Bhansali Engineering Polymers - An Import Substitution Story!


(Anand Srinivasan) #21

@srvn
Forward PE would come to around 10 if you remove the lumpiness of the last 2 quarters of 2016

@Gaurav @Pavas,
Promoter integrity is one of the reasons for the stock lying mostly low.

Amol,
Nice template. Could you share that?

Also note that Acrylonitrile prices have fallen a good amount since Crude oil prices came down and this must be assisting the companies profitability.

I am assuming that the company doesn’t have any pricing power.

Disclaimer
This is definitely not a steady compounder kind of company. It appears to be undervalued at the moment. Thats probably the case we are making


(weblinsolutions) #22

@RajeevJ Allegation on the promoters for mismanagement of the funds seems to be a serious case. How do you view that?


(Rajeev Jawahar) #23

Serious concern, no question about it. I was unaware of it when I had initiated the thread, or would have certainly added it as a concern. That’s the advantage of putting it on Valuepickr! The case in question pertains to 2011, & I wonder what was the outcome in the case as the minority share holders who went to court , the MKG group continue to have a holding in the Co. after all these years!

These are changing times. Most Promoters are looking for market cap, so I guess it pays to be honest! For me personally, the most important thing is how the story unfolds. Only if it unfolds to my liking do I plan to add. Waiting to see the Dec qtr results & the effects of demonetization on them.


(amil) #24

@RajeevJ
Rajeev Sir, Between October 2016 and Jan 2017, MKJ and related companies have brought stake down from 23.58% to 10.74%, what do you infer abt this info?

Oct 2016 filing: http://corporates.bseindia.com/xml-data/corpfiling/AttachHis/2AAD91BE_F20F_494A_95ED_0BD1F45C8684_142309.pdf

Jan 2017 filing: http://corporates.bseindia.com/xml-data/corpfiling/AttachHis/0874027A_8A4D_4BC2_9D56_924BCD758836_125308.pdf


(Rajeev Jawahar) #25

Hi Amil,

That is the point that I was trying to make. The MKJ group that went to court held on to the shares for the next five years. Their selling could be due to any reason. That said, the fact that they went to court means that one needs to be cautious when it comes to corporate governance. Hopefully, the promoters would have learnt their lesson, but like I said before, growth in the next few quarters would determine where the share goes from here!!


(Prem Bhat) #26

Promoter buying reported to BSE on 09-Feb-17.

Came across this during a routine search exercise that I do once in a while for insider trades, hence updating the relevant thread for info of those interested in this scrip. Discl : Not invested.


(ASP) #27

Promoter is continuously raising stake since one year, why would he park his own money if didn’t expect the share price will go up substantial ?
Also promoter stake is already above 50% before raising stake.

Interested in stock and tracking closely.

At this point what is the economic moat of this company ? Can we describe its pros and cons in points to make it simple.


(kevinmehta) #28

Promoter bought again. Reported on 10th Feb.

http://www.bseindia.com/stock-share-price/stockreach_insidertrade_new.aspx?scripcode=500052&expandable=2

Disclosure: Invested


(Hardik) #29

The company has got a favorable verdict from the Company Law Board (CLB), Mumbai Bench, Mumbai against the case filed by certain group of shareholders in September 2011. However an appeal pertaining to the same is pending for disposal before the High Court, Mumbai.


(kanvgarg123) #30

http://www.moneycontrol.com/stocks/reports/bhansali-eng-disclosures-under-reg-292sebi-sast-regulations-2011-6327341.html

Any Idea about this? Amount of shares bought by management = Amount of shared sold by this big investor.

Is this company MKJ enterprises anywhere related to promoters ??

Thanks
I am tracking this company very closely.


(Bheeshma Sanghani) #31

The total capacity of BEPL is going to almost triple from 48000 TPA to 137000 TPA. The revenue for 2017 is expected to be 1500 cr, also almost triple from the current revenues.

Out of 137000 TPA, 130000 TPA is ABS Resin. The final capacity after expansion is

The total cost of this expansion is 200 crores.

As mentioned earlier in this thread, the demand seems to be growing and the company cant keep up with this demand necessitating the expansion. At 200 crores, the company will definitely need to take up additional debt or issue equity.

This is certainly a good bet. There are ifs and buts about the promoter credentials, so thats a concern. Another concern for me is the capex of 200 crores which will be required to transition to the enhanced capacity. The company currently doesn’t seem to have the necessary internal funds needed so its a risky maneuver to go in for an expansion. This can be good or bad. The management seems to be pretty sure of the demand panning out and hence they have decided to take up the risk ( which is a good thing ). If the management has estimated incorrectly then its going to end up in bad shape. However, i guess the company knows what its doing.


(Hardik) #32

2016 AR:

They do not intend to add further capacity at Abu plant which is now at 80 KTPA. They have not raised any long term debt for this expansion from 51 KTPA to 80 KTPA for which they have spent approx. Rs.35 Cr.

Further 120 KTPA is expected to be at some port based location to save on transportation. The cost details for this expansion is not mentioned but it will definitely be significant and needs to be analysed as to how it will be funded when it’s announced.

The above details are from 2016 AR. The Environment report shows study period March to May, 2015 but report is dated Oct. 2016 :slight_smile:


(Kartik) #33

Can you share the link of that write-up and mention the pages also. I could not find the details in AR16.


(Hardik) #34

It’s not from AR. It’s from EIA/EMP Report.

Here is the link

http://environmentclearance.nic.in/writereaddata/FormB/EC/EIA_EMP/25102016SFJ6SGZHAnnexure-documentofEIAEMP.pdf


(Bheeshma Sanghani) #35

Yes. The report is dated Oct 2016, because there were some EC amendments after they submitted the application on 13-05-2015.


(Bheeshma Sanghani) #36

Also, the EC document mentions that the expansion at the existing facility will not require any further land acquisition and will be in the same premises. The 2016 AR mentions “some port based location”.

Any clarity on which exact location is this expansion?


(Hardik) #37

Nope. They have not provided any further information. They must be in the process of identifying the port / location. Any new developments are not known as there is limited communication from the company. Since the key raw material i.e. Styrene monomer is import dependent it could be either at vizac sea port or Ennore. I could be completely wrong here.


(Bheeshma Sanghani) #38

I am just concerned that the words in the Oct 2016 EC covering letter convey that they are waiting for the EC and it hasn’t been granted to them yet for the expansion at their current facility.

If we take it that the capacity expansion is going to happen at this unknown port based location (and not at their existing plant as i have assumed) then wont they need to make a fresh EC application? and also acquire land? I am hoping someone more informed than i am can throw some light on this.

If there is clarity on this then it will give investors like me more confidence


#39

INSIDER TRADING DETAILS


#40

remuneration to KMP/WTD: Fy 2014-15 Fy 2015-16
Remu Paid 1.1 cr 2.2 cr
Profit Before Tax 8 cr 23cr
% of remu w.r. t to pbt 13.5% 7.7%
also Mr B M Bhansali receives 5% commission on net profit which is included above. It seems they are using companies funds to increase their shareholding.