GNFC - The big becoming bigger!


(Capsule91) #244

Done…

And excellent analysis…
Agree on all point expect the TDI, with so much supply coming back online and being added, the prices cannot remain stable…
The last uptrend of the tdi prices happened due to hurricane harvey taking out the us production lines, and the situation is reversing fully and well before expected timeline…add to that is sadara…
And also without antidumping from sadara, i see the pricing war happen domestically also…


(adityaagarwal) #245

Thank you for changing the name. What the price will be in future only time will tell. However the global demand is still more than the global supply even after sadara coming on board. The company has increased domestic market share to 66%, I believe it can command a little pricing power with it’s monopoly status. Also in sheela foam website prices have reverted back to Rs 310/kg.
The company has 5000mt of export order pending though the revenue might not be much 150crores, ebitda from same could be roughly 50+ crores.
It is Exporting to 50+ countries. The market is huge to absorb both sadara as well gnfc and others. TDI is like oil where producers are not breaking price as they are all able to sell at higher prices


(Mridul) #246

Guys…Has anyone here done some analysis on the rev/pat contribution from other prominent chemicals, especially those which Mr. Gupta keeps on referring to in his interviews - Formic Acid, Ethyl Acetate and stuff. He keep iterating that market should not value GNFC as pure play TDI, which in my opinion is completely incorrect. If one chemical forms majority of your profits, how can you even say that? You want market to believe in something which is incorrect.

My question regarding contribution from other chemicals… as i am trying to understand what can the large incoming capex for these other chemicals bring to GNFC’s.

I have been maintaining my stance here regarding TDI cylicality despite good demand. In cyclicals, it is all about supply! With such large capacity coming online, price should crack irrespective of what Mr Gupta says. He said prices will remain stable around 4300-4400 (when they were are 4500-4600). We already are around 4000. So, simple thing - he is just selling his company and his results! No one can predict chemical prices one yr forward. It is all fuzzy projections which can go awry.


(Capsule91) #247

No data is there whatsoever to find the individial realization from chemicals…
I will be cautious to remark of the md is reporting wrong figures, because the most data out there about the tdi prices are derived from mainly china local floating prices…
The statememt that the compamy should not he valued in terms of tdi, is a round the head thing for me , as i read caution in that and the oncoming downcycle in tdi is reflected and he knows the valuation degradation to gnfc in terms of market price that will occur if tdi prices revert back to pre hurricane harvey levels…
Also i dont think the capex plans will get valued any sooner until the moment it finally comes online and shows figure addition, as all chem prices have topped out, presently…

Disclaimer… Exited the scrip with all the holdings today(based on the oncoming uncertainity that i dont want to be a part of specially when its core fundamental in stress, technically i suspect this is wyckoff disrribution and the last point of supply in phase d of the schematics that is happening)… will be trackimg fundamentals


(@nalyst) #248

Guys any update on this news :point_up_2:


(adityaagarwal) #249

Check the annual reports for disclosures, you will find your answer.


(Sameer Wakude) #250

Hi,
When is the confcall scheduled? I tried to search on google, but didn’t find any information. I also emailed them today to find out.


(suhagpatel) #251

TDI prices @ 295/Kg. Reflecting the recent downtrend in international prices.

Regards,
Suhag


(suhagpatel) #252

This video of Zee business claims that TDI prices have been raised by 8% in China recently. Video is dated as 22nd April 2018. However, company revised prices on the downside in May.

Can someone check and confirm the actual date of the video?


(Mridul) #253

Some back of hand calculation for TDI

TDI capacity - 67000 ton
Average FY18 Price - 4300 /Ton
Assuming Average exchange rate in FY18 ~65
TDI price realization per Kg ~ 4300 * 65 ~ 280 INR/Kg

At 93% capacity utilization -> 93% of (67000000 Kg * 280 INR/Kg)

Revenue from TDI = 1750 cr

From segmental result stmt
Revenue from overall chemical division in FY18 = 3987 Cr

PBIT from Chemical division during FY18 ~ 1335 Cr

Majority if interest was owing to Fertilizer division (seeing total liabilities from segmental result stmt)
Almost all tax is owing to Chemical division

Chemical division PAT ~ 1335 - 372 = 963 Cr

Now, check this article - https://www.icis.com/resources/news/2018/02/20/10195239/bumper-tdi-pricing-continues-through-first-quarter-covestro/
As per this article, EBITDA margins for Polyurethane segment was ~29%. Assuming similar margins fro GNFC for TDI, EBITDA from TDI comes to around 525 Cr. Post Depreciation (~60Cr) i.e. (1/4th of the overall depreciation), TDI PBIT comes around 465 cr.

This is one third of the overall PBIT from chem division.


(PE_Ratio) #254

Few points from the con call

1. Capex:
Capex will be in Acetic acid, concentrated nitric acid, and formic acid. These will be brownfield expansion over the next 2 to 3 yrs. 1000cr capex. There is also a plan for green field capex on acetic acid which is 1 billion dollar, which is only in the evaluation stage. But man, 1 billion dollar is 6700 crore rupees. I’m not sure if Mr. Parekh wanted to say 1 billion rupees or 1 billion dollars. 6700 crore rupees capex on acetic acid is crazy.

2. Ecophos:
15% stake. Will be online in the mid of 2019. Still 1 yr away for any revenue generation from this project. That may be recognized as revenue or may come in the form of dividend. They are not sure.

3. TDI:
Management is guiding that the TDI prices will not soften for the next 1 to 2 yrs. Their reasoning is that the European plants are not operating at full capacity and they frequently go through shut down.( How much of it can be believed, I’m not sure. Convestro con call will give an idea on the TDI pricing). 70 to 80% of the revenue in chemicals may be from TDI. They are planning to decrease this percent over the next 2 yrs. (If TDI prices follow the current trend, this percent will automatically come down, but I hope it comes down the other way by improving other chemicals revenue) Antidumping duty is not applicable to Sadara since they started operating newly after the duty was imposed.

4. Fertilizer business:
No plans to expand fertilizer business. No return on the 1500cr net worth in the fertilizer business. When asked if there is any plan to make GNFC just GNC, i.e. to get rid of the fertilizer and give that to GSFC, and also to offload the stake in GSFC since there is not much interest in expanding the business, the management said that’s for the board to decide. There will be some contingent gains.

5. Neem project:
They don’t want it to be called FMCG, but neem based products section. The revenue from this is 16 to 17cr. They have already started selling the products in more than 6 states.

Overall impression is that the management doesn’t want to give product specific detail (like they usually do) even for Neem products revenue. Someone in the background said the revenue from Neem products was 16cr for Q4, Mr. Parekh wasn’t ready to reveal that too. When the caller asked repeatedly, he revealed 16cr. When asked if that 16cr was revenue or the bottomline, he was not ready to reveal that too. But I assume that 16cr is revenue because if that is bottom line, then the revenue should be over 150cr, which is nowhere nearby the last quarter revenue.

Disc: Exit at 495. Tracking.


(suhagpatel) #255

Transcript of Q4FY18 Concall.

Regards,
Suhag


(suhagpatel) #256

Where can we check Chinese TDI prices?

As per Nigel D’souza Chinese TDI had corrected frm 41000 yuan/tn to 25000 yuan/tn. This is a big fall in a span of 3 months.

Now Chinese TDI bounced to 29000 yuan/tn.

Regards,
Suhag


(Capsule91) #259

(sunilgct) #260

Gas leak reported at GNFC’s TDI unit in Dahej


(anil jain) #261

(saurabhg) #262

The Company has started 24 Neem Parlours in Ahmedabad & Surat. (Apart from Neem Stores in a few states) These Parlours are going to open in other cities in Gujarat soon and have plans to expand into Rajasthan & Madhya Pradesh next.

The product mix for now is purely cosmetics, but they are receiving requests for other categories as well (Pest Control & Medicinal).

The average sales per store is 1500 to 1800 Rs./day :hushed: (Maybe its initial days, but i doubt that it would add significantly to toplines anytime soon)


(Capsule91) #263

U mean 1500 to 1800 items per day right?


(saurabhg) #264

No Its Rs.
For some stores its higher. The gandhinagar store was doing around 3000 to 3500rs/day. The overall average is around 1800Rs. (these figures were from the counter salesman, was he concealing or not telling the tight figures? Cant say)
(Editing the original Post now)


(Aditya Mehta) #265