⚡️Micro Cap Multibagger? Fundamental Analysis - Advait Infratech

Bro Vestor

30 Aug 202408:19

Summary

TLDRThe video script discusses Allright Investors' recent entry of Ashish Kacholia into the company, exploring its business segments: Transmission Towers and Green Energy. It highlights the company's journey since 2009, focusing on products like Optical Ground Wire for power transmission lines, Glass Disk Insulators, and Stringing Tools. The script also covers the company's initiatives in green energy, including a 250 MW hydrogen electrolyzer plant and solar EPC projects. The presenter provides a financial analysis, considering the company's growth drivers, challenges, and future prospects, concluding with a wait-and-see approach due to current market consolidation.

Takeaways

💼 Ashish Kacholia has recently invested in Advait Infratech, sparking interest in the company's business potential.
⚡ Advait Infratech's business is divided into two segments: Transmission Towers and Green Energy.
🛠️ The company specializes in live-line installation for transmission towers, which involves installing optical fibers on live power transmission lines, a highly risky task.
🌐 Advait Infratech is a leading producer of optical ground wires (OPGW), used in power transmission, real-time power monitoring, and lightning protection.
🔌 The company is also involved in the installation of glass disc insulators and partners with the Global Insulator Group to supply these to over 20 countries.
🔋 Advait Infratech has ventured into the Green Energy segment, with a focus on hydrogen production and solar EPC projects.
📈 Despite being in an uptrend, the company's stock is in a consolidation phase, with support levels at 1752 and 1140, and resistance at 2225.
💸 The company has a market cap of around ₹2000 crores, with strong ROE and ROCE figures, but its P/E ratio of 80 suggests overvaluation.
📊 Advait Infratech's sales and profits are increasing, but the company faces challenges like high receivables and rising debt.
🚦 Investors are advised to be cautious due to potential competition in the market and the opaque nature of the company's management.

Q & A

What is the main focus of the company Advait Infratech?
-Advait Infratech primarily focuses on two business segments: transmission towers and green energy solutions.
What is 'Live Line Installation' mentioned in the script?
-'Live Line Installation' is a method used by Advait Infratech to install optical fibers on existing power transmission lines while the wires are live and carrying current, making it a risky operation.
What are Optical Ground Wires (OPGW), and how are they used?
-Optical Ground Wires (OPGW) are used in power transmission for real-time monitoring, communication, and protection against lightning. These wires contain fibers that help in detecting faults and dispersing lightning.
What is the significance of the partnership between Advait Infratech and the Dalian Insulator Group?
-Advait Infratech is the marketing partner for Dalian Insulator Group, a company with over 100 years of experience in manufacturing porcelain and composite insulators. This partnership allows Advait to install these insulators globally, leveraging Dalian's research and manufacturing capabilities.
How does Advait Infratech contribute to green energy initiatives?
-Advait Infratech contributes to green energy by developing a 250 MW hydrogen electrolyzer plant in Gujarat for green hydrogen production and undertaking solar EPC projects in collaboration with KPI Green.
What is Advait Infratech's role in EPC projects, and how do they impact the power grid?
-Advait Infratech undertakes EPC (Engineering, Procurement, and Construction) projects, focusing on replacing conductors in transmission lines to increase the power transmission capacity of the grid.
What is the Emergency Restoration System (ERS) developed by Advait Infratech?
-The Emergency Restoration System (ERS) is a cost-effective technology developed by Advait Infratech in partnership with CSIR Chennai. It provides a temporary bypass for current transmission when a transmission tower fails, ensuring uninterrupted power supply until the original tower is restored.
What challenges does Advait Infratech face in its business operations?
-Advait Infratech faces challenges such as reliance on government-linked projects, potential delays in payments, competition in several product segments, and the risk of technological disruption in green energy initiatives.
What are the key financial indicators of Advait Infratech's performance?
-Advait Infratech has a market cap of around 2000 crores, with a Return on Equity (ROE) and Return on Assets (ROA) both at 37%. The company's P/E ratio is around 80, and its sales and net profit have been increasing, though it has faced operational losses due to increased receivables.
Why does the speaker recommend caution before investing in Advait Infratech?
-The speaker advises caution because the company is currently in a consolidation phase, with a potential for time or price correction. The stock appears overvalued based on their analysis, and there are risks associated with government projects and competition.

Outlines

00:00

💼 Investment in Advait Infratech: Business Overview and Risks

This section introduces the company Advait Infratech, highlighting the recent investment by Ashish Kacholia. It details the company's business model, dividing it into two segments: transmission towers and green energy. The transmission tower segment is explained in depth, including the installation of live-line optical ground wires (OPGW) and glass disc insulators. Advait Infratech's partnerships with global insulator groups and their role in installing these insulators in 20 countries are mentioned. The company also produces optical fiber cables, EPC projects, and stringing tools, all crucial for power transmission and distribution. The section concludes with an overview of the company's emergency restoration systems technology and other products like joint boxes and earthing solutions for towers.

05:02

📊 Growth Drivers and Challenges for Advait Infratech

This section discusses the potential growth drivers for Advait Infratech, such as government push towards green energy and infrastructure development, as well as India's electrification and 'Make in India' initiative. It also addresses the challenges the company might face, including its dependency on government projects, competition in the market, and the possibility of disruptive technologies impacting their green energy segment. Additionally, the opacity of the management and the lack of direct communication channels with them are noted as concerns for investors. The technical analysis part indicates that the company is currently in a consolidation phase, with specific support and resistance levels identified. The valuation analysis suggests the company might be overvalued, with a recommendation to wait for a potential price correction before considering an entry.

Mindmap

Keywords

💡Transmission Segment

The 'Transmission Segment' refers to the part of the business that deals with power transmission lines. In the video, it is mentioned as one of the two main segments of the company's operations. The script discusses how the company installs optical fibers on existing power transmission lines, which is a method to enhance the transmission capabilities without disrupting the current power flow. This segment is crucial for the company's growth in the power infrastructure sector.

💡Green Energy

Green Energy is a term used in the script to describe the company's initiatives towards renewable and sustainable energy solutions. The company's portfolio includes projects like solar power and hydrogen electrolyzer plants, which are part of their commitment to environmental sustainability. The script highlights the company's partnership with government and other organizations to develop infrastructure for green energy, reflecting a significant trend towards ecologically friendly practices in the energy sector.

💡Optical Ground Wire (OPGW)

Optical Ground Wire, or OPGW, is a type of fiber optic cable used in power transmission lines. The script mentions that during the installation process, these wires are used on top of the current power transmission lines. OPGW serves multiple purposes, including real-time power monitoring for fault detection and communication purposes. The use of OPGW is a key aspect of the company's transmission segment, showcasing its role in modernizing power infrastructure.

💡Glass Disk Insulator

The 'Glass Disk Insulator' is a protective device mentioned in the script, used in power transmission towers. The company has partnered with Advanced Infratech Global Insulator Group as an official marketing partner for these insulators. The script notes that these insulators have been installed in 20 countries, indicating their widespread use and the company's international reach in providing solutions for power transmission infrastructure.

💡Stringing Tools

Stringing Tools are essential for the installation of power transmission and distribution lines. The script describes how the company manufactures these tools, which aid in the efficient and safe installation of transmission lines. The mention of stringing tools in the script underscores the company's comprehensive approach to providing end-to-end solutions for power transmission projects.

💡Hydrogen Electrolyzer

A 'Hydrogen Electrolyzer' is a device that produces hydrogen through the process of electrolysis. The script mentions that the company has a 250-megawatt hydrogen electrolyzer plant, which plays a significant role in the green energy segment of the business. This technology is part of the company's efforts to contribute to the hydrogen economy, a key area of focus in the renewable energy sector.

💡Solar IPC Projects

Solar IPC (Independent Power Producer) Projects are initiatives where the company is involved in the development of solar power projects. The script highlights the company's engagement in such projects, including a signed MOU for a 500-megawatt capacity power project. These projects are part of the company's commitment to green energy and reflect the growing demand for renewable energy solutions.

💡Emergency Restoration Systems

Emergency Restoration Systems, as mentioned in the script, are technologies developed by the company to quickly restore power in the event of transmission tower failures. The script discusses how these systems bypass temperature and continue to transmit current until the original tower is restored, minimizing losses for consumers and producers. This showcases the company's innovation in crisis management within the power transmission industry.

💡Joint Boxes

Joint Boxes are protective devices for overhead optical fibers, as described in the script. The company manufactures these boxes, which are not the typical joint boxes but are designed to protect the optical fibers from environmental factors. The mention of joint boxes in the script illustrates the company's focus on creating robust solutions to safeguard the integrity of the power transmission network.

💡Towering Solutions

Towering Solutions, as used in the script, refers to the company's offerings related to the construction and maintenance of transmission towers. The script mentions partnerships with manufacturers like IVL Not Make the Effort to Pronounce and Bucher, indicating the company's collaborative approach to providing comprehensive solutions in the power transmission sector.

💡Government Push

The 'Government Push' is a term used in the script to describe the support and initiatives from the government that drive the growth of the company's green energy segment. The script suggests that government policies and infrastructure development are significant growth drivers for the company, as they create demand for green energy and transmission infrastructure projects.

Highlights

Ashish Kacholia recently invested in Advait Infratech, suggesting potential growth or value in the company.

Advait Infratech was established in 2009 and has two main business segments: transmission towers and green energy.

In the transmission tower segment, Advait Infratech specializes in live line installation, a risky process of installing optical fibers on power transmission lines while current is still flowing.

The company produces Optical Ground Wires (OPGW), which are used in power transmission, real-time power monitoring, and communication, and they also help protect against lightning.

Advait Infratech is the official marketing partner of the Global Insulator Group and has installed glass disc insulators in over 20 countries.

They are also marketing partners for Dalian Insulator Group, the only company in China with both manufacturing and R&D capabilities for porcelain and composite insulators.

Advait Infratech is a leading producer of optical fiber cables, which are crucial for modern communication and internet infrastructure.

The company also undertakes EPC (Engineering, Procurement, and Construction) projects, particularly in upgrading power transmission line conductors to increase grid capacity.

Advait Infratech has developed a cost-effective Emergency Restoration System in partnership with CSIR Chennai to prevent power loss during transmission tower failures.

The company's green energy segment includes a 250 MW hydrogen electrolyzer plant in Gujarat for producing green hydrogen through electrolysis.

Advait Infratech is involved in solar EPC projects and has signed an MOU with KPI Green for a 500 MW power project.

The company manufactures fuel cell systems and has the capability to build hydrogen refueling stations, positioning itself in the hydrogen energy sector.

Advait Infratech's growth drivers include the global push towards green energy, infrastructure development, and the 'Make in India' initiative.

Challenges for the company include dependency on government projects and payments, competitive market conditions, and the potential for disruptive technologies.

The company's financial performance shows increasing sales and net profit, but also highlights challenges such as pending payments and increased borrowings.