Keval Shah

Price increases since start of the Iran war Sulfur: +97% WTI Crude Oil: +60% Jet Fuel: +58% Heating Oil: +55% European Natural Gas: +54% Gasoline: +52% Diesel: +52% Brent Crude Oil: +50% Cotton: +28% Urea: +24% Rice: +23% Fertilizer: +20% Palm Oil: +12% Iron Ore: +12% Coal: +11%

This can be a concern for many #FMCG companies! Palm oil price rising.

Positive read through for Steelcast!

This is from India's negligible presence in MRO currently. Interestingly, this is just icing on the cake! Real cake is exports of aero-parts and eventually assembly of aircrafts in India!

It is just the beginning of the era of Indian defence exports!

youtu.be/mv6-plKDGSE?si… Markets have recovered as if 2nd order impacts will be minimal & only for 1-2 qtr max. Need to be careful. If Strait of Hormuz doesn't open in 2-3 weeks, it can be very -ve for India! Not a good time to get carried away currently!

At this rate, single HALE drone might be priced at 200-300 cr vs Dynamatic's current Aerospace segment revenue of 700-800 cr. The opportunity size is huge in drones as Dynamatic transforms into an OEM! Only 3 peers globally! #DynamaticTech

South Korea is the Most Cunning Partner India have :) FDI Comparison if we do - Korea total investment in Vietnam is 13-14 times higher than in India. Vietnam economy is only 1/10th India's size. Samsung alone exports $54 billion a year from Vietnam. India has huge market but gets less factories and jobs. Vietnam got the real manufacturing boom. Even Recently Samsung going to build new factory there in Vietnam, in case of china we know the problem but in case of South Korea they do business under Radar, even this is bigger than i Imagine How South Korea Used free trade deal with India is just a Case study - when yu read it in detail yu will get it. Korea got a free trade deal (CEPA) in 2010. Under that deal, Korean goods entered India at zero or low duties. Samsung, Hyundai, LG used this to sell massively into India - phones, cars, appliances. India's imports from Korea went from $10B to $21B. India's exports to Korea actually fell - from $8B (FY22) to $5.8B (FY25). The trade deficit tripled from $5B to $15.2B. But selling wasn't the only play. The real play was value extraction: Hyundai - Paid itself a ₹10,782 crore special dividend (7.2x its normal payout), then did India largest IPO - 100% offer-for-sale. Every rupee of the $3.3B IPO went to the Korean parent. Then raised royalty rates from 2.5% to 3.5% per car. Three moves, one after another, all designed to drain cash from the Indian subsidiary to Seoul. LG - Same template. 100% offer-for-sale IPO, $1.4B to the Korean parent. The Indian subsidiary now trades at $12.5B market cap - higher than the Korean parent itself. LG used Indian investors money to value an Indian business that it still controls and still pulls dividends from. Samsung - Royalties paid to Korea jumped 50% to ₹3,322 crore in one year. After Korea changed its tax law in 2023 (no tax on foreign dividends coming home), Samsung pulled ₹22B worth of dividends from all overseas units in 9 months. India was one of the biggest sources. Combined - Hyundai + LG alone pulled $4.7B out of India in 12 months. All legal under CEPA. Best way to fuck RBI stricter Foreign Outflow What Korea did in Vietnam (same period) Korea put $92B of FDI into Vietnam. India got $6.7B. India economy is 10x Vietnam size. Samsung alone runs 6 plants in Vietnam, employs 100,000 people, exports $54B/year from there - that's 13% of Vietnam's entire exports. Vietnam got factories + jobs + exports. India got imports + deficit + cash extraction. Why Delhi stayed quiet for 15 years Diplomatic politeness. Also, during 2010–2020, India negotiating leverage was weaker. India needed Korean investment, Korean tech, Korean defence platforms. So the imbalance was a known problem that time but that time of dealmaker didn't think of long term MEA Secretary Kumaran publicly named the $15.2B deficit before President Lee landed. Commerce Minister Goyal called the 2010 CEPA irrational and lopsided. This was intentional signaling. What India wants in CEPA 2.0 - Four things: Services access - Indian IT exports to Korea are only $200M (vs $200B globally). India wants visa quotas for Indian engineers in Korean semiconductor/AI projects, and recognition of Indian professional qualifications. Pharma access - Indian generic drug exports to Korea are just $167M. Korea has rules that kill generic price advantage. India wants those removed. Forced local content - Like what Vietnam and Indonesia did. India wants 50% local value-addition by year 5, 70% by year 10. If you want to sell in India, build in India. Reciprocal sourcing - For every $1B defence/steel/shipbuilding contract India gives Korea, Korea must buy equivalent value of Indian services, pharma, components. Must read this Article: swarajyamag.com/economy/the-im…

@UTobyM Sir, what can be approx range of selling price of these MALE & HALE drones as per ballpark industry standards?

This is what we'll co-develop with Aerodata: 5 Tonne MALE & HALE UAVs that'll fly 30,000+ & 50,000+ feet above MSL respectively, for 40 hours at a stretch, bristling with cutting-edge software, sensors and hardware✨️ A fabulous day with Sujee, Jay and our Aerodata colleagues!

Today, Aerodata AG and Dynauton (Dynamatic) established a framework for a strategic collaboration to develop new unmanned, airborne surveillance and reconnaissance MALE & HALE solutions for specialised ISR missions in the Himalayas and Indian Ocean Region. 🇮🇳🇩🇪 #IndiaGermany

Very apt! Don't get carried away!

Some 2nd order impacts of Iran conflict which markets might not be pricing in yet - x.com/i/status/20402… x.com/i/status/20402… x.com/i/status/20397… x.com/i/status/20388… x.com/i/status/20327… x.com/i/status/20402… Will get more clarity with Q4FY26 concalls!

Strong Order Pipeline Boosts Outlook for Indian Shipbuilders The Indian Navy’s share in defence spending is around 21% and there is a large pipeline of orders. Key beneficiaries: Mazagon Dock Shipbuilders Ltd, Garden Reach Shipbuilders & Engineers Ltd, Cochin Shipyard Ltd GRSE FY26 revenue ~₹6,400 crore; strong pipeline including corvettes and export vessels Large defence pipeline: submarines, frigates, destroyers, and landing docks (~₹3 trillion opportunity) Potential big-ticket order: second Indigenous Aircraft Carrier (~₹45,000 crore) CSL order book boosted to ~₹23,000 crore with LNG ship order from CMA CGM Additional opportunities: VLGC ships, survey vessels, offshore platforms, green ships Revenue growth expected to accelerate in FY27–FY28 with execution of large defence orders Companies investing heavily in capex, R&D, and global partnerships Risks: client concentration (Indian Navy), long procurement cycles, and global supply chain dependencies

Product mix of NBFCs in Nomura's coverage. Nice view! Bajaj Finance Shriram Finance Tata Capital Piramal Capital & Housing Finance Cholamandalam Investment and Finance Company HDB Financial Services L&T Finance Mahindra & Mahindra Financial Services

#DREDGINGCORP - one of the beneficiaries discussed in @suru27 deep dive in shipping industry webinar. Not too much investor communication so this helps provide insights. Aims to double revenue. Growth in profits would be even higher.

On-ground checks amid ongoing global tensions — what we are seeing so far: Over the past few days, our team connected with multiple companies across sectors to understand how the current situation is unfolding at the ground level. A few key observations: 1. Demand remains resilient across sector till now Encouragingly, there is no visible demand destruction so far. Most of sectors in-fact said demand has been quite decent till now. For eg: most auto ancillary companies indicated that OEM schedules for even April–May remain healthy. However, given recent price increases across sector, some moderation in demand over the coming months cannot be ruled out. 2.Margins holding up (for now) Margins remain stable as companies are still consuming lower-cost inventory.Price hikes have been meaningful across sectors, and most corporates are proactively securing raw material supplies to ensure business continuity. However if situation persist then margin headwind could be see in 1Q and part could be negated by higher top-line growth. 3. Shift towards shorter-term contracts: There is a clear preference for shorter-duration contracts—fortnightly or monthly—on both raw materials and finished goods. With uncertainty around commodity prices, companies are avoiding long-term commitments at elevated levels. 4. Unorganised sector under pressure, market share shift to leaders across sectors Smaller players are facing challenges due to working capital constraints and raw material volatility. This is leading to a gradual shift in market share towards stronger, well-capitalised leaders. 5. Labour availability becoming a constraint for MSMEs: Several companies highlighted emerging labour challenges. In certain pockets, workers are returning to their villages due to issues like LPG availability, upcoming elections, and lingering fears of a Covid-like disruption. This is beginning to impact operations across small scale industries. 6. Logistics disruptions increasing lead times: Logistics is becoming a bottleneck, with fuel availability at highways turning inconsistent. Delivery timelines, which were earlier around 4 days, are now stretching to 7–8 days in many cases. Freight rates from China to India has gone by 2x. 7. Chemicals sector seeing tailwinds: The chemical sector continues to witness strong demand. Supply pressures from China have eased due to logistics disruptions and currency movements, supporting better spreads. However, raw material availability remains a constraint. 8. Petrochemical chain seeing availability constraints: The broader petrochemical value chain is witnessing both availability constraints and pricing volatility, creating uncertainty across multiple downstream industries. 9. Innovation and adaptability on display Encouragingly, companies are responding with agility. For instance, some AC/EMS players that were dependent on gas cylinders for welding and paint shops are now shifting to alternative processes like oxy-acetylene, helping mitigate supply disruptions and maintain continuity. 10. Preparing for structurally higher energy costs Many corporates believe that even if the war subsides, oil prices may remain elevated. Countries are likely to build strategic reserves after this energy shock, keeping demand firm. As a result, the entire oil value chain could see sustained inflation—creating top-line tailwinds for several sectors, even as cost pressures persist. 11.Inflation: not all bad for earnings A moderate level of inflation is often supportive for corporate earnings and nominal GDP growth, as it drives higher realisations and revenue growth. While there could be some pressure on margins and currency in the near term, the overall setup remains constructive. Periods like these often accelerate market share gains for stronger players, while also setting the stage for nominal growth tailwinds in an inflationary environment.

A very good article on possible second order effects of Iran conflict. What happens when lower cost inventories run down in few weeks? moneylife.in/article/gulf-w…

10 annual report red flags (save this): 1. Auditor changed 2x in 24 months Action: Read resignation letter, check for qualifications 2. CFO exit + New auditor within 6 months Pattern: Preceded DHFL, Manpasand, Coffee Day frauds 3. "Subject to" or "Except for" in audit opinion Meaning: Qualified opinion = Auditor disagrees with management 4. Related Party Transactions >25% of revenue Check: Is it growing faster than revenue? 5. Contingent Liabilities >70% of Net Worth Risk: If disputes crystallize, equity at risk 6. Goodwill >30% of Total Assets Danger: Serial M&A may lead to impairment 7. Other Income >30% of PAT (recurring) Quality: Profit from operations vs accounting entries 8. Receivables Days increasing 3+ years Signal: Revenue growth but cash stuck with customers 9. "Emphasis of Matter" in auditor report Read: Auditor highlighting specific concern 10. Multiple Key Managerial Personnel changes in 12 months Pattern: CFO, CEO, Compliance Officer all leaving = investigate Check your holdings' latest annual reports this weekend. Research desk → katalystwealth.com

The Aerospace Ancillaries - Short Stories in one post 1. Dynamatic Technologies Started delivering complete ship-set of all eight doors for the Airbus A220. If my understanding is right, likes of Sansera and Aequs are working with Dynamatic on this. Of course, Dynamatic has also started other Airbus programs (not doors) for "A320/A330". If and when Airbus awards doors program for A320/A330 series, Dynamatic could enter into different league! But I have no idea if it would come anytime soon. But, of course, several other programs for OEMs like Bell, Boeing, Dassault Aviation, Deutsche Aircraft, and Thales. Additionally, Dynamatic has also developed 4-5 versions of Drones which could turn out to be a good optionality. But of course, consolidated earnings growth would depend on how they deal with their other two verticals. They do have couple of programs (including 220 doors) that could generate > 400 cr each (9MFY26 aerospace revenue was 565 Cr), so, opportunity is big! Only question is can they execute well and capitalize!? Any correction towards 8000-8500 could be a decent entry point 2. Aequs Ltd They have two verticals. Aerospace vertical is doing very well but the Consumer vertical is their achilles heel. It is not only loss making but hurting the overall profitability of the company severely. The aerospace vertical perhaps is best in class with a vertically integrated setup (hardly 2 or 3 in the country with such capabilities). Their consumer vertical has two sub segments, Toys and Electronics. Toys division isn't doing much although they commenced deliveries to Mattel and that should help. But their Electronics sub-segment could be the wildcard here. They have started supplying to (supposedly) Apple and this one is expected to pick up momentum in next 2-4 quarters and thereby driving the overall profitability significantly upwards! Some analysts believe that Consumer Electronics could become bigger than Aerospace vertical and if that happens, you are looking at a big show! Rs 100-115 could be a decent entry point but one would need to wait for 3-5 quarters to see significant earnings jump. 3. Sansera Engineering Primarily still an auto ancillary but transformation towards better product mix has started. If all goes well, they are expected to post 1000 Cr in FY28 in ADS segment (Aerospace, Defence and Semiconductors). Considering that their H1FY26 ADS revenue was 86.4cr, you could see why market was excited to re-rate it already. But honestly, a good chunk of this optimism is now captured in this. Any correction towards 1700-1800 would be a good buy. Good management and better capabilities. 4. Azad Engineering Just like Dynamatic, shifting to Aerospace more and more. They manufacture one of the best and most complex products with huge moat. They have also undertaken huge capex and they probably have few execution challenges. If and when they commission the full capex, we might be looking at a giant! Valuations aren't cheap at all. This one takes good support around Rs 1400 5. Unimech They supply tools for MRO and that's a cyclical/lumpy business. Unless this business is available at very attractive price, this wouldn't be my top priority. There has also been a rumor that they lost a major client, but on that note, they are trying to expand into other verticals and geographies. 6. Rossell Techsys They produce Electronic Wiring components and that's a very critical component in aircrafts. However, most of their Aerospace work is limited to defence aircraft and they don't have much presence in commercial aerospace which is actually the sweet spot. But they have started supplying electrical wiring and harness to semiconductor and space companies and that could be a game changer if they can scale it up. But valuations are super rich. 7. Raymond Just like Sansera, primarily an auto ancillary company but they have some solid expertise in Aerospace vertical. They are setting up a large plant at Sri City in AP but first leg of that commercialization is about consolidating multiple manufacturing centers they have in Karnataka. Hence, you may not really see significant incremental capacities at least for next 6-8 quarters. But they are doing 100s of FAI (First Article Inspection) and depending on how many will be successful, might determine the future opportunities. 8. Sigma Advanced They are originally a defence firm and then acquired 45-47% in Indrajaal which is anti-drone specialist (deployed at western command center). They have recently acquired Nasmyth group (UK) and that group supplies to Tier-1 aerospace firms. So, in a way, Sigma now has a sizable aerospace vertical (annual revenues of 700+ Cr). How they can grow it further is the key. If someone has 3 years sort of view, this could turn out to be a giant player if they scale up all three verticals! However, the original firm Megasoft which acquired Sigma and adopted the name has had very bad history! Disc: This is not a comprehensive list and none of these are buy or sell recommendations.

Over the last 5 years, the Defence sector was a massive wealth creator for Indian investors The Indian Shipping industry today looks similar to how Defence did five years ago. India generates the cargo, but it just doesn't own the ships yet. A $70 Billion awakening is underway. 🚢🇮🇳👇