BC SECTORLEARNINGS
Saved by @SAnngeri

In a business where the buying & selling price is fixed by the government, how is that the sugar stocks are rallying so much?

A thread 🧵 to learn how the sugar sector works. Do re-tweet and hence us educate more investors (1/n)

 - Sugar is made out of Sugarcane
- The government fixes buying price (FRP – Fair & Remunerative price) for the mill from the farmers at 2.850/Kg
- Selling price is also fixed at Rs. 31/Kg (MSP – Minimum selling price) (2/n)
Lets understand the sector,

- Sugarcane purchased by the mill is crushed to remove the juice (exactly like you have sugarcane juice at a hotel)
- Juice is heated & boiled to remove sugar (3/n)
- The juice can be boiled upto 3 times to remove sugar. Each time it is boiled, sugar is removed, than some water is added and boiled again to remove more sugar (4/n)
- There are 2 by-products as well. The residue left behind after the boiling process is over is like a gum/paste called molasses & the fiber/stem of the sugarcane after juice is extracted (5/n)
-U can either directly convert the juice into molasses without extracting sugar so that U can produce more molasses or boil the juice twice, extract sugar & use the remaining juice 2 extract molasses (B Molasses) or burn the juice 3 times & extract the molasses (C Molasses) (6/n)
Sugar industry deals in 3 products,
-Sugar
-Molasses can be further processed to make Ethanol & Alcohol
-The fiber is burned to generate electricity. Sugar mills use the same electricity for running the mill & extra is sold. This is called co-generation (7/n)
Rough calculations,

1 Tonne of sugarcane roughly can produce
- 110 Kg of sugar (or)
- 70 L of Ethanol
You produce 1.6 times more sugar than Ethanol from 1Tonne of sugarcane.

& Sugar mills rough business split is,
60-65% sugar, 20-25% ethanol, 10-15% co generation (8/n)
What should the mill focus on producing depends on the rate of sugar or Ethanol. Sugar currently is 31/kg & ethanol is 62.65. So 1 tonne of sugarcane can generate the below revenue
-Sugar = 31*110 = 3410
-Ethanol – 70*62.65 = 4385.5 (9/n)
So what should they produce more? Ethanol

So why are they even producing sugar?
Ethanol production needs a proper distillery set up which not all mills have. Mills are now investing for the same. (10/n)
Why are stocks going up?
- Demand & Supply
- Exports
- Ethanol
- Working Capital (11/n)
Demand & Supply (12/n)
Exports (13/n)
Ethanol (14/n)
Working Capital

Working capital to get better with more focus on Ethanol as payments from OMC happen monthly vs selling sugar which take 7-9 months of inventory time where as the farmers have to be paid in 14 days after acquiring the crop from them (15/n)
What to look for in a sugar company?

- UP based companies to do well. Water is available for cultivation, crop is also good & hence the factory capacity utilization is better & sugar produce per tonne is more
- Ethanol capacity/Tonne of crop crushed
- Working capital (16/n)
Cant end this thread without crediting @varinder_bansal for a very good video on sugar sector from where I have taken the latest data for the thread. You can watch the entire episode here -https://t.co/kDtnHmzL98 (17/n)
I have written multiple threads earlier on
- Sector Analysis - Banking, Paints, Logistic, REIT, InvIT
- Macro Economics
- Debt Markets
- Equity Markets
- Gold
- Personal Finance etc.

You can find them all in the link below 👇 (**END**)

https://t.co/UrRt87OLLF

More from Kirtan A Shah

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Have been bullish on #gold since $1786, Gold at $1910 today.

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In this #IPO frenzy market, lets talk (Thread) about some basics around
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(b) Non-Funding requirement
- Enhancing corporate stature
- Exit options to large investors like the VCs & PEs (2/n)

While most of us believe IPOs are for funding requirements, you deep dive and understand it’s more of an exit channel for large investors (VC/PE). Let me explain the same concept from a start-up's perspective (3/n)

If u r starting off ur entrepreneurial journey & need capital, how do u raise funds?
-Self Funding
-Friends & Relatives (F&R)
-Bank Loan
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Angel investors r the 1s who invest @ the idea stage & PE/VC who invest in the growth phase of the company.(4/n)

- Self funding can be the best option but everyone’s not prepared
- F&R I wish helped
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Does increase in Inflation & hence interest rates lead to a fall in equity? While theoretically yes, practically the last 20 years of data shows otherwise

Please ‘re-tweet’ 🧵& help us educate more retail investors

#Investing

Lets start with basic, y does inflation ⬆️?
Most feel bcoz of higher demand & lower supply but that’s nt the only factor. Imagine there is a shortage of laptops wrt the demand, but there is no liquidity in the market (people don’t have monies) will the price of laptop ⬆️? No

So, Inflation takes place because the demand supply situation is accompanied by high liquidity, people have the monies to spend and hence the price goes up. Inflation does not take place only because of the demand supply gap (3/n)

Its RBI’s job to keep inflation under check. What role does RBI play? RBI is comfortable keeping Inflation between 2-6% currently. So if Inflation is increasing, how can RBI control it? Can RBI do anything to demand & supply? Nothing (4/n)

So the only tool available with RBI to control inflation is controlling liquidity. If RBI is able to reduce liquidity in the market, less money will chase the goods and hence Inflation can be expected to stabilize. (5/n)
FINANCE
Kirtan A Shah
Kirtan A Shah
@KirtanShahCFP
Should you add more in Equity or redeem right now?

A thread 🧵to guide retail on why & what should they do at these historic market highs.

Do ‘re-tweet’ and help us educate more retail investors (1/n)

#investing #StockMarket

Some investors feel that markets are trading at a PE of 27 vs 10 years historical average of 20 and a market-cap to GDP of 105 vs historical average of 79 and hence markets look expensive (2/n)


But, in such crazy liquidity driven markets, prices can move much ahead of the fundamentals & suddenly we start hearing commentaries of how the market is pricing in the earnings of FY 22 & 23 to justify the rally

If you r new to fundamentals, 👇 can help


Results for Q4 have come out very well but that is also because of the lower base effect of the last year.

Over the last many years, markets have corrected 10-15% each calendar year. Can it happen this year as well? Can very much and that can be a great entry point. Why? (4/n)


There are a lot of over hangs in the near term,
-Crude going up
-$ index moving up
-Inflation moving up
-COVID uncertainties
All of the above are –ve for markets & liquidity on the other side driving markets up, its impossible to judge the near term movement of the markets (5/n)
STOCKSLEARNINGS , ALL , PE THREAD
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@KirtanShahCFP
𝐀 𝐩𝐫𝐢𝐦𝐞𝐫 𝐨𝐧 𝐁𝐥𝐨𝐜𝐤𝐜𝐡𝐚𝐢𝐧 & 𝐂𝐫𝐲𝐩𝐭𝐨𝐬 🧵

I still everyday meet investors who think Bitcoin & Blockchain are the same & this thread is specifically for them

Do re-tweet & help us educate more invetsors ☺

#Investing #Cryptos #Bitcoin (1/n)

(Q1) Lets start with what was historically used as a method of payment?

- Barter system, you give me a cow and I give you 100 kgs of rice (2/n)

(Q2) So why dint we continue with the barter system?

- It was difficult to transact in fractions
- What if I want only 50 kgs of rice? I cant give you half a cow right?
- This is the prime reason for the introduction of smaller units of payment method we now call as coins (3/n)

(Q3) How did Gold coins get shortlisted for the job?
- It was malleable & portable
- It was non corrosive, could be stored for a long time
- It was a perfect combination of abundance & rare
- Plus it was eye catching & visually appealing (4/n)

(Q4) What about paper currencies?
a) When paper currencies were introduced, it was decided that a country could only print as much currency as the gold reserves they have but this was withdrawn in 1971 bcoz of which the central banks could then print as much money as they wanted
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Saket Mehrotra \U0001f60e\u2615\U0001f4b0
Saket Mehrotra 😎☕💰...
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For almost seven years, I have tracked the hotels space very closely.

While everyone wants to jump on the 'unlock trade' bandwagon, I do not feel it's a great idea because the business model in itself is a little flawed.

Here's a thread 👇 (1/n)

Let's first start with the industry overview.
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Are you able to maintain your Revenues if not increase them? (2/n)

Why is this relevant?
Well, think of a regular business selling goods / services.
Typically, when you're not able to sell something, you keep it for the next day or hold it in your 'inventory'.
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Whether you manufacture a product or sell a service, you do a certain degree of demand planning.

In the context of hotels, this would be based on the location, the demand of tourist arrivals and accordingly the number of keys (hotel rooms).

(4/n)

The only catch here is the fact that you only have a 24 hour window to sell a day's inventory.

Taj Mahal Palace in Mumbai only has a 24 hour window on a daily basis to sell 560 room nights.

Once the day gets expired, the inventory is gone. (5/n)
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If you find megatrends early, it could be highly rewarding...

If you want to refresh powerful concepts of Chemical Sector...

This is must watch for you...

One of the most in-depth analysis on the sector you will ever see..!!

#investing
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Learn about the STEEL SECTOR in this thread

The demand for steel is generally only 1.2 times the GDP & there is no significant growth in our GDP but still the sector has rallied relentlessly, lets try & understand

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The metal sector is broadly divided into 2,
-Ferrous is a category of metal that has Iron in it, Steel as an example
-Non-Ferrous is a metal, which does not have Iron content, Aluminum, copper, lead, nickel, Zinc etc.
This thread focuses on Ferrous & hence Steel (2/22)

To start, lets understand with how steel is made (its important).
Iron ore is mined, it is then first converted to Iron & Iron is then converted to Steel. There are 3 processes of making steel
-Blast Furnace
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We will discuss all three (3/22)
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After writing on Banking & Paints, this thread focuses on the 'Logistic Sector'. Idea is to give a small start to the retail investors looking at investing in this space from where they can build on.

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Logistics business macro

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What’s the business?

Logistic is traditionally seen as a warehousing & transportation business where goods, needs 2b transported 4m point A to B using Road, Rail, Ship or Air & can be stored at multiple warehouses before the consumer receives the product (3/n)

The business landscape is changing fast with newer competition and technology is challenging the older business models. 3PL (3rd party logistics) & 4PL is one such change in the business of logistics, will discuss about the same ahead. (4/n)

Listed companies involved in the business may or largely may not own the Trucks, Rails, Aircraft, Ships, Warehouses etc., but uses outsourced services of other vendors and the listed companies manage the logistics from point A to point B (5/n)
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(Thread) With Kotak launching its International REIT Fund of Fund NFO, it is worth revisiting our old thread on Real Estate Investment Trust (#REIT). The Idea is to educate readers on REIT & share our view on the Kotak #NFO

Do ‘re-tweet’ & help us educate more investors (1/n)

What’s a REIT?

Lets say I am a RE developer, K Raheja. I like a land in Mumbai & Hyderabad 4 some commercial development. I decide to buy it. Where will I get the monies 2 buy & construct it?
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So I invest some monies, got some 4m banks & MF’s & I also got Blackrock to invest 2 buy the land & make the business park called 'Mindspace'. I constructed around 23-mn sq ft with multiple building & I started leasing them out to companies who wanted rented office premises (3/n)

There comes a point where I needed more monies to build new building, pay off the loans etc., where do I get the monies? So I decide to do an #IPO. Not of the entire company K Raheja but only this project called Mindspace. So I formed a trust or corporation (4/n)

I commit to payout 90% of my rent income to the shareholders proportionately as dividends & I will use this IPO money to invest a minimum 80% in completed real estate, which is generating rent & will use 20% in constructing new Real Estate or lend to some other developer (5/n)
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one of the things i like about Batman is that it's fundamentally about being orphaned, and being an orphan — how this guy stays tethered to the world in his own weird, abstract, extrajudicial way when he feels that his link to it has been violently severed

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