Bluechip Tex is in the business of twisting the polyester texturized yarn. It has one manufacturing unit in Silvasa.
For the past 5 years, it is showing exciting growth in terms of sales. From 12 Crore sales in 2011 to 111 Cr sales in 2015. The 1st two quarters of FY2016 have also shown an excellent growth. The TTM sales currently stands at 136 Cr.
From Operating stand point, the company has shown an increase of WC by 8 Cr in the last 5 years (6 of which is in 2015). However, against that they have generated OCF of 15.5 Cr. The only concern we could find in the operating space is the OPM, which hovers around 3-4%.
From financial standpoint, the company has a total debt of around 9 Cr, and has debt equity ratio of 1.39. ROCE is around 23-24%.
Though the company has only 1 production unit, it capex is involved in installation of new machines at these locations, such as in 2015, 1 Draw Texturising Machine and 2 Air Texturised Machines were installed. The market demand of such products is something we are trying to figure out, and may be the community here can help.
The risks that we found are:
- OPM is very low, 3-4%, not sure if industry norm, or the company issue.
- Related party transaction. Almost all of raw material is purchased from Beekaylon Synthetics, in which all the Khemanis (promoters) are shareholders.
Now, the above two risks can be related, or separate. We are trying to find more info on this.
Lastly, this stock is available at a PE of 9 currently. We are searching answers for following questions:
- OPMs in this industry.
- Capacity Utilization of current assets, and how much sales can be reached going forward.
Disc: Invested at a tracking level
@akash_1cr and Nikhil