Customize Consent Preferences

We use cookies to help you navigate efficiently and perform certain functions. You will find detailed information about all cookies under each consent category below.

The cookies that are categorized as "Necessary" are stored on your browser as they are essential for enabling the basic functionalities of the site. ... 

Always Active

Necessary cookies are required to enable the basic features of this site, such as providing secure log-in or adjusting your consent preferences. These cookies do not store any personally identifiable data.

No cookies to display.

Functional cookies help perform certain functionalities like sharing the content of the website on social media platforms, collecting feedback, and other third-party features.

No cookies to display.

Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics such as the number of visitors, bounce rate, traffic source, etc.

No cookies to display.

Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.

No cookies to display.

Advertisement cookies are used to provide visitors with customized advertisements based on the pages you visited previously and to analyze the effectiveness of the ad campaigns.

No cookies to display.

Dharmic Bull

New Portfolio Entry: Balu Forge Ltd.

Buy Price: 240

Reasons for buying:

  1. Company is into manufacturing and supply of forgings and precision engineering components.
  2. They are ISO certified and have factory in Karnataka. 90% of sales is from exports across 80 countries.
  3. They spend 2-4% of sales on R&D and have 45 members in it.
  4. The end user industries are automobile, railways, defence, agriculture (majority), oil & gas and new energy.
  5. Management has guided for 25% revenue growth with EBITDA margins of 20-22%.
  6. Last year Sales were 327 CR, the company has recently done QIP to raise 150 CR. This is being done to double their capacity which will get operationalized in about 2 quarters. Management has said commissioning of the new plan will lead to higher margins.
  7.  With government capex in railways and defence booming, the company is expecting a good amount of order in flow.
  8. Their R&D team is investigating exciting projects – like lithium batteries, electric charging stations, hydrogen opportunity etc.
  9. Several star investors like Ashish Kacholia and Samit Vartak hold minor stakes.

Risks:

  1. Company has poor cash flows as compared to its ambition. This has led to consistently negative CFO and company is forced to dilute equity and raise funds.
  2. Due to the nature of the business, the company’s working capital cycle is around 150 days.
  3. If there is a global slowdown or currency risk, the company will be affected because as of now domestic sales is just 10%.

Leave a Reply

Your email address will not be published. Required fields are marked *

Press ESC to close