GET RICH.

STAY RICH
WITH OMKARA CAPITAL
 Whatever I share will be DILSE

I am a micro investor & not a macro

investor
I am biased in my views
Disclaimer
Safe to assume that I own what I am
bullish on
I am very bullish on INDIA
Disclaimer: Omkara Capital is a SEBI registered Research Analyst (SEBI Reg. no. INH000008206). This presentation, data
and information presented herein are for information purposes only and does not construe to be any investment, legal
or taxation advice. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Any
action taken by you on the basis of the information contained herein is your responsibility alone and Omkara Capital
Private Limited (“Omkara” or “Omkara Capital”) and its group companies, if any or its employees or directors, associates
will not be liable in any manner for the consequences of such action taken by you. We have exercised due diligence in
checking the correctness and authenticity of the information contained herein, but do not represent that it is accurate
or complete. Omkara Capital or any of its group companies, if any or employees shall not be in any way responsible for
any loss or damage that may arise to any person from any inadvertent error in the information contained in this
publication. The recipient of this report should rely on their own investigations. Omkara Capital and/or its group
companies, if any and/or directors, employees or associates may have interests or positions, financial or otherwise in
the securities mentioned in this report. Please do your own due diligence and consult with your financial advisor before
buying/selling any company mentioned in this presentation. We may have advised the stocks mentioned herein to our
client and Omkara Capital, its directors, employees or relatives of Directors or relatives may have financial interest of
the Companies.
Journey of a long-term equity market investor
Some Basic Gyaan But Very Imp….
It is like a small prayer to start the
session
NOBODY
WANTS TO
GET RICH
SLOW
Stock’s does
not make
you wealth,
but catching
big trends do
Gross Block Trend For Chemical/ Pharma Ind
Investing is not a science
You must find your own style
by doing mistakes but not
repeating them
MAKING MONEY IS
DYNAMIC

Research: Corporate
MOST IMP Connections

Market
Ground Checks
Information

Staying
HUNGRY
There are many ways
to find a winner to
make big wealth.

You need to be
HUNGRY & read a lot
Fashion works only on
the ramp and not in the
stock market
BIGGEST LESSON:
Never Be Rigid
Beauty of LONG
UPCYCLES that people
forget rationality &
beauty of LONG
DOWNCYCLE is that
people forget growth
You should stay
on the wicket to
make wealth in
the stock market
MOST IMP LESSON:
NEVER REGRET IN
THE STOCK MARKET.

EVERYONE WILL
HAVE DIFFERENT
WINNERS
 Everyone Will Have
Different Winners: Never
REGRET missing a stock
RJ: Lupin, Titan
RKD: HDFC Bank, D-Mart
Ramesh Damani: McDowell
Nemish Shah: Commodities
Raamdeo: Hero Honda
Madhu: Divis, Pharma
Sunil: Mastek, Saregama, JSPL
Anil Kumar Goel: Sugar/ Agri
OMKARA CAPITAL Mukul Agarwal: IndiaMart, Intellect
OMKARA’s INVESTMENT
APPROACH
 Holding Investing
Buying is Selling is
is not so is testing.
simple. tricky.
easy. Always :)
One liners from
experience
Galtiyan kam karo, paisa
apne aap ban jeyga
Kyun aur kitna
lena hain is more
important than
kya lena hain
Next mix your drinks
(never mix investing and
trading bets)
Sasta PE dekh kar stock
mat lo, achha co samajh
kar stock lo
TTM PE MULTIPLE FOR SOME COS
Sometimes cheap can
be very expensive
Speculation requires a
human quality of
accepting defeat &
booking losses sooner
than later
Buy Cheap & Add
Expensive.

Average always at higher

levels & never at lower levels
Chalane wale
chal base
 Fundamental kehte
sab hai, chahte sab
momentum hi hai
But
English gaane kehte
sab hai, naachte sab
Hindi par hi hai.
OMKARA’s
BELIEFS AND
LEARNINGS
Our beliefs & learnings
The agony & financial pain of a wrong investment can be far higher than the joy of a
Rejection is more important than selection successful one

Focus on doing less mistakes rather than thinking Some “hope trades” or “bade-investor-ne-liya trades” or “big turnaround hoga” or
“jaldi paisa banega trades” can take away all good things done in your portfolio
about returns, money will be made on its own

Focus on finding “good companies” backed with historical data (good promoters,
Historical data is more important than only doing high return ratios, low debt, controlled working cap) rather than just doing excel
excel future projections projections on a company with no sound history

Keep it simple and adhere to the process always. A lot of money gets lost in being
Paisa jaldi kamana hain ya zyada - choice is yours adventurous or buying things based on hearsay which gives faaltu ka loss. Stop this
asap – and u will be amazed at the results that follow

In Value-investing, you will always make money It is okay to be in companies where stocks don’t move daily, and/or are not discussed
on TV/social media. Keep the faith on data.
slowly and steadily, but surely
 Catching the Cycle

1996-2000 2003-2008 2009-2014 2015-2019 2020 onwards ??

 Technology  Infrastructure  Consumption  Auto  Import Substitution

 Financials (Chemicals, APIs,
 Media  Commodities  Pharma Electronic
(NBFCs, HFCs)
 Real Estate  FMCG Manufacturing)
 Financials (Insurance,
Wealth, AMC)
 Healthcare
 Staffing
 Food, Water
 Sectors where no
supply seen in last 10
years - VALUE

If You Invested In A Good IT Company In 2000, There Were No Returns Made For Next 10-15 Years Due To Valuations.
Similarly, If You Invested In FMCG In 1995, There Were No Returns For Next 10 Years. So Good Company Is Not Always A
Good Investment
Strictly Privileged & Confidential | For internal use and not for public circulation
 Our Approach | 3P Investment Philosophy

PROMOTER “We’ve never succeeded in making good

P Has Passion for its products, Focus on the business and
conduct’s the business with Unquestionable Integrity
deals with bad people”
- Warren Buffett

PRODUCT
P
“In business, I look for economic castles
Has substantial competitive advantages over others and has
the ability to sustain and protect the same over years to come
protected by unbreachable ‘moats’”
- Warren Buffett

PRICE
P We don't want to buy the highest quality business. Its all about
finding good businesses and paying a lot less for it
“Everything is AAA at the right price”
- Howard Marks

Strictly Privileged & Confidential | For internal use and not for public circulation 37
 Our Process | 4th Sep – Going Beyond The Numbers

Preliminary research Differentiating the company

 Last 5 year’s annual reports  How the company derives its moat?
 Financial modelling  How sustainable is its moat?
 Public announcements  Competitive landscape
 Consistency in management commentary  Macro business environment
Desktop Business
[...]
 Industry data / statistics Research Quality

What do we ask ourselves before investing Going beyond the desk

Self Scuttlebutt
[...]
[...]
 Is there an adequate margin of safety ? Checks  Review from the suppliers, customers,
 What can go wrong ? employees and competitors
 Is it too good to be true ?  Soft due diligence on promoters
 Why is it cheap as markets knows better?  Social media checks
 Why is the other side selling if its cheap ?  Executive compensation & business interest

Strictly Privileged & Confidential | For internal use and not for public circulation 38
 Our Stock Selection Strategy

 “Price -Value gap” identification investing

o Mis-priced investing opportunities (times when stock falls due to technical selling & not fundamentals)

o Improving fundamentals not being recognised yet by markets

 Corporate Action Strategies Investing: Potential change of management with underlying business remaining
strong or good franchise

 Potential re-rating opportunity: Consistent mid cap performers that are now starting to show growth ambitions

Strictly Privileged & Confidential | For internal use and not for public circulation 39
 What do we avoid?

In Companies In Investing

Hot stocks or concept stocks Forecasting the markets

Businesses that we do not understand Investing on the basis of technical analysis

Expensive valuations Churning the portfolio

Promoters with corporate governance issues Following the herd

Leveraged companies / promoters

“If we avoid the losers,

The winners will take care of themselves” – Howard Marks
Strictly Privileged & Confidential | For internal use and not for public circulation 40
 Things to question

 Low Operating Cashflow to EBITDA, especially due to high working capital (Cash conversion cycle and WC days)
 Aggressive capex plans by cos with low EBITDA and generating low cashflow from operations (Capex vs EBITDA)
 Changes in accounting policies, such as around fixed assets, depreciation, inventory
 Substantially lower tax outflow in cashflow vs income statement
 High capex, depreciating and replacing capex which may not make business sense or show correlation with
revenue (“buy, depreciate, sell, lose money, repeat” – Source: Glaucus)
 Stark difference in cost / expense profile against comparable peers
 Related party transactions, especially with promoter group entities which aren't subsidiaries
 Cash lying in current accounts and foreign jurisdictions

Strictly Privileged & Confidential | For internal use and not for public circulation
INDIA
IT exports
> Oil
Imports
 THE BIG PICTURE

Strictly Privileged & Confidential | For internal use and not for public circulation
India has been among the fastest-growing economies in the last 2 decades with growth rates of
8%.
 GST

RERA

Govt laying Demon

roadmap GST

since last NPA clean-up

many tears Cut in corporate rate tax

Make In India

FTAs

Formalization of economy

Focus on ignored sectors like ethanol, textiles

Leakages less due to digitization
 State of Geopolitical issues
Political crisis in
emergency in Sri b/w Russia: Japan getting old
Pakistan
Lanka Ukraine

Bangladesh
Europe battling gar increasing power India is busy doing
US playing games
crisis tariff & petrol business
prices
 Monthly GST > ₹1.5 lah crore

NPA mess clean up done

Credit growth now above 14% in July 2022 vs 5.4% in April 2021

Highest Monthly Home Sales

Highest Monthly Auto Sales

Indian India made 6.28 billion UPI transactions worth $132 billion in July, 2022. Highest ever digital payments in
India
Manufacturing PMI hits 8 months high

Economy Highest ever spectrum auction at 1.5 lakh cr

2 major FTAs done in speed time

6.9% Unemployment rate, lowest in 6 months

Equity AUM rises 41% YoY in FY22; records highest ever net inflows in a year

E-way bills/railway freight were up +10%/+7% YoY in Mar'22

Power consumption has also risen (+7%/ +10% YoY Mar/1HApr)

 For the 1st time, US Navy ship arrived to Tamil Nadu, India for repair
and maintenance
India has set an target of 1.75 lakh crore of defence production by
2025, which includes export of 35,000 crore
Apple to begin production of 6.1 inch iPhone 14 in India and China
simultaneously for the 1st time

Indian US based 'GE Healthcare' inaugurates it's 1st 5G innovation lab

outside USA in Bengaluru, India

Economy India has now over 75,000 startups recognized. 49% of startups are
from Tier 2 & Tier 3 cities
India has crossed 600 million smartphone users and has more than
50 Million 5G smartphones as of July, 2022.
Hardly any countries with 7% GDP growth.

India’s share in the world M-cap at 3.2%, inching towards its all-time
high level (3.3% in July 2010)
BIG CALL
FOR
OMKARA
Manufacturing Sector
DID YOU For the first time in over 3 decades India
became a net exporter of engineering goods

KNOW in FY22. From peak deficit of $ 32b in FY12 to

surplus of $6b in FY22.
DID YOU KNOW
Manufacturing sector’s share in the
Indian economy reached the pre-covid
level of ~18% of GVA in FY22 and is
poised to hit an all-time high in the
medium term
India's
Manufacturing
PMI outperforms
every other nation
Manufacturing – How huge is the Opportunity?

Manufacturing sector can grow 2.8x by 2030

6.0 25%

5.0
5.0
20%
20%
17%
4.0
17%
16%
15%
15% 15%
13%
3.0
2.7
10%

2.0

1.0 5%
1.0

0.3

0.0 0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2030

Indian GDP in $ Tn (LHS) Manufacturing Output $ Tn (LHS) Manufacturing as a % of GDP (RHS)

Source: World Bank
 CAPITAL GOOD SECTOR
Net Sales (cr.) EBIDTA (ExOI) (cr.) PAT (cr.)
TTM 18,648
TTM 234,949 TTM 26,436 2022 12,898
2022 148,524 2022 18,297
2021 180,777 2021 7,828
2021 12,546
2020 197,671 2020 1,542
2020 10,429
2019 225,476 2019 14,981
2019 28,472
2018 197,813 2018 8,782
2018 18,112
2017 187,986 2017 10,592
2017 13,461
2016 185,001 2016 6,250
2016 10,978
2015 191,742 -3,2002015
2015 12,746
2014 214,616 2014 5,235
2014 14,839
2013 214,352 2013 6,842
2012 203,167 2013 17,662
2012 14,246
2011 173,482 2012 24,235
2011 12,831
2010 151,473 2011 21,916
2010 10,611
2009 146,164 2010 16,285
2009 9,787
2008 113,623 2009 16,527
2008 10,809
2007 86,230 2008 14,788
2007 8,530
2006 61,753 2007 12,091
2005 46,309 2006 8,435 2006 6,013
2004 36,780 2005 5,385 2005 3,701
2003 31,137 2004 3,836 2004 2,063
2002 28,719 2003 2,825 2003 1,216
2001 24,498 2002 2,457 2002 862
2001 1,042 2001 838
0 10000 20000 30000 -5000 0 5000 10000 15000 20000
 CAPITAL GOOD SECTOR
Gross Block (cr.) Market Cap (cr.)
Total Debt (cr.)
TTM TTM 709,791
TTM
2022 2022 463,057
2022 13,110
2021 88,901 2021 388,355
2021 41,773
2020 85,321 2020 237,613
2020 49,658
2019 78,058 2019 329,986
2019 46,248
2018 72,866 2018 367,106
2018 45,361
2017 66,309 2017 331,179
2017 44,477 2016 270,068
2016 69,631
2016 47,219 2015 306,381
2015 97,539
2015 57,588 2014 187,004
2014 94,302
2014 59,372 2013 163,091
2013 81,219
2013 50,661 2012 197,665
2012 73,678
2012 39,963 2011 257,273
2011 63,741
2011 32,971 2010 269,307
2010 54,645
2010 29,585 2009 146,416
2009 52,998
2009 31,024 2008 286,690
2008 36,890
2008 22,147 2007 187,890
2007 28,874
2007 14,126 2006 172,156
2006 22,555 2006 9,245 2005 49,640
2005 19,166 2005 8,196 2004 32,893
2004 16,666 2004 6,652 2003 13,682
2003 16,564 2003 6,670 2002 11,110
2002 15,996 2002 7,516 2001 8,969
2001 12,846 2001 6,420 0.00 200000.00 400000.00 600000.00 800000.00
Capex Cycle – A direct play on Manufacturing

Triggers for the next capex cycle

Big Getting Bigger Government Initiatives Electronic Manufacturing

Improving Capacity Utilisation Changing mix of government capex Defense

Capex as a % of GDP rising

Industry Consolidation Project Announcements & Execution Import Substitution Plays

Budget Allocation to Major Schemes

Uptick in gross credit disbursement Share of manufacturing in new investments is

rising Improving Order Book of Sectors
Asset Quality Improvement
Reforms
O/S Private Sector Capex
Export hitting all time high
PLI Increasing New Company
Deleveraging Registrations

Improving Economic Health Improving Private Dynamics

Industry Consolidation – Big Getting Bigger

Visible Consolidation of Market Share Across Sectors

Source: Spark Research

Industry Consolidation – Improving Output & Utilisation

Overall Industry Capacity utilisation is nearing pre-Covid Levels

Source: RBI
Capacity Utlisation (%)
80 74 75 76 76 74
69 69 70 69
70 67
63
60
60
50 47

40
30
20
10
0
1 8 18 18 -1
9 19 19 -1
9
-2
0 20 20 -2
0
-2
1 21
n- p- c- ar n- p- ec ar n- p- ec ar n-
Ju Se De M J u S e D M J u S e D M J u
Source: Economic Survey

Capex Related
Nitti-Gritty

Top players in Cement and Steel

Industry are achieving peak utilisation
levels which usually leads to further
capex

Source: Spark Research

Are the Economic conditions in place to support a Capex Cycle?

Improving Strengthening Booming

Banking Health Uptick in credit
Balance Sheets Exports
Economic Health – Uptick in Credit & Improvement in Asset Quality
Source: VQ Research

Source: RBI
Net NPA as a % of Gross Advances
4.5

3.9
3.5 3.4
3.1
2.7 2.8

2.1 2.1

1.5 1.6
1.3 1.3
1
0.8
0.3 0.3 0.2 0.2 0.2

2016 2017 2018 2019 2020

Scheduled Commercial banks Public Sector Banks Private Sector Banks Foreign Banks
Source: Economic Survey

Increasing borrowings should lead to future capex Banks have an incentive to lend as overall health of the sector Improved
 Economic Health – Company Leverage in the last two decades

ycle
e -l e ve raging C
R

Upcycle

Demand>Supply leading Consolidation leading

to Releveraging (Capex) to Deleveraging

Source: Spark Research

Downcycle
 Economic Health – Revival in Exports Post A Decade
Engineering goods, Chemicals, Pharma, Textiles and Electronics sectors
India Merchandise Exports ($ Bn) witness better growth from a 2Y CAGR basis
450

400
400

Decadal Breakout
350
330
314 310 313
306 300 304
300 292
276
262
250
250

200
185
179
163
150
126
103
100
84
64
53
50

0
FY3 FY4 FY5 FY6 FY7 FY8 FY9 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY
22E

Source: Ministry of Commerce

A decade of pain finally getting over! Private sector ready for next capex cycle

Private sector participation in GFCF has … As cashflows were used to deleverage the
declined over the past decade… balance sheet

Gross Fixed Capital Formation Trends

CFO/Capex at a 2 Decade High

Source: Kotak MF

Source: Economic Survey

Myths About The Capex Cycle – Interest Rates

Myth - High Interest Rates will hamper the Capex Cycle

Truth - Interest Rates rose to elevated levels in the last capex cycle

India 10 Year G-Sec Yield (%)

12

10

0
01 01 01 02 02 03 03 03 04 04 05 05 06 06 06 07 07 08 08 08 09 09 10 10 11 11 11 12 12 13 13 13 14 14 15 15 16 16 16 17 17 18 18 18 19 19 20 20 21 21 21
a n- un- ov- pr- ep- eb- Jul- ec- ay- ct- ar- ug- an- un- ov- pr- ep- eb- Jul- ec- ay- ct- ar- ug- an- un- ov- pr- ep- eb- Jul- ec- ay- ct- ar- ug- an- un- ov- pr- ep- eb- Jul- ec- ay- ct- ar- ug- an- un- ov-
J J N A S F D M O M A J J N A S F D M O M A J J N A S F D M O M A J J N A S F D M O M A J J N
Source: NSE
Myths About The Capex Cycle – Inflation

Myth - Inflation will hamper the cycle

Truth – Early stage inflation drives corporate profit to higher levels

Source: Equirus, Spark Research

 GOVT INITIATIVES

Rising Capex as Changing Mix of Budget Allocation Govt Reforms

a % of GDP Govt Capex to Main schemes
 Govt Initiatives – Reforms to focus on Manufacturing

Source: Omkara Research Source: Equirus Research

 Govt Initiatives – PLI Incentives

PLI Incentives Should Drive Annual Incremental Gross Value of Rs 7L crs

Impact of Govt Policies on Electronic Manufacturing has set the bar for
the implantation of PLI Incentives

Source: Omkara Research

Electronics Manufacturing is a roaring success of Govt Policy Implementation
MSIPS Applications shot up by Govt This Boosted Electronic Manufacturing backed by 25% Capex Subsidy
Electronics Production In India (Rs Bn)
MSIPS Approved Applications and Investments
5335
800
GR
% CA
4974
17
730
4580
3883
514
3173

314 2433
260 286 1903
168 199
197
72 154
68 94
11 33
8
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
FY15 FY16 FY17 FY18 FY19 FY20 FY21
Proposed Investment (Rs Bn) Number of Applications
Source: MeitY Source: MeitY
Kenil

Subsequently Boosting Electronic Exports With the most impact on mobile manufacturing

Indian Electronic Exports (Rs Bn) Mobile Phones Manufacturing in India (Rs Bn)
829 2140 2200

AG R
17%
C
619 8x 1700

1320

390 400 412

382
900

540

267
189

FY15 FY16 FY17 FY18 FY19 FY20

FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Rising Defense Exports Via Increasing Govt Policies

Increasing FDI Limit, High Export Promotion, Corporatization of OFB’s will help
Defense Capital expenditure as % of the Total Defense Budget is rising in reaching the export target of $5 Bn by FY24.

Source: Budget Source: IBEF

Defense Capital Expenditure India Defense Exports ($ Bn)
20 30%
18 1828%
18 1.53
25%

6x
16 25%
13 1.29
14 19% 19% 20%
19%
12 11 18%
11 11 17%
10 10 15% 0.97
8
10% 0.72
6
4 5%
2 0.28
0.26 0.22
0 0%
FY16 FY17 FY18 FY19 FY20 FY21 FY22RE

Capital expenditure ($ Bn) Capital expenditure as % of total Budget FY15 FY16 FY17 FY18 FY19 FY20 FY21

Support for increasing Indigenization from the govt will positively benefit domestic defense Industry
 Changing Private Sector Dynamics

Announcement of Rs Changing Mix of Govt supporting new Private

8L crs Capex Private Capex manufacturing

Revival of Core 8 IIP shot Commentary from Cap Where are we in the cycle?
order book of Cap Goods Good companies
Notable Sectoral Capex Announcements of ~Rs 8L Crs between FY22E – FY24E

Source: Omkara Research

 Rising New Company Registrations, EC Grants, Govt Capex

Rising New company registrations and EC Grants should be followed by Capex in the coming years

Environment Clearance
4250

3250

1620 1753

1120 1100
555

CY15 CY16 CY17 CY18 CY19 CY20 CY21

Kenil

Centre Capex State Capex

1284
766
1113 1118 709
1076 668 673
951
860 566

713
379 365

4MFY16 4MFY17 4MFY18 4MFY19 4MFY20 4MFY21 4MFY22 4MFY16 4MFY17 4MFY18 4MFY19 4MFY20 4MFY21 4MFY22

Source: Spark Research

 Revival in Core 8 Industries Shot up Order Book For Capital Good Companies

Notable Revival in Core 8 Industries from Pre- 20% jump in order book from pre-covid 4.4% jump in order book from pre-covid
Covid Levels levels to post covid levels to post covid

Source: Economic Survey, Omkara Research

Bullish Commentary from Capital Good Companies

Global Companies Domestic Companies

Source: Spark Research Source: Omkara Research

Q1FY23 Have never heard/ seen this kind of
language/ commentary from

Industrial manufacturing/ industrial guys since ages.

ABB/ Siemens/ Cummins/ SKF/ ZF/
Craftman/ Rolex/ Bosch/ Alicon – all super
Concall duper. Continuous growth momentum in
sales + all time high order book + huge
operating leverage with increase in RoCE &
increase in margins due to lower commodity
prices ahead. As I said – rare to see hear
industry all gung ho in single tone
 •Management highlighted that with China being
impacted with Covid and war situation in Europe,

Timken companies are looking to diversify supply chain

which could provide growth opportunity to India, as
it remains one of the lowest cost manufacturers in
Concall Timken global supply chain.
 • FY23 expect Topline & Absolute EBITDA to grow
by 20% each

Craftman • For next 3-4 yrs, 20% CAGR on Topline will

continue

Automation • Blended Margins witnessed in Q1FY23 are largely

sustainable, with potential for further improve as
operating leverage kicks in
Concall • “Guidance is conservative and we are confident of
doing much much better”
 • The management expect robust demand, going forward, on the
back of positive sentiments from CV OEMs
• As part of its Refresh India strategy plan, EUR38-billion ZF
Group plans to double its component sourcing from India to
EUR2 billion as part of its China-plus strategy to ensure reliable

ZF CV supplies. Out of this, EUR 1 billion (Rs. 8000 cr) pertains to CV

Business i.e. directly related to ZF Commercial Vehicle Control
Systems

Concall • Sustained execution of ~30% YoY revenue growth should also

aid operating leverage and help EBITDA margin to recover to
~15% levels in next 2-3 quarters
• Capex for FY23, FY24 would be ~Rs. 120 crore, Rs. 170-180
crore, respectively
• No longer “just a braking system co” but a complete solutions
provider with advance technologies for electric vehicles
Bosch • Will surpass FY2018-2019 peak
• Alert: Co used to 12k cr sales with 18% margin in FY18-19 peak

Concall (1Q Sales at 3544 cr & Ebidta margin at 12.67%)

 • Guidance Raised from 18%-20% to 25%-28% for
FY23
• Current 25-28% growth guidance is conservative,
Alicon given uncertain global situation. Highly likely that
will revise guidance further upwards in Q2 Concall
Concall • EBITDA Margin Target is 14-15% over a medium
term, in a normalised scenario. FY23 margins will
be 12%+ min
• Co is targeting 20% Topline CAGR over next 4 years
SKF
India Freight Wagons total Capacity - 3 lac, Wagons
to be ordered in next 3 years 90000 by Railways, So
India is going to add 10% of total wagons capacity for
Concall next 3 years. This opens a lot of opportunity size for
Railways bearings mfg (Class E and Class K Bearings)
Bearing Industry Growth Trend
Emerging export opportunities
Inferences From
The Last Cycle
 How did the last cycle look like?

Source: VQ Research
 How did the last cycle look like for Capital Goods?

Revenue (Rs Cr) PAT (Rs Cr)

250,000
18,022
158,970
200,000
158,320 13,077
150,000
9,048 9,644
3.5x 91,367
5.8x
100,000

50,000
26,239 1,556

0
02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

Kenil
EBITDA (Rs Cr) OCF (Rs Cr)
30,000 28,372 25,000

25,000 19,836
20,000

20,000 19,260
15,000
15,000
4.5x 11,831 12,573
10,000
2.3x
10,000 6,802
5,283
5,000
5,000 2,654 2,908

0 0
02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

Source: Omkara Research (Exc- Suzlon)

 FY12-21 - GB goes 2x, asset turns dropped, more cash on BS, decadal low ROCE

Asset Turnover Gross Block – INDAS Adj (Rs Cr)

4.00 3.61 100,000
3.30 91,281
3.50 90,000

2.52 80,000
3.00
70,000
2.50 60,000
2.00 50,000 47,946
2.06 2.19
1.50 40,000
1.74 26,690
30,000
1.00
20,000 12,709
0.50
10,000
0.00 0
02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

Kenil

0.60
Total Debt/Equity(x) ROCE (%)
40.00
0.50 0.51 0.50 35.40
35.00
0.40 30.00
0.34 23.80
0.32 25.00
0.30 0.30 19.21
20.00
0.20 0.22
0.20 15.00
18.25
17.13 13.98
0.10 10.00

5.00
0.00
02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 M 0.00
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

Source: Omkara Research (Exc- Suzlon)

 TTM Valuations

P/E P/B
50.0 9.0
45.0 8.3
8.0
44.6
40.0 7.0
34.7
35.0
6.0
30.0 5.2
25.7 5.0 5.0
25.0 26.4
4.0
20.0 19.6
3.0
15.0 2.5
10.0 2.0
12.1 2.0
7.5 1.8
5.0 1.0
1.0
0.0 0.0
02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 M
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT
Kenil
EV/EBITDA EV/Sales
40.0 3.5
35.0 3.0 3.0 3.0
30.0
2.5
25.0 27.5
2.0
20.0 17.8
1.5
15.0 1.3
1.0
10.0 12.3 0.8
9.4 0.5 0.5
5.0 4.5
0.0 0.0
02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 M 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 M
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT

Source: Omkara Research (Exc- Suzlon)

 Cap Goods remains an under-owned sector

DII Holding (%) FII Holding (%)

18% 14%
17%
16% 12%
12%
14%
10%
12% 12%
9%
10% 10% 8%
9%
8% 6% 6%
6%
4%
4%
2%
2%
0% 0%
02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

Cap Goods Mcap as % of Total NSE Mcap

7.0% 6.7%

6.0%

5.0%

4.0%

3.0%
2.3%
2.0% 2.3%
1.6%
1.0%

0.0%

Cap Goods as % of Total Mcap

Source: Omkara Research
 Case Studies of Past Cycle - Siemens

Sales EBITDA PAT

1800
16,000 1200
14,264 1600 1516 1046
14,000 12,920
1400 1324 1000
12,000 7.20x 868
1200 4.96x 800 5.23x
10,000 9,417
1000
834 624
8,000 800 600 540
640
586
6,000 600
400 343
4,000 400

2,000
1,793 200 168 200 166

0
0 0
03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 M
03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 M 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT 03 05 07 09 11 13 15 17 19 21
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT 20 20 20 20 20 20 20 20 20 20

MCAP P/E ROCE(%)

100000 120 70
90000 87513 64
100 60
80000 75741
84
70000 50
60000
80 7.80x 70 69 44 46
40
50000 60
40000 16.63x 38
30
40
30000 24135 20
20000 16
13424 20
9 10
10000 7
1496
0 0 0
03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 M 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 M 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 M
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT
Case Studies of Past Cycle – SKF India

Sales (Rs Cr) EBITDA (Rs Cr) PAT (Rs Cr)

4000 600 450
545 391
3474 400
3500
500
350
3000
2671
420 298
400 300
2500 2228
2000 4.77x 300
4.33x 250
5.90x
1620 258 200 190
1500 198
200 150 128
1000 100
467 100 60
500 50 32
0 0 0
03 04 05 06 07 08 09 10 11 12 13 14 16 17 18 19 20 21 M 03 04 05 06 07 08 09 10 11 12 13 14 16 17 18 19 20 21 M 03 04 05 06 07 08 09 10 11 12 13 14 16 17 18 19 20 21 M
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT

MCAP (Rs Cr) P/E ROCE(%)

20,000 50
60
18,000 17,223 45 44

16,000 40 37 50 51
14,000 35
12,000 11,121 30 40

10,000 25 3.23x 30
8,000 18.97x 20
19
26 25
6,000 15 12 20 21
3,645
4,000 10
6
2,000 1,571 5 10
192
0 0
0
03 04 05 06 07 08 09 10 11 12 13 14 16 17 18 19 20 21 M 03 04 05 06 07 08 09 10 11 12 13 14 16 17 18 19 20 21 M
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT 03 04 05 06 07 08 09 10 11 12 13 14 16 17 18 19 20 21 M
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT
Case Studies of Past Cycle - Thermax

Sales (Rs Cr) EBITDA (Rs Cr) PAT (Rs Cr)

7000 700
450
6091 602
6000 5711 600 392
400

4791 350
5000
8.72x 500 317
9.95x 373
426 300 6.70x 291
4000 400 355
3433 250
207
3000 300 200

2000 200 150

100
1000 698 100 60 59
50
0 0
0
03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 M 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 M
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT 03 05 07 09 11 13 15 17 19 21
20 20 20 20 20 20 20 20 20 20

MCAP (Rs Cr) P/E ROCE(%)

25,000 90
22,523 80
80 78
20,000 71 70
70 68
16,038 60
15,000
60
9.33x 50
16.83x 50
40
40 36 37
10,000
7,160 30 25 30 29
5,533
20 20 22
5,000 14
9
10 6 10 11
329
0 0 0
03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 M 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 M 03 05 07 09 11 13 15 17 19 21
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT 20 20 20 20 20 20 20 20 20 20
Case Studies of Past Cycle – ABB India

Sales (Rs Cr) EBITDA (Rs Cr) PAT (Rs Cr)

12000 1000 600
547
900
789
10000 800 500
4.41x
700 2.51x 429
8000 5.10x 6837
7565
6934 600 544
400

500 300
6000
400 355
4000 300 200
124 141
200 142
2000 1468 100
100
0
0 0
03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

MCAP (Rs Cr) P/E ROCE(%)

50,000 47,300 160 50
47
45,000 140 45
40,000 40 39
120 110
35,000 105 35
30,000 100 4.58x 30
25,000 5.59x 80 25
65 21
20,000 60 20
14,841 16
15,000 15
9,609 40
10,000 23 10 10
18
5,0002,855 20 5
0 0 0
03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Case Studies of Past Cycle – AIA Engineering

Sales (Rs Cr) EBITDA (Rs Cr) PAT (Rs Cr)

3500 3333 800 700

3000 2881 700 659 664 600 566

600
2500 500
500
2000 400
400
1500 8.54x 1417
10.04x 300
300 249
277
10.30x 181
1000 200
691 200 134
500 100 100
166 28 18
0 0 0
03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 M 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 M 03 05 07 09 11 13 15 17 19 21
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT 20 20 20 20 20 20 20 20 20 20

MCAP (Rs Cr) P/E ROCE(%)

25,000
40 40

20,000 19,316 35 3.40x 34 35

30 32
16,830 30 30
27
15,000 25 25
35.07x
35.07x 20 19 20
22
10,000 18
15 15

5,000 3,438 10 7 10
6
1,006 5 5
196
0
0 0
03 05 07 09 11 13 15 17 19 21
20 20 20 20 20 20 20 20 20 20 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 M 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 M
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TT
 Capex Cycle – it fuels growth in a multitude of sectors and drives employment

Source: Spark Research

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www.omkaracapital.in
grow@omkaracapital.in

+91-83693-59393
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YOU
Omkara Team