This is the seventh post in our quarterly update series. In each post, we pick four stocks from our watchlist and share the latest updates on these businesses. These are not buy recommendations but we find these businesses interesting and we may build position (or buy more of those that are already in our portfolio) in them in future under these two conditions —

  1. Their business continues to do well and,
  2. They are available at valuation which we find reasonable with sufficient margin of safety.

You can see the earlier updates here.

Below we have four more companies that we’re tracking closely. We have made notes from their quarterly updates and the analyst conference calls.

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Please click on the read more button for more details on each stock.

Safari Industries

Safari Industries (India) Limited is engaged in manufacturing and trading of luggage travel goods. The Company’s product range includes polycarbonate (PC) zippered luggage. It also offers products under various categories, such as laptop bags and backpacks.

Safari is the second biggest player in the luggage industry in India. The company deals mainly in low priced low margin products and are mainly driven by volumes. The industry is seeing tremendous volume growth. The phenomenal growth has also brought in a lot of small competitors in the arena. They might pose a threat in the longer run for companies like Safari and VIP. Thus it remains to be seen how Safari will maintain its market position and find a way to resolve this conundrum of heightened competition and increasing raw material cost.

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Ashok Leyland

Ashok Leyland is an Indian automobile company headquartered in Chennai, India. It is owned by the Hinduja Group. Founded in 1948, it is the second largest commercial vehicle manufacturer in India, fourth largest manufacturer of buses in the world and 10th largest manufacturer of trucks globally.

Ashok Leyland have showcased their position as a resilient player in the HCV industry by maintaining a double digit EBITDA margin despite competitive pressures and rising raw material prices. Like the rest of the industry, it remains to be seen how the change in HCV norms in BS VI will affect the company. The recent fall in volumes remains a concern in the near term for the company

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Tata Elxsi

Tata Elxsi provides product design and engineering services to the consumer electronics, communications & transportation industries and systems integration and support services for enterprise customers. It also provides digital content creation for media and entertainment industry.

Tata Elxsi has been one of the sleeper hits from the Tata conglomerate. It has been steadily growing for in the past and has maintained a healthy growth rate of more than 20% for a number of years. But right now they are facing headwinds originating from their biggest customer JLR who accounts for 20% of their total revenues.

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Allcargo Logistics

Allcargo Logistics is engaged in providing integrated logistics solutions and offers specialised logistics services across multimodal transport operations, inland container depot, container freight station operations, contract logistics operations and project and engineering solutions.

The company has exhibited healthy growth in domestic and international businesses and have been expanding into newer businesses as seen from their participation in the joint venture Aavashya CCI. The domestic prospects for the company look promising with warehousing partnerships with online retailers like Flipkart.

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We’ll continue publishing the notes from these calls on our website. If you don’t want to miss these updates, please subscribe to our newsletter.

And don’t hesitate to reach out to us if you have any questions.

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