Wow! That is some guidance. Almost 5 times its current revenue in next 4 years. MD himself says that's optimistic.
I have gone through the whole thread. I feel there are lots of things which effect this business. Crude price is one that effects topline and PAT big time along with inventory and offtake.
Regarding OBA division break-even (at PAT level), mgmt guided for Mar FY17, but has still not happened even after 5 qtrs post the original guidance. So approvals are taking time.
Some questions -
What would be approx revenue contribution from Phenol-Acetone plant (around 2000 cr at 80% utilization as per Anand Rathi report)? Margins are supposed to be close to 15% int his division.
Why are they paying dividends when they are doing QIP and raising huge debt for capex? They could have saved 60-65 cr in last 3 years had they not paid dividends.
What is the cost of the debt? What is net debt at the moment? This company has been constantly raising debt but not trying to reduce it, as constantly coming with some new project. Have they cleared their plans on debt repayment post the large greenfield project? What are the repayment terms?
@basumallick - They have guided to grow Specialty chemicals business at 15% CAGR for next 5 years. Will they be needing any capex for the same? I believe revenue from Phenol/Acetone division would not be included under specialty division...Correct me if i am wrong.
ROE - They have been extremely poor on this front.They have constantly said they will improve margins as contribution from Specialty Chemicals division increases, but the things are yet to reflect in the numbers. Similarly, Asset turns have been reducing constantly from 4.6 (2012) to 2.1 (2017) probably because they are constantly doing capex and are unable to utilize that as per their expectation. Leverage is continuously increasing. So all three parameters of ROE are questionable.
Receivable days (from 52 days in 2009 to 91 days in 2017) constantly rising every year.
There are lots of such questions which from Balance Sheet point of view make this a questionable investment. There are better companies with much better operational metrics than Deepak Nitrite. Though, phenol plant can change the dynamics for this company (that's what i am betting on).