COSMO FERRITES

Banking on top-quality ferrites

New Delhi-headquartered (with its factory located in Himachal Pradesh) Cosmo Ferrites is a leading manufacturer and exporter of soft ferrites. Established in 1986, the company manufactures soft ferrites and coils which cater to a wide clientele comprising manufacturers of transformers, compact fluorescent lights, mobile phones, wireless chargers and inductive heaters. The company’s products serve all major applications like solar invertors, sensor VFD drives, energy meter lighting, SMPs, battery chargers, induction welding and hearing applications.

After struggling to establish itself for over a quarter century, the company has entered the turnaround stage. Till fiscal 2021, its earnings were nominal. In fact, in fiscal 2020, it incurred a loss of Rs 3 crore in its operating performance while at net level the loss was Rs 10 crore. But after fiscal 2021-22 it has staged an impressive turnaround and is now on the growth path. Consider:

• The changing fortunes of the company are well reflected in its share price, on stock exchanges which has risen 15 per cent in a week, 56 per cent in one month, and 105 per cent since the beginning of calendar year 2022. In short, the stock which was going abegging around Rs 17.50 on March 31, 2021, is today in demand around Rs 200, that too after falling back from Rs 455.
• The company has taken a very long period to establish its image among clientele. Till fiscal 2020, it slowly and gradually increased its sales, but margins were negligible and after earning small profits of Rs 1 crore to Rs 6 crore till 2018-19, it incurred a loss of Rs 3 crore in fiscal 2020. Thereafter, there was a sustained improvement in quality and timely fulfilling of orders. During the last two years, sales have crossed the Rs 100-crore mark and operating profit has been Rs 31 crore and Rs 11 crore respectively. The company is in a turnaround phase and, going ahead, will grow in stature.

TOP-CLASS UNIT

• In order to offer high-quality products, the company’s manufacturing facility, located in the foothills of the Himalayas, was equipped with the best German and Taiwanese equipment. In order to service this equipment, a tech-savvy technical team was appointed.

In order to maintain a high degree of quality, the management has ensured quality control at every stage of production, according to Cosmo group CEO Pankaj Poddar. Says Mr Poddar, “Our focus on quality and pro-environment measures has made us eligible for ISO 1901-2008, ISO 14001-2004 and ISO VTS 16949-2009. All our raw material and manufactured ferrite products comply with ROHS norms as per EU standards and epoxy coating materials are UL 94 V-O approved.” The company’s well-equipped R&D department and its adherence to high quality, transparency and innovation have enabled it to expand its footprint abroad.”

• With the rising demand for its products at home as well as abroad, the company has expanded its production capacity from 500 mt to 3,600 mt. This expansion has helped sales cross the Rs 100-crore mark and put it on the profitable path.
• The revolution in the automotive industry with the emergence of the EV (electric vehicle) segment will be a boon for Cosmo Ferrites. For an autonomous electric vehicle, power conversion is of paramount importance to ensure its efficiency. The electric power varies at different levels while it is being generated, stored and consumed. All the steps in this process use ferrite cores for a range of functions such as energy storage, noise filtering, self-shielding and conversion. EV charging infrastructure also needs ferrite cores to ensure magnetic flux guidance and self-shielding.

The company has entered a major turnaround phase. Its share price, which was friendless at Rs 17.50 on March 31, 2022, has jumped to over Rs 200 by now. The stock has a lot of growth potential going ahead. Discerning investors will do well to accumulate these shares at every decline.

PERFORMANCE INDICATORS (Rs. in crore)

NCC

Pan-India giant in construction

Hyderabad-headquartered NCC (formerly Nagarjuna Construction Company) is one of the largest and most well-diversified construction companies in India. The company has ventured into two diverse sectors of construction and infrastructural development spanning the nation. Its construction activities are covered under buildings, transportation, water and environment, electrical (T&D), irrigation, mining and railways. During the last four decades, the company has registered remarkable growth – both in terms of numbers and variety of projects. It has progressed from strength to strength in building expertise within the organization to handle complex and challenging projects. A veritable rollcall of projects assigned to and completed by it is testimony to its capabilities and commitment.

By now, NCC has completed 490+ building projects, 20,000+ km of water pipelines, 35,000+ acres of land irrigated and 35,000+ of villages electrified.

The company has remarkable expertise in buildings and housing which are key measures of the growth and development of a nation, reflecting the living standards of its citizens. NCC has been a major player in this area, having contributed to construction, including industrial buildings, commercial buildings, housing projects, IT parks, shopping malls, sports complexes, hospitals and stadiums.

WATER SYSTEMS

Of late, management of water and waste water has assumed enormous significance and NCC has been playing a critical role in this field. In fact, it has augmented its expertise to be able to execute various water supply, drainage and sewage systems as well as sewage treatment plants. Realising the importance of the Railways in keeping the development of a country on track, NCC has undertaken to keep the wheels of growth in constant motion by engaging in projects involving dedicated freight corridors, zonal railway projects and private railway sidings.

• Of late, orders are raining on the company and its order book is getting fatter and fatter every day. In April 2023, it received six orders worth a total of Rs 3,344 crore (excluding GST), of which three orders worth Rs 2,506 crore are related to the buildings division, two orders worth Rs 538 crore to the electrical division and one order worth Rs 300 crore to the water division. In May 2023, the company received orders aggregating Rs 2,088 crore. In June too, it received substantial orders for the building division and the water segment.

In July 2023, it received new orders worth Rs 1,919 crore from state and the Central government agencies. Of these, orders worth Rs 1,636 crore were related to the water divison and those worth Rs 284 crore were related to the building division. In fact, by March 2023, the order book had reached an all-time high of Rs 50,240 crore – almost 3.8 times its FY2023 revenue. Again, business-wise, the order book is well diversified into building/water and railway/electrical/transportation/mining and others. All these provide strong revenue visibility in the coming years. What is more, orders are expected to continue unabated and with robust execution pick-up, the company’s topline and bottomline are expected to shoot up, going forward.

DEBT DIVES

• The company’s balance sheet is healthy and robust. It reduced its debt from Rs 1,950 crore as on March 31, 2022 to Rs 980 crore as on March 31, 2023. The management expects the debt to go down further by March 2024.

Thanks to a strong and well-diversified order book, robust execution capabilities, a sharp focus on debt reduction and improvement in working capital, the company’s future prospects are highly promising. Shares of NCC are quoted around Rs 52. In recent times, there has been a spurt in the price. Hence, the best way is to accumulate these stocks at every decline.

PERFORMANCE INDICATORS (Rs. in crore)