Rain Industries - An oversold de-leveraging play

(madhavikkutti) #177

Yes @bhavveshh, My calculations are just estimates based on available info & assumptions based on trends and there can definitely be a margin of error (plus or minus). That way, we don’t even have the production figures of the month Dec-17 available right now, hence I assumed it to be the average of the figures of the first 2 months of Q3. As you can see from my worksheet, Goa Carbon stopped giving the sales value starting from Jun-17 onwards. The estimated revenue figure of Rs. 157.26 crores was derived using the following calculation: 150.65*(21,020/18,286)*(18,471/20,342).

One real benefit that came out of the above exercise was that, I got reaffirmation that, the CPC prises are on a steady rising trend since Mar’17, as mentioned in the following article and it should benefit companies like Rain: http://www.moneycontrol.com/news/business/stocks/rain-inds-good-results-confirm-strong-tailwinds-for-carbon-products-in-metal-industry-2434853.html. We also got the trend that, the demand for CPC has been more or less steady between Q2 & Q3 without any significant decline.

(saumya) #178

Some recent article on china and aluminium


(madhavikkutti) #179

(SivaSai) #181

Petcoke import duty hiked to 10 % from 2.5 %. Do you think Rain share price will go up on Monday?

(dhiresh17) #182

One more big positive for Rain Industries.

(Raj A A) #183

Rain Ind is manufacturing only CPC and CTP besides cement . To my knowledge major requirement of Petcoke is imported. Rising of petcoke is affecting cement as well as DI pipe mfrs.

(Naz) #184

How can increasing raw material prices be positive for the company ? I believe pet coke is the raw material for the Indian unit of Rain which does the calcining of raw pet coke to produce Calcined Pet Coke (CPC). Rising prices of raw pet coke will rather have adverse impact on the gross margins of the company.

(sunilgct) #185

Let’s not jump the gun.
There is Fuel grade pet coke-FPC(used in cement manufacturing)
Green pet coke ( used in making aluminium smelters)

Rain is mostly fully integrated getting most of the intermediaries from its subsidiaries . GPC alone it procures…but this mostly a byproduct of crude…

Now coming to ban of FPC and import duty …it will have negligible impact on rain as cement is only 10% of rain revenue and more over they don’t import as far as I read for their manufacturing …
So don’t get carried away with the news …or buzz.
As far as rain ,CPc prices is all you need to worry about as long as it is intact eps will grow…and so as the share price.
It will be around 350-400 range for now and post dec results I expect result to be good and we can see 500 levels around Jan /Feb18 when results are declared.

And if markets reacts positively for loan refinancing we could see some momentum .

(Naz) #186

From import tariff perspective, there are only two types of pet-coke - calcined or not calcined (image given below) (no bifurcation of import tariff with regards to FPC vs GPC).

So, import duty increment from 2.5% to 10% will impact both Fuel Grade pet-coke (FPC) and Green pet-coke (GPC) equally as both fall under not-calcined.
So this probably should impact CPC India division of Rain (Vizag plant). I recall that Green Pet Coke (for aluminium anode production) is mostly imported as pet-coke from Indian refineries are not of anode grade quality. Now whether it comes from a third party or from a subsidiary should hardly matter as in both the cases this will hit their consolidated profitability.

(n.arvind2k) #187

CPC primarily used by Aluminum/Steel sector does not get Impacted either by ban on Pet Coke or does not have positives from the rise in import duties on Pet Coke.

There is confusion among the investor community about the Pet Coke required by cement industry, which has no connection with CPC supplied by Rain to Aluminum/Steel industries.

Anode grade (Low in sulfur and metals) type further calcined to produce Calcined petroleum coke (CPC) is used to make anodes for the aluminium, steel … Rain manufactures this CPC*

Keep an eye on CPC prices… Hope it crosses 10k and trades above that range for the next 6-12 months :slight_smile:

(sunilgct) #188

Where did you get the chart on coke prices …can you point to the website …and is there a way where we can track across the globe …particularly us and China prices

(vivekchoraria) #189

the chart you copy pasted is not for cpc but pet coke…completely different things…there is no public source for cpc prices unless you subscribe to one of the major research houses like platts.

(ashit) #190

Small new video on business model and outlook of rain industry

(sarmams) #191

Rain Industries has now been moved to A group in BSE (previously it was in B group). What are the implications of this? Does this automatically enable the stock to be part of F&O segment? Any other advantages due to this reclassification?

(ashit) #192

Mohanish pabrai opinion on Rain industry and tailwinds like
China’s pollution control policy
US corporate tax cut policy
Disclosure invested in Rain industry

(sunilgct) #193

Goa carbon posted stellar results. Goa has 75000 TPA of CPC where as Rain as 3 times more apart from CTP and Cement. expect a stellar results fr Rain as well.
BTW Goa equity base is very small and Debt compared to Rain. Strongly feel Post The Q3 results even the CMP will look cheap. Expect to see a EPS of 8 rupees for Dec… extrapolating for FY 19 will be approx 32 with the current PE of 25 , FMV will be 800 Rupees and Goa carbon is tailing at 40Pe where as Rain is at 25 , so even if we discount EPS for FY18 to be 25(which should be approx the FY17 EPS) , we should still see a FMV of 625. and if the PE expansion happens then easily 1000.

and if this was not enough :slight_smile: … Dolly Khanna Increased the stake to 2.57% another 18L shares added in the dec quarter. Total holding is approx 85L shares for dolly khanna .

(Manohar T. Patil) #194

Thanks Sunil, from where you could find out the increased holding Dolly Khanna in Dec. quarter. It would be a useful source of information. Thanks in advance!

(Nolan) #195

Seems she has gone out of the textbook to allocate more than 40% of her capital on a single stock. Shows her level of confidence and future potential of Rain.

(dhiresh17) #196

use bajaar.me website to find shareholdings of famous investors and mutual funds. But this website can only track the Shareholding from BSE. It cant track holdings in NSE.

(yudiagg) #197

While Dolly Khanna has increased holding, all other funds like ICICI,
Reliance and Goldman have completely exited - this is intriguing - even
they have solid research capabilities.Do they believe that the high price
of CPC, being a commodity, is not sustainable and that it is only a short
term transient phenomenon.