Ritesh Khanna

[Ritesh Khanna @ritesh1628]

Shaily Engineering concall takeaways:

Positives
- Signing of a new consumer electronic customer and working on a highly complex consumer appliance. Plans to infiltrate the customer's ecosystem for more products
- Confident of 36m+ pens in FY28
- Limited impact of DRL on pen offtake
- Hiring key business personnel to get innovators on board (in 4-6 quarters)
- Dismissed Chinese competition (patent infringement and similar pricing)
- Gross Margins to improve from Q3
- Confident of attaining dominant market position in newer markets opening up for semaglutides - Brazil, Mexico, Turkey, Saudi

Negatives:
- Limited visibility on consumer division turnaround

Company continues to climb up the value chain and work on complex products and opening up new revenue pipelines

#ShailyEngineering

[Ritesh Khanna @ritesh1628]

Solid results by Shaily Engineering despite commodity headwinds and DRL's semaglutide supply halt - wonder how much impact it had.

Consumer business continues to drag earnings down while company keeps opening up new high growth avenues in Industrial (semiconductor trays and packaging) and Healthcare.

Balance sheet strength and management's foresight gives me confidence to hold and potentially add.

Disc. Invested and biased

#ShailyEngineering

[Ritesh Khanna @ritesh1628]

One thing that you missed out is the impact of Other Income. Strip that out and we have 30% PBT growth which is commendable.
I don't blame the management on refraining from providing profitability guidance in light of current volatility in commodity prices especially copper. Management however did mention that 20%+ growth in topline is a good possibility

[Ritesh Khanna @ritesh1628]

@KapilBaldawa As a shareholder myself I am quite pissed with the way the company has performed despite structural tailwinds and policy support. My only hope is that smart metering business is divested or they somehow miraculously do a turnaround on that business.

[Ritesh Khanna @ritesh1628]

Kaynes management does not instill me with the confidence expected of a midcap

1. In today's concall when Jefferies analyst asked for Debt figures, management couldn't come up with the number - inexplicable

2. Q1 presentatation Pg 22 we have PAT growth as 32% instead of negative 32% - nobody did sanity check?

3. Lying about their financial position in the media interactions a week before quarter ending

#Kaynes

[Ritesh Khanna @ritesh1628]

@stockscansin can you clarify the rationale behind labelling the results as weak, strong etc?

PGEL reported a revenue growth of 35% which was higher than most analysts had predicted. Strip away Other Income and PBT grew a solid 29%.

Reason the results been categorized weak?

[Ritesh Khanna @ritesh1628]

@ishmohit1 It's coming. Bleeding out their cash cow businesses for AI where demand at scale is a few years away and by then AI will be a commoditised business and the profits nowhere close to what AI companies are projecting

[Ritesh Khanna @ritesh1628]

@stockscansin Have used multiple screening tools including Factset and CapIQ but have not come across the functionality laid out in such concise format 🙌
Only addition I would suggest is expanding the timeframe-dynamic date range and adding more fields in dropdown - YTD, Annual, Last 2Ys etc

[Ritesh Khanna @ritesh1628]

@thebigbulldeals How much of this will flow from India and how much from Nasmyth facility in UK? Will the ultra precision work happen at Sri City or is it just gonna be the labour intensive work being done in India?

[Ritesh Khanna @ritesh1628]

@WizardsUnknown The way I value Ather:
Assuming 2W EV market penetration grows to 30% in 2030 and Ather is at 20% market share;
My base case 12% PAT at 1.5 lakh ASP and 10 lakhs annual sales is annual profit of 1800 crores. Ather grid, international expansion, zenith platform on top of that

[Ritesh Khanna @ritesh1628]

@WizardsUnknown Agreed on grid - it's a low margin capital intensive business at present and can only bear dividends if other OEMs start leveraging it (not a very long shot imo considering hero is already using it)

[Ritesh Khanna @ritesh1628]

@WizardsUnknown Unit economics at steady state:
Assuming Base model at 1.1 lakh ASP and AtherStack at 18k

- Vehicle GP contribution: 20-25% of 1.1 lakhs: ~25k
- GP contribution of AtherStack: 85% of 20k and at 90% attach rate: ~15k

A whooping ~40% contribution to gross profit.

[Ritesh Khanna @ritesh1628]

@WizardsUnknown Regarding valuation, currently TVS, Bajaj, Royal Enfield are all 1 lakh cr+ market cap, so there is sufficient headroom to grow 3-5x from here

[Ritesh Khanna @ritesh1628]

@WizardsUnknown None of the other OEMs have revenue adjacencies akin to Ather:
- Atherpro Stack has an attach rate of ~90% and is 85% GP
- Ather Grid may become the national charging infrastructure

Considering their Tech and R&D focus, don't rule them out carving out new revenue streams

[Ritesh Khanna @ritesh1628]

@siddharth_iitm They are the iphones of the 2W EV market. People who have purchased their scooter swear by the brand. I see them becoming a behemoth in the EV ecosystem and they might even spread out to other verticals given their focus R&D and technological focus.

[Ritesh Khanna @ritesh1628]

@ishmohit1 If AI bubble pops which I see popping soon, don't you think that the DC Capex slows down?
Don't think AI is a bubble but valuations of AI companies certainly are unjustified and unsustainable

[Ritesh Khanna @ritesh1628]

@soicfinance My biggest concern and risk with this business is that they are not entirely in control of their revenues - the streaming platforms have the pricing power. What happens when youtube or spotify cuts the monetization rate per view or content creators' revenue?

[Ritesh Khanna @ritesh1628]

@MithunSarkari Agree largely with your comments just that we might not see real recovery before Q4'27. The margins are going to be squeezed in Q1-2.
I do believe that the company is sitting at an inflection point and just needs some tailwind (reduced inflation/extended summers) to explode.