GNFC - The big becoming bigger!


(suhagpatel) #266

Good clarity on few points.

1 - Considering the current international price of TDI, GNFC is getting better price domestically. Rs. 295/Kg is the current price as CMD confirmed (Sheelafoam site also has same figure) which translates to $4400/Tn in USD. So their focus on expanding share domestically is good.

2 - Few other chemicals like Acetic acid, Methanol and Fomic acid are trading at all time high. This should provide cushion to certain extent in case TDI prices go down domestically as well.

3 - Company expecting margins and revenues to increase going forward.

If we go by what CMD mentioned, then we are in for another superb quarter by GNFC.

One observation I have is recently CMD has been interacting with media very frequently. Not sure if that is a good sign or not but he should focus on running the company rather than giving regular updates on TDI prices.

Regards,
Suhag


(hemtan100) #267

agreed. CMD’s visibility on media has grown multi-fold in the last 1 year.
Given that he intends to grow the neem vertical to a few hundred crores in 3 years, this kind of frequent media interviews may not do too much harm imho. Neem vertical needs all the marketing possible to grow to such a scale and being associated with a known company (in the eyes of common man) should help.


(suhagpatel) #268

Good insights on company’s expansion plans and overall fertilizer industry.

Regards,
Suhag


(Aditya Mehta) #269

Sadara Landing price in India around Rs.280-290/kg
Base for domestic price of TDI Rs.250/kg
Acetic acid prices up 40% from last one year.
GNFC is the only producer of ACETIC ACID
RCF formic acid plant acquisition cancelled due to some issues , So they will on their own go for capacity expansion of 7-8000 tonnes.

(suhagpatel) #270

Company is short term debt free now. There are many good things happening recently. First analyst meet yesterday was one of them. They mentioned that they will be uploading the meeting transcripts soon (Not sure if other companies do that. Pardon my ignorance here). CMD is trying hard to build a professional image for a PSU.

As far as TDI prices are concerned, there is definitely a downtrend even for domestic prices as well. Prices hovered around Rs. 295/Kg for May-June. Now quoting at Rs. 280/Kg which was last seen around Aug-2017. Going forward, TDI prices will remain flat or even go down Y-o-Y basis as we are looking at a bigger base now.

Growth in other chemicals, Echopose JV and Capex should drive the growth forward.

Regards,
Suhag


Bull therapy 101-thread for technical analysis with the fundamentals
(Ayush Mittal) #271

Detailed presentation - https://www.bseindia.com/xml-data/corpfiling/AttachLive/afe607b0-b0b4-429f-af5b-9ab6d33a95a8.pdf

Summary of recent GNFC Analyst Meet 2018 (fwd)

Chemicals

· There are total 41 plants around the globe producing TDI with a total capacity of 300,000 MT out of which GNFC has about 67,000 MTPA Capacity

· GNFC manufactures 50,000MT of pure TDI and 15,000 MT of TM blend (TDI blend)

· GNFC has 65% of domestic market share for TDI while rest is imports

· GNFC holds 60% of domestic market share for Aniline while rest is imported

· The prices of Aniline have gone up by 24% in 1 year

· GNFC is the only manufacturer of Formic acid, Aniline and Methanol in India

· The demand of Acetic Acid is 1.5 mn MT per year in India and GNFC has a capacity of 159,000 MT while the rest is imported

· GNFC is the only manufacturer of Formic acid in India and has a domestic market share of 65%.

· The demand of formic acid in India is about 36,000 MT out of which 22,000 is supplied by GNFC

· Formic acid is used in rubber extraction; the demand is expected to go up in future on the back of increase in rubber plantation in North East India

· GNFC uses imported Ethanol which is cheaper than domestic ethanol used by other manufacturers

· The company has a strict policy of not supplying acetic acid to other domestic manufacturers of ethyl acetate since the manufacturing process of ethyl acetate is more cost efficient via acetic acid route

· According to GNFC and Covestro the supply from SADARA TDI plant has been absorbed in the market and would not cause any disruption in the prices

· The TDI prices are expected to correct but there won’t be any drastic downfall in the prices

· The demand for TDI goes down in monsoon and rises back up after September

· The export price for TDI is about USD 3500 to 3800/MT

· The TDI 2 plant has been running at 105% capacity utilization for last 2 weeks without any issues.

Expansion

· The company would be spending roughly around Rs 20 bn on expansions for various chemicals such as Formic Acid (~7500 MTPA), CNA (50,000 MTPA), Ammonia(150 TPD), Acetic Acid (planning in process)

· The company expects about 12 – 13% ROI on the CAPEX.

Others

· GNFC is a strict follower of Make in India campaign and all the product it manufactures are import substitute

· GNFC exports to 67 countries out of which 31 are in Africa

· The company has zero long term debt and zero working capital

· Exports grew by 49% in 5 years

· The prices for neem fruits went up to Rs 16/ kg from Rs 1 – 2/ kg in past few years

· The take-off in fertilizer segment was low in June due to delay in monsoon. However there has been a pick up in fertilizer sale in July.

· GNFC produces more than 1 mn MT of fertilizer and this segment contributes about 30% to the revenue.

· About 24% of total urea production was used for industrial manufacturing purpose and to limit this use of urea, the GoI has mandated need coating for urea fertilizer. 30 mn MT of urea requires ~25,000 MT of Neem coating.


(Akshay Kumar) #272

(suhagpatel) #273

There are news that Gujarat Government has appointed MS Dagur (IAS) as MD, GNFC relieving Dr Rajiv K Gupta (IAS) - Current CMD.

Though there is no official communication on BSE yet.

Regards,
Suhag


(sjsandesh) #274

Notification has come:

We hereby inform that Government of Gujarat
(GoG) vide its Notification No.AIS/35.2018/24/G dated 12/7/2018 has
withdrawn the nomination of Dr. Rajiv Kumar Gupta, IAS as Government
Director from date he relinquishes the charge as Managing Director of the
Company

Vide aforesaid Notification, GoG has nominated Shri M.S. Dagur, IAS as
Government Director on the Board of the company from the date he assumes
the charge as Managing Director. Shri M.S. Dagur, IAS will be formally
appointed as Managing Director of the company at the ensuing Board Meeting.


(suhagpatel) #275

TDI Prices are falling much faster than what GNFC & former CMD wanted us to believe.

Current price @ Rs. 255/Kg. Steep fall of Rs. 25/Kg in about two weeks.

Disc: Invested

Regards,
Suhag


#276

What about the international or chinese spot prices?


(suhagpatel) #277

Chinese prices were around 27500/tn till last week.


(hemtan100) #278

BASF restarts TDI plant. Immediate impact on TDI prices in Europe and Middle East.


(anil jain) #279

GNFC:Strong
Revenue growth strong in both chemicals and fertilizers biz
EBIT loss in fertilizers biz expands
EBIT profit in chemicals almost doubles

Q1FY19-YoY
Revenue up 64% at 1604cr
Ebitda up 80.4% at 311.35cr
OPM at 19.4% vs 17.6%
PAT up 178% at 185.5cr


(suhagpatel) #280

GNFC has written off unrealized subsidiary amount of Rs. 127 Crs in current quarter due to uncertainty of collection from Government. This has resulted in higher other expenses impacting the profits. Subsidiary of 8.29 cr for current quarter also not recognized.

Regards,
Suhag


(PE_Ratio) #281

Listened to Sheela Foam concall. TDI price today is 250 rs/kg. They’re expecting it to go down further to 220 to 225 rs/kg. They’re even thinking that, given the current scenario, the price should settle down between 175 to 200 rs/kg in the long-term - next 1 to 2 yrs. Basically, TDI has peaked and now on the down cycle.
TDI being the major contributor to the topline of GNFC, this explains the Q1 of GNFC and the price action after the result.


(suhagpatel) #282

Comparing YoY it was great results however QoQ was obviously not good. Q1 was mainly impacted by the subsidiary write off and now company is staring at a lower TDI prices. We are already at par with last year’s TDI prices so GNFC will have a larger base to compare with lower TDI prices. Other chemicals which are trading at multi year highs and interest cost savings should support the profits to some extent.

On the management side, new CMD or any other management personnel from company has not spoken after the results. This is in stark contrast to the earlier CMD (Mr. Gupta) who used to always come on business channels next day to share company views and plan for the future. Management change has come at a bad time for the company.

Regards,
Suhag


(suhagpatel) #283

Did GNFC conduct any concall after Q1 results? I don’t see any announcement or transcript on BSE.

Regards,
Suhag


(Aditya Mehta) #284

No communication with Investors after new MD taking charge.
Seems he is quite opposite to Dr.Rajiv Gupta.


(suhagpatel) #285

Thats sad. The current MD looks typical babu whereas Mr Gupta created a professional image of GNFC.

I find it surprising that even the CFO or other management team did not find any merit in having a concall.

Regards,
Suhag