Bhansali Engineering Polymers - An Import Substitution Story!

(Chandragupta) #395

Purchase of stock-in-trade, almost absent till last year, is Rs.102 crores. This has produced 15-20 % of the revenue (material cost of in-house production is Rs.590 crores). This points strong demand, which the company is unable to meet from its own capacity. So it has sourced finished products from outside. While this is a positive, it also means that when the new capacity comes up, in-house production will replace these purchases. To that extent, new capacity will not contribute to topline growth. Part of the future topline growth has already come in this year. Margins should still improve though.

This is an item that should be watched.

(nil_71) #396

As I mentioned earlier, there is a decelerating trend in BEPL top and bottom line. BEPL saved the day on topline through import , and also suffered exchange loss

As @chandragupta mentioned, I fulled agree, you may not see, substantial top line growth in coming days, till that 37KTPA expansion happens.

(cool_gaurav) #397

I agree with you that write off Rs. 8 Crore debtors is a huge amount (around 8% of profit) & matter of concern and also debtors has increased in absolute amount. Just writing a line that all the actions has been taken against defaulter is not enough. I think something more is there, keep a watch.

(jainnitinp) #398

Just like those with BEPL in their portfolio have a vested interest, those planning to invest also have an interest in writing negative and bringing the price down to find a good entry point. Credit goes to the mgmt for being transparent about the write-off and exchange loss otherwise they could’ve just gotten away without anyone knowing why other expenses have gone up. IMO, although the stock had priced in a good result already, today’s selloff was more a knee jerk reaction and it has entered oversold territory.

Disclosure: invested

(Vinay Arya) #399

Whether the trend is decelerating or accelerating can clearly be found out by the capacity utilisation nos, which according to the analyst reports are now in the range of 70-75% for FY18, i.e a production of ~70k tonnes out of 100k capacity. With more capacity of 37k tonnes being available at end of FY19, there is a clear opportunity for slow ramp up of utilisation numbers. There is no need to speculate on that.

(Barbie) #400

Company has an edge in ABS Market, due to duopoly and could perform better by utilizing its capacity and expansion plans.
But the main issue i found is with integrity of promoter. Specially after this write off of Rs 8 Crore debtor in latest quarter.

Discl : Not invested yet, analyzing the company

(nil_71) #401

I have one question, why Cos is not holding quarterly call with investors ? For the last 3 qtrs, they are meeting all the analysts on earth. They are not sharing any presentation also

(skhanbir) #402

I think its a fair expectation from the management to share the interactions/discussion and QA with analysts.
This will answer all the questions.

I expect the management to share the QA after finishing all the sessions with analysts.

(Chandragupta) #403

Came across this primer on ABS Resin :