Between the first and second Covid-19 waves, three people from SBI Mutual Fund — including the small-cap fund manager — drove to Hyderabad to check out a business for investment. “Thanks largely to the conviction we gained from that visit, we ended up making significant gains on that stock,” says R Srinivasan, chief investment officer-equity, at SBI Mutual Fund, known for his skill in picking mid-caps and small-caps.
Client concentration risk persists with single largest customer constituting 50 per cent of revenues and top 5 customers constituting 90 per cent plus of sales. The continued geopolitical tensions impacting exports which now constituted 10 per cent of sales in H1FY23 vs 25 per cent plus as of FY22. High dependence on imported content/raw materials (~25 per cent) impacting production capabilities at times of global supply chain disruption are other key risks and concerns, analysts said.
“DTS has a good market opportunity in the EV space and for automatic transmissions in the passenger UV segment on the back of strong demand. Further, they intend to strengthen relationships with existing customers, grow across geographies and focus on tailor-made precision components that would bode well for future growth. Lastly, their focus on R&D, cost optimization measures, sourcing local raw materials and expanding product portfolio will too help drive growth,” analysts at Religare Broking had said in an IPO note.