BHANSALI ENGINEERING POLYMERS LTD - Q2 FY 21 RESULTS REVIEW - DT 03 11 20

 

BHANSALI ENGINEERING POLYMERS LTD

Q2 FY 21 RESULTS REVIEW

DT 03 11 20

COMPANY OVERVIEW

 

Bhansali Engineering Polymers Ltd (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.

Major clients of the company include large Indian brands namely Bajaj, Exide, Fiat, Aquaguard, Beetel, VIP, Samsonite, BPL, Onida, Sanyo, Videocon, Voltas, Whirpool, Electrolux, Crompton, IFB, LG, Kenstar, Tata, Toyota, and many more.

The company`s product include the following Abstron, Santron & High Rubber Graft

 

Management                  

M C Gupta            Chairman & Ind.Director   

B M Bhansali        Managing Director      

Jayesh B Bhansali       Executive Director & CFO   

 

QUARTERLY RESULTS

 

Bhansali Engineering Polymers (in Rs. Cr.)	Sep '20		Jun '20		Mar '20		Dec '19		Sep '19		YOY		QOQ
Net Sales	308		99		251		260		279		10.1		209.7
FINAL NET PROFIT		35.51		-1.39		7.79		16.92		20.37		74.32		-2654.68
Equity Share Capital		16.59		16.59		16.59		16.59		16.59		0		0
Basic EPS		2.14		-0.08		0.47		1.02		1.23		73.98		-2775
Consumption of Raw Materials	121.1		81.17		141.88		151.83		161.96		-25.23		49.19
Purchase of Traded Goods	76.31		50.34		62.54		56.72		79.8		-4.37		51.59
Increase/Decrease in Stocks	28.59		-47.42		8.48		-6.27		-13.28		-315.29		-160.29
Employees Cost	10.61		4.89		-0.01		9.59		8.99		18.02		116.97
Depreciation	2.57		2.55		2.53		2.58		2.21		16.29		0.78
Other Expenses	24.93		13.75		25.79		23.62		22.12		12.7		81.31
P/L Before Other Inc., Int., Excpt. Items & Tax	43.76		-5.88		10.19		21.99		17.74		146.67		-844.22
Other Income	1.69		4.73		0.17		0.89		-0.44		-484.09		-64.27
P/L Before Int., Excpt. Items & Tax	45		-1.15		10.36		22.88		17.3		162.72		-4052.17
Interest	0.05		0.01		0.03		0.02		0.03		66.67		400
P/L Before Tax	45.39		-1.16		10.33		22.86		17.27		162.83		-4012.93
Tax	10.03		0.09		2.59		5.95		-2.99		-435.45		11044.44
Net Profit/(Loss) For the Period	35.37		-1.25		7.74		16.91		20.25		74.67		-2929.6
Share Of P/L Of Associates	0.14		-0.14		0.05		0.01		0.11		27.27		-200

 

MP  80.25    

PE   9.38      

VOLUMES      1,04,454

52 Wk L/H     25.3       99.95

Market Depth

BUY 8408

SELL 11.47 K

42%

58%

MONTHLY

TECHNICAL RATING

Very Bullish

Annual	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Sales	1,104	1,224	1,031	626	530
Net Profit	66	46	99	35	16
Other Income	5	6	13	8	2
Total Income	1,110	1,231	1,045	634	533
Total Expenditure	1,027	1,153	883	568	499
EBIT	82	78	162	66	33
Interest	0	1	7	9	11
Tax	15	30	54	21	6

 

CASH FLOWS	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Operating Activities	88	53	191	78	55
Investing Activities	-42	-33	-16	-11	-34
Financing Activities	-10	-28	-148	-64	-22
Others	0	0	0	0	0
Net Cash Flow	35	-8	27	1	-1

 

Valuation

Market Cap (Rs Cr.)  1,355.45

P/E   23.22

Book Value (Rs)  21.47

Dividend (%)   50

 

Per Share Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Basic EPS (Rs.)	4.04	2.85	6.03	2.14	0.98
Diluted Eps (Rs.)	4.04	2.85	6.03	2.14	0.98
Book Value [Excl. Reval Reserve]/Share (Rs.)	21.47	18.01	15.51	9.73	7.63
Dividend/Share (Rs.)	0.5	0.5	0.3	0.2	0.1
Face Value	1	1	1	1	1
Margin Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Gross Profit Margin (%)	8.35	7.01	16.29	11.49	7.44
Operating Margin (%)	7.49	6.41	15.7	10.62	6.39
Net Profit Margin (%)	6.05	3.79	9.65	5.69	3.04
Return Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Return on Networth / Equity (%)	18.81	15.8	38.88	21.95	12.79
ROCE (%)	21.95	24.11	58.98	39.25	12.39
Return On Assets (%)	10.26	8.89	23.51	8.44	4.63
Liquidity Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Current Ratio (X)	1.72	1.86	2.04	1.3	1.22
Quick Ratio (X)	0.96	1.37	1.51	0.74	0.84
Leverage Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Debt to Equity (x)	0	0	0	0.85	0.25
Interest Coverage Ratios (%)	736.63	64.78	20.94	6.79	3.07
Turnover Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Asset Turnover Ratio (%)	169.1	230.84	242.52	149.17	152.05
Inventory Turnover Ratio (X)	5.3	12.23	12.89	4.5	6.39
Valuation Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
P/E (x)	0	112.54	41.44	137.1	198.21
P/B (x)	1.34	4.07	10.99	3.58	2.36
EV/EBITDA (x)	4.5	13.86	16.62	9.69	7.97
P/S (x)	0.43	0.99	2.74	0.92	0.56
Growth Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
3 Yr CAGR Sales (%)	20.82	32.14	19.73	755.51	709.7
3 Yr CAGR Net Profit (%)	23.32	42.18	173.51	229.06	152.98

 

 

HISTORICAL PRICES	THEN PRICE	NOW	DIFF%
3YR BEF	143.7	81.85	-43.04
2YR BEF	85.8	81.85	-4.6
1YR BEF	55.6	81.85	47.21
3M BEF	44.1	81.85	85.6

 

Type	Dividend%	Ex-Dividend date
Final	50	Sep 17, 2020
Final	50	Sep 19, 2019
Final	30	Sep 19, 2018
Final	20	Jul 06, 2017
Final	10	Sep 15, 2016

 

 

Share Holding Pattern in (%)
Standalone	Sep-20	Jun-20	Mar-20	Dec-19
Promoters	56.45	56.45	56.45	55
Pledged	0	0	0	0
FII/FPI	0.43	0.71	1.1	1.76
Total DII	9.13	9.38	9.03	9.89
Fin.Insts	0.01	0.17	0.16	0.43
Insurance Co	0	0	0	0
MF	0.01	0	0	0
Others DIIs	9.11	9.21	8.87	9.46
Others	33.99	33.46	33.41	33.34
Total	100	100	99.99	99.99

 

STRENGTHS

Rising Net Cash Flow and Cash from Operating activity

Growth in Net Profit with increasing Profit Margin (QoQ)

Growth in Quarterly Net Profit with increasing Profit Margin (YoY)   

Company with No Debt     

Book Value per share Improving for last 2 years  

Company with Zero Promoter Pledge     

WEAKNESSES   

Companies with growing costs YoY for long term projects  

Inefficient use of capital to generate profits - RoCE declining in the last 2 years  

OPPORTUNITIES     

Companies with current TTM PE Ratio less than 3 Year, 5 Year and 10 Year PE 

Turnaround companies- loss to profit QoQ    

Negative to Positive growth in Sales and Profit with Strong Price momentum  

Highest Recovery from 52 Week Low     

THREATS    

NIL 

MONTHLY     

TECHNICAL RATING   

Very Bullish  

 

Bhansali Engineering:

Highlights
- Strong set of results backed by better product prices
- Negative cash flow a temporary blip, leaner working capital management positive
- Key concern is the weak discretionary market & sustainability of margins

- Traction in Capex plan can help it re-rate

BEPL, Market Cap: Rs 1,476 crore, CMP: Rs 89, the dominant player in the duopoly market of ABS (Acrylonitrile butadiene styrene) in India has posted worth-noticing quarterly numbers. 

While the results have been marked by better product prices, improved outlook for the auto end-market suggests that this could be start of another bull run for the stock. However, as we move ahead, there are a few lessons to be learnt from the previous bull market and kept in mind.

Q2 result – strong margins

Company posted a strong improvement in the sales number in Q2 FY2. Sales have improved 210 percent QoQ .

Sales run rate is amongst the best in five quarters historically and benefitted from higher product realizations. 

Strong improvement in gross margins was slightly dented by higher employee cost resulting in an EBITDA margin of 15.1 percent.

Outlook

leaner management of working capital; debt-free status. 

periodic introduction of high-margin grades

periodic capex plans for long term growth. 

structural scope for import substitution opportunity. 

While the stock’s current trading multiples are at a discount to sector and its own historical highs, there is limited scope for re-rating from here.

There has been a sharp rise in raw material prices recently and 80 percent of the raw materials are imported. Also, though there is sequential improvement in the auto end-market (40 percent of sales), the consumer durables end-market (60 percent of sales) is subdued and likely to take time to reach pre-Covid era demand. 

A significant improvement in discretionary demand which other than volume growth should also help in demand for high-margin grades of ABS used in high-end automobiles and consumer appliances.

The company’s current capacity of 137,000 tonnes is nearly enough to meet 40 percent of domestic demand. New capacity would not only help in import substitution but also provide an export opportunity.