BHANSALI ENGINEERING POLYMERS...
Transcript of BHANSALI ENGINEERING POLYMERS...
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BHANSALI ENGINEERING POLYMERS LTD
Company Report
Date 10th April 2018
BSE Code 500052
NSE Code BEPL
Market Cap (Rs Cr) 3529.52
52 week High/Low 224.40/35.40
Industry Chemicals
Face Value Rs 1/Share
Shares O/S (In No) 16.59 Cr
EPS * 5.19
Book Value* 13.82
P/E 40.99
P/B 15.40
*Note: On TTM Basis
Shareholding Pattern as on Dec’ 2017
Research Analyst : Astha Jain
Bhansali Engineering Polymers (BEPL) is a leading name in the petrochemical sector in India. BEPL is a vertically integrated petrochemical company that is into manufacturing of ABS (Acrylonitrile Butadiene Styrene) -- a raw material used extensively across industries like automobiles, home appliances, telecommunications, luggage and other sectors.
Reputed Clientele: As co’s products find application in automobiles, home
appliances, telephones, electrical and electronics appliances, business
machines, luggage, stationery, novelties and various other products ,its
clientele includes strong names like HMSI, Maruti, Whirlpool, Samsung, LG,
Toyota, Mahindra, Bajaj, Godrej ,Hero Motocorp, TVS Motor & many more..
Zero debt company: Company has paid entire dues outstanding leaving no
dues remaining in lieu of which company gets release of all the prime and
collateral securities charged in favour of Allahabad bank to secure their
aforesaid credit facilities of Rs. 216.50 Crore including exclusive Equitable
Mortgage of Land and Building, Hypothecation of Plant & Machinery and all
other Fixed assets of company related to its Abu Road Plant and Satnoor
plant, Release of pledge of 5,00,00,000 (Five Crore) Equity Shares
belonging to Promoter and Promoter Group of company and release of
Personal Guarantee extended by its Managing Director for securing the
aforesaid credit facilities thus maintaining the zero debt status of company
Successful implementation of co’s capex plan: ABS capacity expansion
plan of the company from 80 KTPA to 100 KTPA at its Abu Road Unit has
been successfully implemented within the envisaged cost and time frame
i.e. Rs. 20 Crore and 31st March, 2018 respectively. Hence being cost
effective expansion strategy ,it will benefit the company going forward.
Valuation
The company is currently trading at 29x of FY19E eps of Rs 7.26. On the back of increase in global ABS prices, co stands to benefit from its capacity expansion plans . Along with that co’s effort to deleverage its balance sheet & funding its expansion plans through internal accruals shows strength in fundamentals of company .Going forward, co expects to save its logistics cost & increasing quality competitiveness against international giants in ABS manufacturing field . Hence , we recommend “Buy” on the stock with price target of Rs 255(appreciation of almost 20%) for long term investment.
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BUY CMP 212.75 TARGET 255 MEDIUM TO LONG TERM
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Company Overview
Bhansali Engineering Polymers Limited (BEPL) was incorporated in the year 1984 and it was the first company in India to start manufacturing Quality ABS resins using foreign technology. The first plant of company situated at Satnoor, Madhya Pradesh was setup in technical collaboration with Sumitomo Chemical Engineering Co. Limited / Sumitomo Nagatuck Limited, Japan and started its production in 1990. Company is one of the two leading Petrochemical Company in India involved in the manufacturing of ABS & SAN. BEPL is a vertically integrated petrochemical company that manufactures ABS which acts as a raw material for leading companies dealing in Automobiles, Home Appliances, Telecommunications, Luggage, Bus Body and various other multifaceted applications. The Company, with a view to expand its footprint in ABS Market, acquired two units of competitors viz. Polychem, Baroda & Rajasthan Polymers Resins Ltd (RPRL), Abu Road in the year 1999 & 2003 respectively and consolidated its entire ABS Production activities in Abu Road, Rajasthan and HRG at Satnoor, Madhya Pradesh.
Acrylonitrile Butadiene Styrene (ABS) is an opaque thermoplastic and amorphous polymer. It is
useful in manufacturing products such as drain-waste-vent (DWV) pipe systems, musical
instruments (recorders, plastic clarinets, and piano movements), golf club heads (because of its
good shock absorbance), automotive trim components, automotive bumper bars, medical devices for
blood access, enclosures for electrical and electronic assemblies, protective headgear, whitewater
canoes, buffer edging for furniture and joinery panels, luggage and protective carrying cases, small
kitchen appliances, and toys, including Lego and Kre-O bricks. Household and consumer goods are
the major applications of ABS. Keyboard keycaps are commonly made out of ABS.
Styrene acrylonitrile resin is a copolymer plastic consisting of styrene and acrylonitrile. It is also
known as SAN. It is widely used in food containers, water bottles, kitchenware, computer products,
packaging material, battery cases and plastic optical fibers.
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Sales ( In Rs Cr )
BHANSALI ENGINEERING POLYMERS LTD
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Strong CAPEX Plan
Co has decided to set up a port based green-field plant with a minimum capacity of 200 KTPA in
the state of Gujarat. The new plant will be based on state of the art technology from Japanese
company Nippon A&L, .The implementation programme has been scheduled to commence
manufacturing of ABS from the proposed port based green-field plant by 31st March, 2021 as
against previously decided of 31st March 2022. With the new 200 KTPA port based plant
establishment; the company will be able to exploit its capacity of the plant optimally. Due to this,
there will be substantial saving in logistics cost & co will derive benefit out of economics of scale.
These will result in cost & quality competitiveness against international giants in ABS
manufacturing field.
In Jan’18, company has given approval for revised capital Expenditure at Rs 70 Cr pertaining to
the capacity expansion project of company viz ABS compounding expansion from 80 KTPA to
137 KTPA at Abu Road to 137 KTPA by 31st Dec 2018. Co decided to implement it in two phases,
the first phase with 100 KTPA ABS capacity incurring capex of Rs 20 Cr & the second phase with
aggregate 137 KTPA through compounding expansion to be completed by 31st Dec 2018
incurring additional capex of Rs 30 Crores thus aggregates to Rs 50 Cr. CAPEX Plan also includes
setting up of R&D Centre at ABU road which is ongoing project & is likely to be completed by 31st
Dec 2018 with a capex of Rs 20 Cr. All R&D equipment from Aburoad R&D centre will be shifted
to new R&D Centre at port based plant location as & when it is established.
In recent development, ABS capacity expansion plan of the company from 80 KTPA to 100 KTPA
at its Abu Road Unit has been successfully implemented within the envisaged cost and time
frame i.e. Rs. 20 Crore and 31st March, 2018 respectively. The cost of aforesaid expansion has
been financed through internal accruals of the company.
Debt Free Status
The Company was sanctioned working capital credit facilities amounting to Rs. 216.50 Crore
comprised of Fund based credit facilities (FBWC), Non Fund based credit facilities (NBFWC) and
Credit Conversion Factor (CCF) on exclusive basis from Allahabad bank. The entire
dues/outstanding out of the aforesaid credit facilities have been repaid by company. Consequent
upon above, Allahabad Bank has issued No dues letter, Shares pledge release letter to company,
resulting into release of all the prime and collateral securities charged in favour of Allahabad
bank to secure their aforesaid credit facilities of Rs. 216.50 Crore including exclusive Equitable
Mortgage of Land and Building, Hypothecation of Plant & Machinery and all other Fixed assets of
company related to its Abu Road Plant and Satnoor plant, Release of pledge of 5,00,00,000 (Five
Crore) Equity Shares belonging to Promoter and Promoter Group of company and release of
Personal Guarantee extended by its Managing Director for securing the aforesaid credit facilities.
With this co has become zero debt entity with no outstanding dues.
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Consolidated P&L A/c
Rs Cr
Particulars FY15 FY16 FY17 FY18E FY19E Total Revenue 601.06 530.86 626.15 1064.46 1277.35 Growth ( %) -- (11.68) 17.95 70.00 20.00 Expenditure 576.20 493.88 563.67 920.75 1098.52 EBIDTA 24.86 36.98 62.48 143.71 178.83 Growth (%) -- 48.75 68.96 130.00 24.44 EBIDTA Margin (%)
4.14 6.97 9.98 13.50 14.00
Other Income 1.89 2.54 8.44 14.35 17.22 Depreciation 5.02 5.55 5.42 8.89 10.67 EBIT 21.73 33.97 65.50 149.17 185.38 EBIT Margin (%) 3.62 6.40 10.46 14.01 14.51 Interest 13.58 11.08 9.80 0.00 0.00 Exceptional Item 0.00 0.00 0.00 0.00 0.00 PBT 8.15 22.89 55.70 149.17 185.38 Tax 3.28 6.70 21.11 52.21 64.88 PAT 4.87 16.19 34.59 96.96 120.50 Min Int & Ass Sh 0.00 0.00 0.00 0.00 0.00 Consolidated PAT 4.87 16.19 34.59 96.96 120.50 Growth (%) -- 232.44 113.65 180.28 24.29 NPM (%) 0.81 3.05 5.52 9.11 9.43
Ratios
Particulars FY15 FY16 FY17 FY18E FY19E EPS 0.29 0.98 2.08 5.84 7.26
ROE(%) 2.63 12.79 22.01 38.66 32.75
ROCE(%) 9.60 21.49 41.67 59.47 50.38
Book Value 11.16 7.63 9.47 15.12 22.18
Debt/Equity 0.22 0.25 0.00 0.00 0.00
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BHANSALI ENGINEERING POLYMERS LTD
Consolidated Balance Sheet
Rs Cr
Particulars FY15 FY16 FY17 FY18E FY19E Sh Capital 16.59 16.59 16.59 16.59 16.59 Res & Surplus 168.48 109.97 140.58 234.21 351.39 Sh App/Warrants 0.00 0.00 0.00 0.00 0.00 Total Debt(Long Term+Short Term Borrowings)
41.34 31.53 0.00 0.00 0.00
Other Long Term Liab & Provison
2.78 3.43 4.01 5.22 7.14
Net Deferred Tax Liability
-1.30 0.04 4.29 5.58 7.63
Sources Of Fund 227.89 161.56 165.47 261.60 382.75 Net Fixed Assets 122.17 81.86 93.00 113.00 169.75 Non –Current Investments
0.00 0.00 0.00 57.86 89.87
Misc Expenses 0.00 0.00 0.00 0.00 0.00 Other Non –Current Assets
2.71 1.32 1.76 2.02 2.61
Inventories 75.03 83.04 139.25 159.96 207.74 Sundry Debtors 146.56 131.90 136.71 157.04 203.95 Cash & Bank Bal 14.94 15.20 17.25 19.82 25.73 Other Current Assets 0.76 1.36 0.73 0.84 1.09 Loans & Advances 32.46 34.45 31.63 36.33 47.19 Current Investment 0.00 0.00 0.00 0.00 0.00 Total Current Assets 269.77 265.95 325.57 373.99 485.71 Current Liabilities & Provisions
166.76 187.57 254.87 285.29 365.23
Net Current Assets ( Ex Cash)
88.07 63.18 53.45 68.88 94.75
Uses Of Funds 227.89 161.56 165.46 261.58 382.71
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BHANSALI ENGINEERING & POLYMERS LTD
Standalone Quarterly Financial Highlights
Rs Cr
Particulars Q3FY18 Q3FY17 Q2FY18 YoY% QoQ%
Revenues 257.93 122.95 292.87 109.79 -11.93
Expenditures 214.63 113.84 255.06 88.54 -15.85
Operating Profit 43.31 9.11 37.82 375.38 14.52
Net Profit 29.06 3.06 25.10 849.58 15.78
PBIDTM% (ex OI) 16.79 7.41 12.91 126.60 30.05
NPM % 11.27 2.49 8.57 352.63 31.51
EPS* 1.75 0.18 1.51 872.22 15.89
Past Price movement of the stock
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