This is the 12th post in our quarterly result update series for Q4FY21.
In this post, we’re sharing the latest updates of the stocks from our watchlist. Please don’t treat this as a buy recommendation. We find these businesses interesting and we may build position (or buy more of those that are already in our portfolio) in them in the future. The purpose of this post is to bring clarity to our understanding of the businesses we are tracking. We make our notes on the quarterly results and conference calls. Putting it up here makes it easier for us to refer them at a future date.
You can see the earlier updates here.
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Please click on the read more button for more details on each stock.
Dixon has had a phenomenal quarter with revenues rising 146% YoY and profits rising 57% YoY from last year. The company is looking to start exporting 5G smartphones for Motorola from Sep this year already. It is also looking to apply for 4 PLI schemes which are Mobile Phones, AC components, Lighting, and Telecom & Network Products. Despite the issues of components shortage for the TV industry, Dixon is confident of being able to complete its commitments without many hiccups. It remains to be seen whether the company will be able to expand aggressively as it has done in the recent past and what obstacles it will face that may threaten to halt its growth momentum in its emerging segments like refrigerators & street lighting. Nonetheless, given the list of marquee customers that the company has gained and retained over the years and its continuous efforts to expand existing capacities like consumer electronics and adding new product lines like disruptive medical devices, Dixon Technologies is cementing its place as a good growth story in the outsourced manufacturing sector in India.
Galaxy has done well to achieve good revenue & profit growth in Q4 and has managed to increase EBITDA/ton to above Rs 19,000 in FY21 highlighting a good year. It also saw a good rise in demand for specialty care products in H2 after a tepid H1. The company has seen good growth coming from India as demand comeback was strong for all tiers of customers. The company is expecting sustained demand for its products going forward due to the renewed focus on health & hygiene and the new products of nontoxic preservatives and mild surfactants but has been constrained due to global supply chain issues and rising RM prices. The only credible concerns for the company are RM inflation and supply chain issues arising from the shipping container shortage. It remains to be seen how the RM inflation will pan out going forward and whether the focus on health and hygiene is going to stay or not post COVID. Nonetheless, given the company’s robust product portfolio and the ever-increasing list of both FMCG majors and niche specialty product makers, Galaxy Surfactants remains a good stock to watch out for in the specialty chemicals space.
KNR has seen a phenomenal quarter with a 35% YoY rise in revenues. The company has done well to source 2 new HAM projects of Rs 4500 Cr. It is already bidding for new projects and has made 4-5 bids for orders of Rs 1000 Cr each. It has already entered a SPA with Cube for the sale of the 3 HAM projects which will be over soon. The central govt push for awarding road projects of Rs 15 Lac Cr is a great boost for the entire industry and a seasoned player like KNR. It remains to be seen how the industry will fare going forward and how long will it take for the Govt’s push in infrastructure to gain proper momentum. Nonetheless, given its strong balance sheet, good operational history, and resilient order book, KNR Constructions remains a pivotal construction sector stock to watch out for.
Q4 performance for Mayur was phenomenal with its highest ever quarterly revenues and profits. The management remains confident of the product’s technical and quality edge which has helped it bag multiple export orders global auto OEMs. But international demand from auto OEMs has stagnated due to the ongoing chip shortage. The footwear industry has come back well for Mayur in the meantime. It remains to be seen how long the auto segment will remain slow due to the IC chip shortage last and whether the demand for Mayur’s products will remain resilient through it. Nonetheless, given its dominant market position both in the domestic and export segments and the management’s focus on not compromising on quality no matter what, Mayur Uniquoters remains a good small-cap stock to watch out for.
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