Beardsell Limited


(dhanvarsha) #1

We hold minute quantities for tracking Purpose.
Stock Price:56.00

Brief Profile:

Beardsell Limited was incorporated on 1936. Formerly known as Mettur Beardsell Ltd. The company currently has 7 manufacturing units across India and branches in all the major cities. There are multi-disciplinary teams consisting of experienced professional managers, project engineers, production technologists and R&D personnel at its various branches. The company is in the business of manufacturing, selling and contracting activities and has the following divisions:

Business Divisions

  • Speciality Clean Rooms
  • Prefabricated Structures
  • Insulation
  • Packaging
  • Specialty
  • Trading Activities

SWOT Analysis:
Strengths:

  • Products are specific. Competition is less. Profit Margins are high.Company has doubled the Net profit in Year 2017 compare to Year 2016.
  • Prefabricated Structures & the Clean Rooms are the Unique Concepts & is the Strength of the Company. They can develop any & every site based on the Industrial Requirements. As per the detailing given, they can also mould & convert the Sites into the newer ones in quick successions.
  • Huge demand will be created for the Pre-fabricated Structures soon. As the Cost of development would be very low & can be affordable to anyone and everyone.
  • They do following Exports.
    Beardsell is a leading exporter of industrial equipment to various countries. For the past several decades, They have exported many items, manufactured by them and also other companies, to Asian and African countries.

Their past exports include:
 Textiles to Nigeria
 Site offices to Sudan
 Clean rooms to Botswana
 Hatchery Equipment to Ghana
 Software products & IT equipment to Tanzania
 Incinerator equipment to Kenya
 Classroom Laboratory to Ethiopia

Weaknesses:

  • They need extensive Marketing & Sales Team. As their products are unique and can be conceptualize to the entire world. They have done the exports to the specific places & they need to expand their horizons to more specific locations around the world. If they failed to do so then they will lose a great opportunity which lies with them currently.
  • As per their plans, they are about to have strategic collaborations with other companies hence there are probability that this company will give good returns in the Long term.

Threats:

  • Raw materials for Development of the products prepared by Beardsell are Steel & the Crude. Hence the fluctuations in the price of the same do impact on the ultimate quotations.

Opportunities:

  • The rural Areas would be focused for growth.
  • As the director’s report suggests, they can make RO Units, Classrooms, Electrical Chambers, Cabins, and Small Office Premises and so on by using innovative ways.
  • Apart from this, even in metro cities also, they can prepare such Cabins for a short term commitments to fulfill their work and requirements.
  • The African countries would be the largest contributor in their growth trajectory.
  • Even in Under Developed Countries and to occupy huge masses in a small room for temporary purpose, these pre fabricated structures & rooms would be a great option.
  • Apart from this, Their Packaging material concept will also be utilized well through e-commerce business which is expanding in a large way.

Shareholding Pattern:

Promoter’s holding: 74.97%
Public Holding: 25.03%

Foreign Investors/Govt. Stake:0.52%
Non Institutions/Ind. Share Holders: 24.51%


(dobhal.a) #2

With such a low return on equity, I rather put money in bank and so should this company.


(dhaval shah) #3

It is a competitor in our business & as far as we know they are under reporting profits, also their marketing team is not upto the mark and are very difficult to deal with. They are long ago established business & they have all the legacy clients, their sales growth is more due to price increase rather than volume increase. will be interested once they start reporting actual results


(abrarhh) #4

If they are under-reporting profits, then management quality is doubtful.

As you said it would be interesting when they report actual profits. Then this could be hidden jewel.

Another thing is they seem to have the pricing power. But will it sustain?


(dhaval shah) #5

They used to have pricing power, but now there are sufficient players in all the cities they operate. They never tried to capitalize on their leadership position. They still have some major pharma companies as their clients and if they can manage them well, they can give good returns.
Also, the business is majorly dependent on crude & rupee, if crude declines & rupee appreciates they stand to gain and loose when vice versa. This happens because they are not able to pass price increase and thus shows that they have limited pricing power.


(Bheeshma Sanghani) #6

Hi @dhaval

Interesting. Can you elaborate on the competitive landscape and any other insights on beardsell?

Best
Bheeshma


(dhaval shah) #7

The entry barrier for their primary business is not that high, not sure about their panel business & how well it is doing. Their Packaging & Insulation products are quite generic now, previously around 10-12 years ago there used to demand for product manufactured by Beardsell and they had little brand identity, which is now not seen. Also all the packaging & insulation products they manufacture are easily replicated and sold at cheaper price by competitors. Once their existing customer looks out for same product he usually gets a cheaper & better option in terms of business flexibility and never goes back to them.

This is my general experience of company & the market of Mumbai in which they operate, they might be doing better in other locations depending on the team over there.


(Bheeshma Sanghani) #8

Thanks for the inputs. How are their isobuild & quickbuild systems? Any insight on that would help


(dhaval shah) #9

No Idea on those segments


(naravi2011) #10

Only few and specific industries requires Clean Room based on the kind of operation they carry out. Once established, it can be used for many years with minimal maintenance. This is not a repeat business. As such it would be interesting to know the revenue from clean room business as compared to their total revenue.


(Bheeshma Sanghani) #11

In 2013 it introduced its new product line ( SteilWallz ) after a stagnating topline. The change in the business focus is evident from the management commentary. From 2013 onwards there is stark difference in the business numbers.

I have collated the data from the AR (standalone) going back to 2005 to spot the changing trend -

The first thing is the change the growth rates in sales & earnings. From 2005-2012 the topline degrew at 7% and PBITDA grew at 11%. From 2013-2017 the growth in sales has been 15% and PBITDA is at 22%.

The other thing is the change in borrowings. The borrowings increased at 35% CAGR from 2005-2012, while they have increased at 3% from 20013-2017.

The current debt level of 28cr seems to be reasoable compared to its sales of 169cr. Its interest coverage is 4.4 which is also manageable. The balance sheet seems to be holding up well.

Customer advances that had dropped from 2006-2012 have now steadily grown from 2013 to 2016 ( dont have data for 2017)

Working capital cycle down to 17 days in 2017 from 26 days in 2013.

The operating margins that had reduced from 9% in 2005 to 6.6% in 2012 have now grown to 11.4% in 2017 - however a part of this improvement can certainly be attributed to raw material prices going down (the business is sensitive to raw material prices)

Coming back to present day, the company seems to expanding rapidly with its prefab product Steilwallz as this article suggests.

There are some other pointers as well

in 2016 it appointed Abhaya Shankar as President – Business Acceleration and Strategy. Earlier he was MD of Hyderabad Industries ( the market leader in roofing solutions with their brand charminar ). Then he had a stint with Kisan Moulding a polymer pipe player.

In Feb 2016 it also acquired M/s. Sarovar Insulation Pvt Ltd - a company engaged in engaged in the manufacture and processing of EPS products at Coimbatore and at SUPA, Ahmednagar, Maharashtra following a JV with Saideep Polytherm a Pune based company again engaged in EPS manufacture & supply.

The promoters had infused 5.51cr in the company by allotting warrants that were converted to 9,50,000 equity shares in 2011 & 2012 @Rs 58

All these dots seem to suggest that Beardsell has spotted an opportunity in the Pre Fab segment and is refocusing its energies rapidly. Beardsell is also one of the 16 companies mentioned in the “Compendium of Prospective Emerging Technologies for Mass Housing” prepared by BMPTC ( Building Materials & Technology Promotion Council Ministry of Housing & Urban Poverty Alleviation Government of India)

http://bmtpc.org/admin/PublisherAttachement/Compendium%20of%20Prospective%20Emerging%20Technologies%20for%20Mass%20Housing%20-%20Second%20EditionAtt.pdf

With the govt push towards prefab technologies one gets a sense that good times for Beardsell are ahead and it is well positioned to exploit this opportunity.

Disc - Have a beginning position so views may be biased.

Best
Bheeshma


(Bheeshma Sanghani) #12

http://www.bseindia.com/xml-data/corpfiling/AttachLive/36f69a4b-99db-41f9-9033-4dea16e11d38.pdf


(pranav1980) #13

FY17 Annual Report out
Guidance of 250 cr sales and 15 cr PAT in fy18
350 & 25 cr in FY19
ROE should trend up to 30%

Lot of traction with Govt orders.

disclosure- invested


(sri krishna bhutra) #14

Please share the annual report. Thanks


(Bheeshma Sanghani) #15

http://www.beardsell.co.in/BL-AR-2017.pdf


(dhanyatc) #16

Sebi has slapped a fine of Rs3 lakh on Beardsell Ltd for not making the necessary disclosures within the prescribed time frame under SAST (Substantial Acquisition of shares and Takeovers) normsvhttp://www.livemint.com/Money/0Pqc7lK8xxDo3thYiILyqM/Sebi-imposes-Rs3-lakh-fine-on-Prime-Broking-for-violating-br.html. News on July 14,2017.Is company poor on disclosures/buisness reporting now too??


(Bheeshma Sanghani) #17

Request you to share the source of this guidance

Best
Bheeshma


(pranav1980) #18

Source is the FY17 AR


(sri krishna bhutra) #19

Here are some interesting video links


(Bheeshma Sanghani) #20

http://www.bseindia.com/xml-data/corpfiling/AttachLive/6aa36518-a62f-4ee7-a0a3-52f118a19eb6.pdf

A poor quarterly show by beardsell.