Prudent Ideas

RACL Geartech: Management Is the Moat

Established in 1983, RACL Geartech Limited (formerly Raunaq Automotive Components), Mcap 1300 Cr, has evolved from a domestic-focused aftermarket player into a global high-precision engineering powerhouse. The company specialises in manufacturing transmission gears, shafts, sub-assemblies, and chassis components.

The organisation’s journey is defined by three distinct phases: RACL 1.0, which focused on the domestic aftermarket; RACL 2.0, where it pivoted toward exports and global OEM relationships starting in 2004; and the current RACL 3.0, which marks its transition into a technology-driven systems supplier capable of “Concept to Print” engineering. Today, RACL serves premium niche segments in motorcycles, passenger cars, EVs, and heavy commercial vehicles across Europe, Asia, and North America.

DMCC: 100 Years old Sulphur Company

DMCC Speciality Chemicals Limited is a fully-integrated manufacturer of speciality chemicals with a heritage dating back to 1919, when it was India’s first producer of sulfuric acid and phosphate fertilisers. Presently, the company operates a balanced dual-business model centred on two core chemistries: Sulphur and Boron. Serving diverse industrial applications across 22 countries.

Accretion Pharmaceuticals: A Nanocap Pharma Company

Incorporated in 2012, Accretion Pharmaceuticals Limited (Mcap 89 Cr) is a pharmaceutical company that manufactures and sells tablets, capsules, and other healthcare products. There are three main income sources for the company:Contract Manufacturing, Domestic Sales – Not their own brand, but manufacture for their customers, Direct export sales

Yasho Industries: Asymmetric Returns possible?

Yasho Industries Ltd, Mcap 2000 Cr, established in 1985. The company, initially named Vasu Preservatives Private Limited, started production of specialty chemicals in 1993,and changed its name to Yasho Industries Private Limited in 1996. The company is in the business of manufacturing speciality and fine chemicals across different verticals.

Unihealth Hospitals: A Microcap Hospital

Unihealth Hospitals Ltd, established in 2010, is a healthcare delivery company with a presence across India and Africa. Headquartered in Mumbai, the Company operates under the brand UMC Hospitals and provides tertiary and secondary care services through hospitals, medical centres, and specialised facilities.

They adopted an Asset-light growth strategy under the Design–Build–Operate and leased-hospital model that allows for scalable capacity addition with lower upfront capital investment.

Diffusion Engineers: Extending the Durability

Established in 1982, Diffusion Engineers Limited (DEL), Mcap 1400 Cr, is a company that provides specialised engineering solutions primarily for heavy industries (cement, steel or mining).
Their core business revolves around “superconditioning”, which involves enhancing the durability and extending the lifespan of industrial equipment. This helps their customers keep their large machines and industrial plants running more efficiently and for longer periods, which is crucial for their profitability.

Thoughts on the Fallen Prudent Ideas

Hi, from our experience, in Microcap Investing, it is very normal for the stocks to go down by 50-60%. Having said that, in hindsight, we realised that some companies that we published were not at the right valuations, and to add the icing on the cake, we published them too at the peak of the bull run.

Currently, there are 10 stocks that are down by at least 30% since we published our study. Rather than publish a new idea this month, we wanted to share our thoughts and revisit some of the companies that we find interesting and can be a good bet at the current valuations:

Cleanrooms: The Market That Is Going To Explode!

What are cleanrooms?

A cleanroom is an engineered environment designed space where the air is kept super clean by using filters, smooth surfaces, and strict entry rules. They’re used in places where even tiny particles like dust or germs can mess things up, such as in semiconductor manufacturing, pharma labs, biotech research, or even nuclear and aerospace facilities.

Why are cleanrooms required?
Some Industries need to maintain a certain level of cleanliness to operate, and thus they need to rely on cleanrooms. Some examples:

Pharmaceuticals

Healthcare

Biotechnology

Semiconductor

Precision Manufacturing

Aerospace and Defence

A Nanocap Precision Engineering Company

This engineering nanocap company specialises in high-precision components for the valve and pump industry. With a global footprint spanning 10 countries and a focus on over 20 key customers, including DRDO, it aims to drive growth through innovation, sustainability, and strategic partnerships. Their products are used in some key critical industries such as Defence and Wastewater. This is probably the 2nd smallest company we are covering after METSL in March 2024.

Evolving Business and Management

An auto component manufacturer with over five decades of experience, specializing in control cables. The company has a long-term relationship with top domestic and global OEMs, focusing on exports and high-margin products. Recent expansions into new segments and international acquisitions have strengthened its market position, driving steady revenue growth and improved profitability. The company is on the path of transforming itself from a family-run business to a more professionally run business.

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