DIXON TECHNOLOGIES INDIA
| BSE ticker code |
540699 |
| NSE ticker code |
DIXON |
| Major activity |
Consumer Electronics |
| Managing Director |
Sunil Vachani |
| Equity capital |
Rs. 11.87 crore; FV Re. 02 |
| 52 week high/low |
Rs. 6240 / Rs. 3185 |
| CMP |
Rs. 3304.80 |
| Market Capitalisation |
Rs. 19589.66 crore |
| Recommendation |
Accumulate at declines |
Top e-products for top brands
Dixon Technologies (India) Ltd (DTIL) is the largest
home-grown design-focused and solutions company engaged
in manufacturing products in the consumer durables, lighting
and mobile phones markets in India. Its diversified product
portfolio includes consumer electronics like LED TVs, home
appliances like washing machines, lighting products like LED
bulbs and tubelights, downlighters and CFL bulbs, and mobile phones. It also provides solutions
in reverse logistics, i.e., repair and refurbishment services of set top boxes,
mobile phones and LED TV panels. It
is the leading manufacturer of lighting products like CFL and LED bulbs,
LED TVs and semi-automatic washing machines in India. Its key customers include Panasonic India Private
Limited, Philips Lighting India Limited, Haier Appliance (I) Pvt Ltd,
Gionee, Surya Roshni Limited, Reliance Retail Limited, Intex Technologies (I) Ltd, Mitashi
Edutainment Pvt Ltd and Dish Infra Services Pvt Ltd.
The company’s expertise in engineering design, product development,
smart manufacturing and digitisation
touches every area of human lives –
from the moment one wakes up till the
time one goes to bed. With 89 innovations and R&D design centres globally,
the company specialises in disruptive
technology spaces such as 5G, Artificial Intelligentce, collaborative robots, digital
factory and autonomous transport. The company is doing quite well and going ahead its
prospects are all the more promising.
The company offers a fully integrated end-to-end product and solution suite to original equipment manufacturers
(OEMs), ranging from global sourcing, manufacturing, quality testing and packaging to logistics. It is also a leading original design manufacturer (ODM) of lighting products, LED TVs
and semi-automatic washing machines in India. As an ODM,
it develops and designs products in-house at its R&D centre
and manufactures and supplies these products to well-known
companies in India who in turn distribute these products under their own brands
The company is going from strength to strength on the
financial front and its prospects going ahead are all the more
promising.
Consider:
-
Dixon is the rising star in the domestic manufacturing space as it has emerged as the country’s leading electronics manufacturing services (EMS) provider to various multinational/ domestic companies in India. According to experts,
the EMS industry is likely to grow at a CAGR of 45 per cent
over the next five years or so to become a $ 152 billion industry. These experts strongly believe that the China+1 strategy
being adopted by global multinationals, together with Indian
government measures to promote domestic industry, will help
boost the domestic EMS industry going ahead. Dixon’s manufacturing
capacity in LED TVs, washing machines and LED lighting can serve 26
per cent, 28 per cent and 45 per cent
of the total domestic requirement in
volume terms respectively.
-
The company is one of
the biggest beneficiaries of the
government’s production-linked incentive (PLI) scheme for mobile
phones and other electronic products.
In fact, PLI benefits to Dixon have already started flowing in
from the beginning of fiscal 2022. What is more, going ahead,
the company’s mobile revenue will grow multifold over fiscal
years 2020-2023. Interestingly, the company has also applied
for PLI in electronic products like laptops and notebooks. This
will open up a significant growth opportunity for the company going forward.
-
The company can boast of reputed clients, including global multinationals like Samsung, Xiaomi, Motorola,
Panasonic and Phillips, and domestic majors like Voltas -Beko,
Havells-Lloyds, Godrej, Bajaj Electricals and Crompton
Greaves. There is significant future growth potential in domestic electronics manufacturing and Dixon’s plan to increase
backward integration can bring in more customers and lead
to a spurt in revenues and earnings. The company may continue to command premium valuation due to its significant
future growth opportunities, high return ratios and lean working capital days.
-
The government has initiated a
policy of ‘Atmanirbhar Bharat’, i.e., selfreliant India, in the field of electronics
manufacturing wherein India will not only
stand to fulfill its domestic requirements
but also be a manufacturing hub for the . The company has already received PLI approval for its mobile product. The company’s mobile and EMS
segment of mobile phones, electronic
wearables and medical devices constitutes 12 per cent of its revenues. Dixon
has a manufacturing capacity of 30 million mobile phones annually. After getting the PLI approval, the company now
plans to increase the manufacturing capacity of smart phones by five times
within a year. The company has already
signed major customers such as
Samsung, Motorola and Nokia for
manufacturing their mobile phones. Further, the company is in talks with other
global players for manufacturing their
mobile phones. Apart from mobiles,
Dixon has also ventured into contract
manufacturing of set-up boxes for Reliance Jio, Dish TV and City Cable, as well
as for medical devices and wearables.
The company has a strong order book
in set-up boxes with a revenue potential
of Rs 1,000 crore in the next two years,
while the opportunity size for the overall
wearable market is Rs 5,000 crore in
India. According to research analysts
ICICI Direct Research, the mobile and
EMS division of Dixon will see revenue
CAGR of 45 per cent in the next 3 years
to Rs 793 crore, led by a 14-fold jump in
the revenue of the mobile division. As a
result, the contribution of this division to
the total topline is expected to increase
to 44 per cent by fiscal 2023 from the
current level of 12 per cent.
-
Dixon is an undisputed market
leader in the manufacturing of LED TVs
with a capacity of 4.4 million units by fiscal 2021. The company has now planned
to expand the capacity to 5.5 million units
by the end of the current fiscal 2022. The
company has marquee customers in this
segment, including Xiaomi, Samsung,
Panasonic, TCL, Lloyd, Flipkart, Philips,
Toshiba, Vu and One Plus. The ODM
share in this division is only 6 per cent.
With increased backward integration, the
company is looking to increase the ODM share in this division from 6 per cent to
15-20 per cent within the next 2-3 years,
which would help increase the EBITDA
margin of the segment going forward.
-
The company is going from
strength to strength on the financial front.
During the last 10 years, its sales turnover
has expanded more than 11 times – from
Rs 572 crore in fiscal 2012 to Rs 6,448
crore in fiscal 2021. The profit at net level
too has zoomed to Rs 160 crore in fiscal
2021, in striking contrast to a loss of Rs.
7 crore in fiscal 2012. The company’s
financial position is very strong, with reserves at the end of March 2021 standing
at Rs 726 crore — 60 times its tiny capital of Rs 12 crore. The company has been
paying dividends for the last four years,
the rate for fiscal 2021 being 50 per cent.
Overall, the prospects for Dixon going ahead are highly promising with a large
domestic market and rising exports. The
share price is quoted around Rs 3,428.
Research analysts expect the price to go
up to Rs 4,270/4,300 within a year or so.
PERFORMANCE INDICATORS (Rs. in crore)
|
Year
|
Net Sales
|
Net Profit
|
EPS (Rs.)
|
Div (%)
|
BV (%)
|
RONW (%)
|
|
2018-19
|
2984.50
|
63.10
|
54.50
|
20.0
|
384.70
|
18.20
|
|
2019-20
|
4400.10
|
120.50
|
104.10
|
40.0
|
467.90
|
18.20
|
|
2020-21
|
6448.17
|
159.75
|
26.90
|
50.0
|
140.50
|
24.99
|
ADVANCED ENZYMES TECHNOLOGIES
| BSE ticker code |
540025 |
| NSE ticker code |
ADVENZYMES |
| Major activity |
Other Agricultural Products |
| Chairman |
Vasant L. Rathi |
| Equity capital |
Rs. 22.36 crore; FV Rs. 02 |
| 52 week high/low |
Rs. 493 / Rs. 257 |
| CMP |
Rs. 280.50 |
| Market Capitalisation |
Rs. 3136.01 crore |
| Recommendation |
Buy at declines |
Global enzyme powerhouse
Thane (Mumbai)-headquartered Advanced Enzymes
Technologies is the largest enzyme manufacturing firm in India with a global footprint. During the last couple of years, it
has emerged as a global enzyme powerhouse with three wholly
owned subsidiaries, three joint ventures and five stepdown
subsidiaries servicing 700 customers
across 45 countries. The company is
doing very well and prospects going
forward are all the more promising.
Consider:
-
Having pioneered the production of enzymes in India, the company continues to set trends with research and development of new applications for the use of enzymes. Today, the company caters to diversified industries like human nutrition,
animal nutrition and bio-processing.
It provides its proprietary and customized enzyme products
to various pharmaceutical and nutraceutical companies in
India, other Asian countries, North America and Europe. The
company has state-of-the-art manufacturing facilities and
R&D centres across India, the US and Germany.
-
AET has expanded its operations through the acquisition route. It acquired several companies. Advanced
Supplementary Technologies Corporation (which consolidated
its presence in the US), JC Biotech Pvt Ltd, AEM of Malaysia
and Evoxx Technologies GmbH, a renowned German R&D
company. This acquisition has boosted the company’s R&D
capabilities with the state-of-the-art Directed Evolation technology in creating any desired enzyme molecules. Today, the
company has three wholly owned subsidiaries, three joint
ventures and five step-down subsidiaries.
-
With these acquisitions, the company has made slow
but steady progress on the financial front. During the last 11
years, its sales turnover has advanced from Rs 116 crore in
fiscal 2011 to Rs 502 crore in fiscal 2021, with the operating profit growing from Rs 23 crore to Rs 232 crore and the net
profit inching up from Rs 17 crore to Rs 146 crore during this
period. The company’s financial position is very strong, with
reserves at the end of March 2021 standing at Rs 948 crore –
more than 43 times its equity capital of Rs 22 crore. As its
debt is negligible (Rs 23 crore), it is
virtually a debt-free company.
-
From 2022 to 2028,
the global technical enzymes market
is expected to develop at a fast pace,
according to the latest Marketsand
Research.biz document. For the forecast period, the paper proposes a
marketshare estimation in terms of
volumes.
-
The local evaluation phase reveals the substantial capability of
every region in the global technical
enzymes marketplace collectively, with its period and amount.
The study explains expansion techniques and procedures,
estimates, production processes and fee structures. It also
consists of product offerings, revenue evaluation, production
capabilities, gross margins and numerous different crucial
elements that effect the profitability of the company involved
in the market. Advanced Enzymes Technologies will be one
of the major beneficiaries of this market potential.
-
Prospects going ahead are highly promising as enzymes are used in a wide variety of industries like human
healthcare and nutrition, animal nutrition, banking, fruit and
vegetable processing, brewing and malting, grain processing,
protein modification, dairy processing, speciality applications
and textile processing. The management expects sales to cross
the Rs 1,000-crore mark within the next five years, with a
corresponding improvement in earnings. The company is eyeing inorganic growth through fresh acquisitions, particularly
in Europe and North America.
AET’s shareholding is in strong hands, with the promoters
holding 52.55 per cent, foreign institutional investors
(FIIs) 16.27 per cent and
domestic institutional investors (DIIs) 8.67 per cent.
This scrip should be a must
in the portfolio of every
long-term investor.
CONSOLIDATED PERFORMANCE INDICATORS (Rs. in crore)
|
Year
|
Net Sales
|
Net Profit
|
EPS (Rs.)
|
Div (%)
|
BV (%)
|
RONW (%)
|
|
2018-19
|
419.60
|
111.20
|
10.00
|
30.0
|
66.60
|
18.00
|
|
2019-20
|
444.00
|
129.30
|
11.60
|
30.0
|
75.20
|
17.00
|
|
2020-21
|
501.80
|
145.70
|
13.00
|
45.0
|
86.80
|
16.10
|
|
2021-22
|
529.38
|
119.58
|
10.70
|
50.0
|
97.40
|
16.10
|
HEIDELBERGCEMENT INDIA
| BSE ticker code |
500292 |
| NSE ticker code |
HEIDELBERG |
| Major activity |
Cement & Cement Products |
| Managing Director |
Ramakrishnan Ramamurthy |
| Equity capital |
Rs. 226.62 ; FV Rs. 10 |
| 52 week high/low |
Rs. 285 / Rs. 178 |
| CMP |
Rs. 182.15 |
| Market Capitalisation |
Rs. 4127.76 crore |
| Recommendation |
Buy at declines |
Benefiting from a giant parent
HeidelbergCement India, a 69.4 per cent subsidiary of
the Heidelberg Cement group of Germany, was born in 2009
after the German cement major acquired Indo Rama Cement
and Mysore Cement and merged them into one, following which
the merged company was named HeidelbergCement India.
Soon after taking over the company,
the German cement major resorted
to a brownfield capacity expansion
from 3 million tonnes per annum to
5.4 million tpa. Today, the company
has two integrated plants, one at
Imlai near Damoh in Madhya
Pradesh and the other at Jhansi in
Uttar Pradesh. It also has a grinding
unit at Ammasendra in Karnataka.
The company is fast recovering from
the setback suffered due to the
Covid-19 pandemic and is on the
growth path. What is more, going forward the prospects of
the company are quite promising.
Consider:
-
eidelbergCement India is part of the giant German cement group with 58,000 employees working at more
than 3,000 production sites spread over 60 countries in five
continents. The Indian company gets the rich benefits of the
parent group’s capabilities and global experience in the cement business.
-
The adverse impact of the pandemic is on the decline. Though the production capacity was raised to 6.26
million tonnes in 2021, the capacity utilisation came down
from 91 per cent in fiscal 2019 to 72 per cent due to Covid19. However, demand is on the rise, on account of the
government’s focus on reconstruction of roads (83,000 km to
be built over the next five years), robust capex plans announced in the last budget, the government’s stress on affordable housing and increased rural demand.
-
Despite some problems, the company is doing quite
well on the financial front. During the last five years, its sales
turnover has moved up from Rs 1,967 crore in fiscal 2018 to
Rs 2,207 crore in fiscal 2022, with the profit at net level inching up from Rs 133.18 crore to Rs 252.26 crore during this
period. The company’s financial position is getting stronger
by the day, with reserves at the end
of March 2022 standing at Rs
1,338.62 crore – around six times its
equity capital of Rs 226.62 crore.
Though after 1985 – when it had issued bonus shares in the ratio of 2:5
— the company has not made any
issue of free scrips, it has been paying handsome dividends, the rate for
fiscal 2022 being 90 per cent. Its debt
burden is on the decline, with the
interest cost declining sharply from
Rs 75 crore in fiscal 2020 to Rs
36.44 crore in fiscal 2022. The company has reported an
EBITDA per tonne of Rs 607 and an efficient cash conversion cycle of 27 days, which is among the best in small-cap
cement companies.
-
The company has commissioned a 5.5 MW solar
power plant at its mining area located in Damoh (MP). The
solar plant is expected to generate 10 GW hours per annum
of solar energy and will replace costly electricity purchased
under short- term open access and from the grid. The expected
Co2 savings by generating solar energy will be 225,000 tonnes
over the standard life of the plant. The commissioning of the
solar plant is yet another milestone in reducing the Co2 footprint and in avoiding a carbon tax.
-
There are several schemes, projects, ports, railway
lines and dams on the list of the government which are expected to push the current per capita consumption of cement
from 225 kg to 285 kg by 2025. Cement is linked to the core
infrastructure and industrial economy of the country, providing not only jobs to millions but also fulfilling dreams of a house/shelter for millions.
As a result, demand for cement is expected
to grow at a rate of over 6 per cent after the
pandemic period is over.
Thus, the long-term prospects for
HeidelbergCement India are highly promising.
PERFORMANCE INDICATORS (Rs. in crore)
|
Year
|
Net Series
|
Net Profit
|
EPS (Rs.)
|
Div (%)
|
BV (%)
|
RONW (%)
|
|
2018-19
|
2133.40
|
220.60
|
9.70
|
40.0
|
54.10
|
19.90
|
|
2019-20
|
2169.60
|
268.10
|
11.80
|
75.0
|
58.00
|
21.60
|
|
2020-21
|
2116.70
|
312.70
|
13.80
|
80.0
|
63.60
|
22.30
|
|
2021-22
|
2296.96
|
252.26
|
11.10
|
90.0
|
69.10
|
22.27
|
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