Vacuum Fillers: Presently I am studying some companies which have the strength or can achieve the scale to fill up the huge demand supply gap in the near future for some much needed products or services which have in them to make our production very competitive. Study is under progress but I am sharing the snapshots just in case somebody likes it and have it right at the moment. Incidentally these are related to indian logistic sector which is so far a drag to the economy as logistics cost in india are 14% of GDP as compared to 6-7% of developed world. Any Improvement in this can bring huge gains.
Dredging corporation of India: Dredging is making the depth of ports at a certain level so that Ships can navigate easily as they need depth from 10 m to 15 m. With the use, sediments accumulate deep down the port Bed which are then removed with the help of Dredgers. Some of the big ships need around 20 m to 24 m. as usual we Indians are way behind in this also with depth of around 12 m to 14 m in most of the ports here which render us unable to reap the benefits of economies of scale by transporting the cargo by bigger ships. A much larger ship like one with 14000 TEU (twenty feet equivalent units) capacity , the cost is almost 60% of a ship with capacity of 6000 TEU. It becomes a double edge sword when big ships unload their cargo at bigger ports like Dubai and Colombo; from where cargo is shipped to india via smaller ships.
No indian company is having a deep anchor in this sector with PSU Dredging corporation of india being the largest but with much of its dredging fleet being older dated back to 1970-80.
Another big opportunity is Inland waterways projects of Indian Government which will make it possible for us to fully reap the benefits of large rivers like Ganga. We can pollute our Mother Ganga with all possible garbage but can’t use it for the best. India has just 14500 KM of inland waterways even these are not used for transportation of goods which can be very cheap as compared to road and rail. And our Non-religious Neighbor China has waterways of 100000 km and it transports around 47% of its cargo via water, we are at 3-4%. Even EU is at 44%, Bangladesh at 35% !!
Number of inland vessels in india are just 1000, in china there are 200000 and 11000 of EU.
But now india is waking up and just recently they planned a waterway from Varanasi to Haldia of 1620 KM. Dredging is constantly required to keep these waterways navigable.
So we will see huge demand for dredging. DCI is the biggest indian Dredging service provider but garners just around 700 cr of turnover. But it has acquired 3-4 new vessels in last 2-3 years and plans are for better planning of its finance.
I am buying it regularly around 360-370. CMP is 370.
Snowman Logistics: We do not want to waste our life in tiny worldly matters. We see life as Maya but when we move in a Temple, all we seek is; Girl next door named Maya. We are a country of contrasts. We proudly regards agriculture as our identity but every year we waste fruits and vegetables equivalent to the UK’s yearly consumption!! No contrast here…UK do not consume smaller amounts of fruits and vegetables; it is we who waste big…around 40% of annual production. It is worth 50000 cr.
A quantity of wheat equivalent to one tonne per person for the entire population of Australia is wasted by India every year. India is the second largest producer of fruits and vegetables (about 200 million metric tonnes) but it has a very limited integrated cold-chain infrastructure, with only 5,400 stand-alone cold storage having a total capacity of 23.6 million metric tonnes. Most of this (around 80%) is for Potatoes and Onions. No wonder we only process just 5-6% of our agri produce against 80-90% of the western world. This is one of the main reason of wide swings in the prices of these; either we are long or most of the times short but never in balance for much of the time. Traders call the shots in indian agriculture produce.
So again here too, possible scale is huge but Snowman Logistics, the largest in indian cold chain scores just 250 cr as annual turnover. This is nothing and I hear some says it is overvalued!!! PE ratio of 30-40 is irrelevant at this time as it is investing big regularly in capacity expansions, the benefits of which will accrue in the near time.
Gateway distriparks ltd is the promoter of it, with negligible debt (70 cr) it is poised to show stellar performance in the future. Our eating habits are changing. Our new friends like Pizza, Burger king, KFC’s etc all rely on cold chain infrastructure to constantly provide us the same taste.
CMP is 82. Just Freeze it.
(Views are personal and should not be taken as a recommendation for buying or selling a stock. Stock markets are inherently risky so kindly do your Due Diligence before investing. I am not a certified Sebi Analyst and holding the shares discussed in this Post)