Andhra petro

Given the good nos in Q1FY19, was trying to figure out the price trend. Could get some interesting data based on imports:

As per the above the import qtys have come down a lot vs 2015 period

As per the above, the current price is about 80 vs 50-65 a year back

5 Likes

Good updates in latest credit rating report - https://www.icra.in/Rationale/ShowRationaleReport/?Id=73080

5 Likes

One of the few stocks which has actually risen and hit new high in this carnage.

Perhaps the reason is increasing end product prices:

Another interesting thing to observe from above is that despite 35% increase in price over the 1 year, the imports seem to have dipped in the recent months.

13 Likes

Ayush mittal ji can you post the current prices of EH ?

The above data gets updated once a month

2 Likes

The Andhra Petro stock has taken a beating post the Q2 results as the Co. clearly could not pass on the increased raw material costs. One has to understand that companies like Andhra Petro do not have pricing power & the price is determined by the landed cost of its products (Imports). The increase in raw materials cost is usually passed on, but with a lag. This is possibly what is happening at the moment, as the prices of all its products are higher currently than they were in Q2, even as crude is correcting rapidly. Q2 results were impacted not due to fall in Sales, which continued to grow, but due to the Co.'s inability to pass on the RM price hike. This trend of Sales growth should continue in the second half of the year as well.

The valuations are supportive, & even if the Co. does no better in the second half than it did in the first, it should still manage an EPS of about Rs. 11, after getting back to paying taxes again. The current price of Rs. 66 presents a good opportunity in my view. Another positive is the aggressive reduction of debt should see the Co. becoming debt free in the current year itself.

4 Likes

price trend of 2-EH in China & SE Asia (dollars per tonne)

price trend of naphtha and Propylene in Asia/Arab Gulf

3 Likes

@bikedi These graphs seem to be positive for the stock. While propylene prices are lower than a year ago, prices of 2 EH, the main product of Andhra Petro are up 20% from a year ago prices. The SE Asia prices for 2 EH were quoting at 995 USD/MT as on 16/11/17 are now quoting at 1195 USD/MT on 12/11/18 after correcting from a high of 1225 USD/MT

2 Likes

agree, although the 2-EH prices have corrected in last week (more recent 1165 USD/MT) the raw material prices have corrected even more.

2 Likes

Could you post what exactly forms the raw materials for these products?
@ayushmit and @RajeevJ

1 Like

Just went through basics - Propylene is the most used raw material and hence their input cost will be function of propylene prices from HPCL.
Propylene price trend - https://www.statista.com/statistics/796033/us-price-of-polypropylene/

Few other developments are
1.The commissioning of BPCL oxo alcohol plant in Kochi.

  1. Also not all the countries are covered in ADD as mentioned in ICRA report so there is still pressure from CHINA for DOP dumping in India ( I believe ICRA is referring to this - http://www.dgtr.gov.in/anti-dumping-cases/anti-dumping-duty-investigation-concerning-imports-“dioctyl-phthalate-dop”)

  2. Additionally as mentioned in the Annual Report --> Taiwan, Brazil, USA and Japan are new countries added recently to import in India.

3 Likes

Sir can u please post the trends of propylene prices and 2 EH prices of December and January. It could be really helpful

1 Like

Data is available till Nov 2018:

I understand prices of product have corrected to 80 levels or so but input prices have also fallen.

2 Likes

Thanks for the immediate response sir. I have a small query here since the prices of end product s have come down the topline is going to come down . Will it be considered as a negative qoq? or as we expect the margins to be better coz of fall in RM prices

1 Like

The spread between 2-EH prices and Propylene has been the highest last quarter, expecting company to report very good numbers.

1 Like

anyone analysed q3 results? they showed 10cr increase in raw material cost, very negative PAT. I didn’t find any mention of loan payment either?

1 Like

Price momentum : Price> 50 DMA> 200 DMA

Fundamental Momentum: Sales and Margin growing simultaneously

Valuation : Expensive as PB ratio is very high compared to historical valuation. ( PE is not relevant as EPS is very high currently)

Disclosure : Tracking position

3 Likes

@amishra From which website/screener you were able to get pb ration chart?

1 Like

You can see the Price to Book Value charts in this site.

Thanks to @amishra for sharing this. This is new to me. I had not thought of this. While i was using PBV as one indicator to pick up stocks, I did not realise that PBV can also be treated as a chart and stocks should be avoided if the PBV is going too much up. Good time to get into stocks is when it is trading at almost flat or marginal increase in Price to Book value because then it means that when the price of the stock is going up, the book value is going up too. And since Book value is the net value of a firm’s assets found on its balance sheet, the price of the stock would be more stable at a low flat PBV than at a high PBV.