMP) etc.
👉 Company's product segments include differential Housing, Axle components, Transmission components, Automotive components, Prototyping components and other components. They are supplying differential housing for Automotive Electric Vehicle Application.
👉 Major revenue from Tractor (~50%), Electric Vehicle (~20%) & Construction Equipment (~15%).
✅ State-of-the-art Manufacturing Facilities and Building long-term relations with Clients. ✅
👉 Company has production facility of around 7000 sq. mtr. spread in three different Units (Unit-1 & 2 located opposite to each other in Pirangut, Pune ( You can do a virtual tour too - www. roundme.com/embed/P9LT6uCTrmBHipRP9OSs ) and Unit-3 located at Urawade, Tal Mulshi, Pune) around Pune, considered as Major Engineering & IT Hub of India with 78+ Hi-Tech machines supported by Best-in-Class Inspection and testing Facilities. Most of their machinery, with certain modification is capable of being used interchangeably for either of the sectors, depending on the demand for such products.
👉 Customers include CNI Industries, Johndeere, Carrado, Oerlikon fairfield, Escorts, Endurance, Jaya Hind, Oerlikon, Bharat Gear Limited, etc.
👉 The Company has become a partner in a JV company which is incorporated as "Kranti SFCI Private Limited" along with "Steel Forge Cast Industries" for the purpose of carrying on the business of "Machining of forging and casting components". The management and the marketing working shall be done by Steel Forge Cast Industries and the technical part and business operations shall be managed by Kranti Industries Limited (Holding ~30% in JV).
👉 Refer this video showing latest tools & technologies used by the company having high ambitions - DMG MORI Success Stories – FRONT RUNNER IN LPP SYSTEM | Kranti Industries (IN) - www.youtube.com/watch?v=11OOr1M5kPk
✅ Incremental Capex Reflecting in FY22 Revenue & Major Capex Operational from Q3FY23 | Margin Expansion Likely | Clear visibility of Future Earnings. ✅
👉 The company has increased the production capacity by adding new machines in Q1 of FY 2019-20 in existing manufacturing Unit-1 & 2 and has started operations in Unit 3 from Jan 2021 at Urawade, Tal Mulshi, Pune. This is getting reflected in FY22 numbers where sales increased to 90 Cr from 54 Cr last year.
👉 Company is in the process of increasing its production capacity, and therefore the company has acquired Land measuring 3837.50 Sq. metres in Pirangut Pune during 2019 and is in the process of setting up Manufacturing unit. CWIP has been Zero for few previous quarters, it means expansion may be completed. Expecting to start production / operations by Q3 of FY 2022-23.
👉 Fixed Assets was ~ 24.87 Cr. in Mar’18 during which they delivered revenue of 46.03 Cr & PAT of 0.89 Cr. Now in Sep'21 Fixed Assets is 38.90. Cr (increase of 56%) and 9MFY22 Revenue is 71.02 Cr with PAT of 1.92 Cr. During the next 12 months we are expecting revenue close to 100-120 Cr.
👉 Management continuously works on reducing costs and increasing plant capacity utilization. Increased efficiency going forward is expected. Historically operating margin use to be in the range of 12-13%, hence we expect OPM to improve from 10.5% to 12-13%.
👉 Clear visibility of Future Earnings due to 4 Key Developments - #1) Addition of new machines @ Unit - 1 & 2 (Pirangut, Pune); #2) Operation of Unit-3 started from Jan'21 at Urawade, Tal Mulshi, Pune; #3) New capacity 3837.50 Sq. metres in Pirangut Pune will start operation in Q3FY23; #4) 30% stake in JV "Kranti SFCI Private Limited" will also add. 👍
✅ Good Management seems Ethical, Honest & Ambitious | High Promoter Holding ✅
👉 Mr. Sachin Subhash Vora (Chairman & Managing Director) and Mr Sumit Subhash Vora (Executive Director), sons of founder Late Shri Subhash Vora have more than 15+ years of Education each. Both are qualified Graduates in Engineering and have inherited the business acumen, discipline, ambitions from their late father.
👉 Listen to Sachin Subhash Vora's speech during Listing Ceremony of Kranti Industries Ltd. on 28th Feb, 2019 - youtu.be/mC7xqZ61GfY?t=1040 , emotionally driven sons working hard to fulfill father's dream as well as ours dream of 100-bagger.
👉 4 Key developments with clear revenue visibility which will keep this stock in demand for next couple of years. They have been significantly increasing gross block from past few years.
👉 Although they made a small loss in FY21, and FY21 RoE was negative, TTM up to 9MFY22 has been record breaking. They have a track record of generating 13-20% RoCE pre-pandemic. They have also entered long term power purchase agreement and have moved towards automating their operations. This is expected to keep costs low and hence increase OPM.
👉 Current shareholding of promoters in the company is 74.23% (December 31st, 2022). Pledged percentage is zero. Stock is not in the radar of smart investors yet, we might be the early mover here.
🏆🏆🏆 IPO came in Feb 2019 @ 37rs per share & company got listed at BSE SME. Further company announced bonus issue in the ratio of 1:5 in June 2021 and migrated to main board of BSE. During last 3 years stock has not delivered any returns due to flat sales and higher expenses because capex was going on plus Covid-19 issues, BUT Sales (TTM) has doubled from 54 Cr in 2021 to ~ 90 Cr in 2022 and it is likely to cross 120 Cr plus in FY23, stock is under re-rating and will continue to appreciate till 75-100rs in short term. Post commencement of operations in new facility in Q3FY23, stock is going to deliver superior returns in next couple of years.
Hi your virtual tour doesn't work. Maybe try koala360.com as a roundme alternative.
Thanks