Bhansali Engineering Polymers Ltd.- An Import Substitution Story!


(Parthasarathi) #144

Thanks for the reply. I am holding for now but please do let us know if you find anything new on this. Bhan also needs your hand holding like Arihant:slight_smile:


(Agarwala) #145

Today and the next week crucial...
Dear @ madhavikkutti and Parthasarathi! Looking at the chart, it can be inferred that the next few days are crucial for the stock. It is moving in a narrowing triangle formation, strictly paying attention to the support and resistance lines. But near the apex the triangle is becoming too narrow, and the prices have to make a decision. Which direction they take can be anybody's guess, but a sharp correction or big breakout is imminent. It may be a false corrective move first, followed by breakout, but the reverse is less likely.


(Parthasarathi) #146

Thanks for your analysis. Yes i feel it has to take some direction. Up or down....It is high time for a break out...soon the result date would also be announced and the share holding pattern. Fingers crossed.


(nil_71) #147

25% up in 2 days ? any promoter buying ? I could not find anything in BSE

I was thinking Good Auto numbers and Fresh Consumer Durable Stocking could be reason for run up


(lohiyaakshay08) #148

In my view, the company is announcing the results very early gives public the sign that it would be bumper!

Also, after looking the delivery volume on NSE, it gives me feeling that some funds have made the entry.


(lohiyaakshay08) #149

In my view, at 104, BEPL is trading at rich valuations. It is more than 40PE. How do you guys feel it will move going forward?

Anyways, have a look at this-https://asia.nikkei.com/Markets/Commodities/ABS-prices-track-higher-on-Chinese-auto-buying

Disclosure-Exited the BEPL above 100.


(nil_71) #150

Bhansali is on the cusp of pretty good results. LT investors should hold on. I am more interested to know how their proposed expansion plan from 80 KTPA to 130 KTPA going on.

With good Auto nos coming and based on this ABS international price hike + Rupee depreciation , BEPL is expected to do better


(yudiagg) #151

I agree. One must continue to hold it. Let us see if the expansion is funded from internal accruals as claimed by the promotors.


(nil_71) #152

Challenge is BEPL does not hold any conference call


(Mahesh) #153

They even say they want to fund the 130 to 200 ktpa expansion (in that mysterious port city) through internal accruals. The funding for current expansion will give us a clue of how good they are in adhering to statements


(Agarwala) #154

ABS price rise is actually positive for Bhansali—till the rise of the finished product remains more than the rise in the raw material prices. This appears to be the current scenario.

In the next week, if the share price holds above the upper dashed line, there is little cause of concern. If share price moves above the upper continuous line, there will be a bull move, which can take BEPL to 150 and above. In the longer term for the story to continue the prices must remain above the lower continuous line that will shortly cross the century mark. Please ignore the horizontal line at 100.


(nil_71) #155

https://www.platts.com/videos/2017/october/market-movers-asia-100917?utm_source=twitter&utm_medium=social&utm_term=petrochemicals&utm_content=video&utm_campaign=marketmovers

Bhansali only needs good execution


(nil_71) #158

Analysis: Asia ABS, PP block copolymer get support from firm Chinese auto demand
Singapore (Platts)--3 Oct 2017 1210 am EDT/410 GMT

The acrylonitrile-butadiene-styrene margin in Asia is holding near a four-year high despite the fall in prices last week, after riding on bullish Chinese automobile demand throughout the third quarter.

Asian spot prices for ABS, a polymer used in the manufacturing of automobiles and consumer electronics, fell below $2,000/mt CFR China last week for the first time since early September, S&P Global Platts data showed.

ABS was assessed at $1,980/mt CFR China Friday, down $60/mt week on week on retreating feedstock styrene monomer and butadiene prices.

ABS margins averaged at $290.82/mt in Q3, compared to an average of $164.36/mt in Q2, and just $5.02/mt in Q3 last year, Platts data showed.

This is in stark contrast to 2016, when sluggish downstream demand pushed ABS prices to below $1,500/mt until November, resulting in negative margins for non-integrated ABS producers for pro-longed periods.

AUTOMOBILE SALES SHOW NO SIGN OF SLOWING DOWN

A large contributing factor is the increase in automobile sales in Asia, owing to robust demand from China -- the world's largest automobile market. China currently accounts for around half of global demand for ABS, according to market participants.

China's automobile demand is expected to rise 6% year on year from 2016, according to industry estimates.

China's ABS imports rose 4.2% month on month for August at 167,068 mt. This also represents a 14% rise year on year, reflecting the strong demand for ABS and its downstream sectors in Q3.

According to the latest statistics released by the China Association of Automobile Manufacturers, automobile sales were up 10.9% month on month to 2,186,000 units in August. This is a third consecutive month of growth and also represents a 5.3% increase in sales compared to the same period last year.

Production figures were equally positive, up 1.6% month on month to reach 2,093,000 units in August. Year-on-year, this figure represents a 4.8% increase.

Another contributing factor is the pickup in seasonal plastics demand ahead of the week-long National Day holidays in China that started October 1. During this week, downstream users of ABS typically observe a large spike in both consumer electronics and automobile sales.

This increase in manufacturing activity ahead of the National Day holidays was evident in China's latest Purchasing Managers' Index for September, which was up 0.7 points from August to 52.4 -- a year-to-date high.

PP BLOCK COPOLYMER HITS TWO-YEAR HIGH IN SEPTEMBER

The same trend could also be observed in the polypropylene market, especially block copolymers which are being used increasingly by Chinese manufacturers in automobile applications.

China's PP block copolymer import prices surged to two-year highs early September, as downstream demand from the automobile sector rose, according to industry sources.

The Platts CFR Far East Asia PP block copolymer assessment had risen 5% since the beginning of the year to $1,180/mt on September 6, 2017 -- a price level not seen since July 15, 2015 -- with the industry expecting relatively firm demand in Q4. But since then the price has edged down to $1,150/mt on September 27, down $5/mt week on week ahead of the Chinese holidays.

PP copolymer imports into China are also on track to rise 15% to about 300,000 mt in Q3, compared with Q2, according to China customs statistics. Block copolymer, also known as impact copolymer, is used increasingly by the automobile industry to substitute metal components to build lighter cars and promote fuel efficiency -- an industry trend known as "lightweighting."

An average car used about 150 kg of plastics and polymer composites in 2014, according to the American Chemistry Council. This amount is expected to double by 2020, making it one of the most important growth sectors for PP producers, industry sources said.

Q4 ABS PRICES TO REMAIN SUPPORTED ON SUPPLY TIGHTNESS

Looking ahead to Q4, with no new ABS plants scheduled to begin production later this year, demand is expected to outstrip supply, sources said.

"Despite a fall in both feedstock butadiene and styrene monomers prices last week, the tightness in the Asian ABS market will likely continue to provide support to ABS prices in the short term," an ABS producer said.

Feedstock butadiene was assessed at $1,450/mt CFR China on September 29, down $150/mt week on week, while SM fell $95.50/mt over the same period to $1,263.50 CFR China. This represents a $79.80/mt or 7.6% fall in feedstock costs week on week for non-integrated ABS producers, which will likely exert some pressure on producers to adjust offer prices lower when the market reopens after the National Day holidays, next week.

Meanwhile, European ABS prices in October are expected to be steady, tracking a stable outlook on costs, Platts reported earlier. The European ABS spot price was last assessed at Eur1,820/mt ($2,180/mt) FD NWE Wednesday, up Eur90/mt over the month.

With the CFR China ABS spot price falling below $2,000/mt last week, the import arbitrage from Asia into Europe may re-open in October, based on indicative freight costs of around $100/mt between the Far East Asia and Europe and additional inland freight costs of around Eur20-30/mt


(amil) #159

Very relevant news article. Excellent eye for detail!!

Do you know the correlation between prices that BEPL (or any other indian market players) fetch and the prices of ABS in Europe / China.... Do they track closely or are BEPL's sales at contracted price with no mark-up for rise in spot?

Just trying to understand whether margins and bottom line of BEPL tracks closely to global prices or it follows its own course?

Your reply will be appreciated.


(nil_71) #160

No idea. But what I gather from earlier notes that BEPL, 50% production long term contract and rest 50% Market Linked


(nil_71) #161

http://www.bseindia.com/xml-data/corpfiling/AttachLive/ee055705-904a-436b-9b65-65e84820f1a5.pdf

Results pretty good. Concern is looks like proposed expansion is not taking place as expected

My Q is if expansion is taking as usual .Why CWIP number is so low ? Has they shelved it ?

Also Cash portion has substantially gone up from from 17 crs/ March 2017 ( as per AR) to 57 Crs/Sept 2017


(Dr. Tarun Deep Singh) #163

http://www.bseindia.com/xml-data/corpfiling/AttachLive/ee055705-904a-436b-9b65-65e84820f1a5.pdf


(Agarwala) #164

The stock is getting ready for the fireworks in the week(s) ahead

See my previous post above. Following wonderful results, the channel line is likely to be breached in the morning session itself on Monday. This should follow in sharp upward movement in the prices. I am hopeful because little less than 2 crore shares changed hands (open interest) during last two weeks only. Total public shareholding is just above 7 crore shares. This includes holding by mutual funds and large investors also. So a large chunk of floating shares has changed hands during last few trading sessions.

During last eight trading sessions the volume never fell below 40 lakh shares, and this is some kind of record for BEPL. It seems volume is coming back to the script, and with substantial movement the stock might have reached stronger hands. Only one conclusion can be drawn that the prices will go higher from here.
This prediction is my personal opinion based on some facts, however, anything is possible in stock market—say a negative news like expansion project delayed or held back. Please use your due diligence before investing.
Disclosure: heavy investment done at 25.


(Anuj Maheshwari) #165

Also, didn’t the management clearly say that they won’t resort to borrowings to fund expansion? As i see 147 cr loan whereas it ws debt free earlier. Or was my understanding wrong?


(nil_71) #166

Yes fully agree. Since Management does not hold any concall, any entrepreneurial person based in Mumbai, if he/she can make a visit to its Mumbai HO, that will be great