Shree Pushkar Chemicals

(chets) #102

Good results.

  1. Topline at 96.38 cr vs 78.03 cr qoq and 78.95 cr yoy
  2. Net profit at 10.39 cr vs 7 cr qoq and 9.01 cr yoy
  3. Quarterly Eps at 3.44 vs 2.32 qoq and 2.98 yoy
  4. Half yearly eps at 5.76 vs 4.98 last year.
  5. Receivables at 70.82 cr vs 61 cr in March 2017.
  6. To meet 400 cr annually they need to meet 225 cr in next 2 quarters.

(chets) #103

With Reference to above captioned subject matter and pursuant to Regulation 30 of SEBI (Listing Obligation & Disclosure Requirements) Regulations, 2015, we would like to announce that an additional capacity of 3000 MTA of the dyes plant has been created at its unit no. III at B-97, MIDC Lote Parshuram and the plant has commenced trial runs by end November 2017.

(Rohit) #104

Sales up 22% YOY but PAT is 15% YOY , shows decrease in margin. Why PAT growth is not inline with Sales growth. Is thier any specific reason for this ?

(ramanhp) #105

Is there any news or recent development that triggered the stock price to an all time high ?

(Mridul) #106

Some excerpts from the Q2 concall with my comments/interpretation. Mostly covered the questions and answers on the RM aspect. Have i got my interpretation on RM right?

Q: On the RM side, any RM cost pressure you saw in Q2/Q3?
A: As far as RM is concerned, it was quite stable as far as Q2 is concerned, but now in Q3, RM prices are going quite high and the impact of this will be seen in the finished product by the beginning of Q4.
Q: And any particular reason for this sir apart from crude going up?
A: Crude has got no impact on our business. The major impact which we are seeing is only the China factor. What we have been talking and discussing and analyzing in the past few con-calls, we will see the real color and flavor of that probably in the next financial year 18-19. (My comment - i think he is saying that crude has got no impact as it is cost plus business. Two, margin improvement during past few years was due to China pollution impact. This will continue to benefit Indian players in next year as well.)

Q: Okay. Sir, China capacity being shut down for dye intermediates, sir how is that impacting us?
A: See, first of all I won’t say that the China capacity is shutdown, rather I will like to put my views on this point that China is facing acute problems in achieving their production levels because of their environment laws and audits. So the focus is shifting to countries like India and in India also, the companies that are more compliant in terms of the environment laws will be able to benefit and get larger share of that. As I just mentioned, there is a huge spike in the RM prices, it is not one or two raw materials, we can see that many chemical products have gone very high. Sulfur is almost double, caustic is almost increased by 40%-45%, same with caustic lye. Impact of those RM will be felt in Q4. I believe that 18-19 will be a very good year for the Indian chemical companies.

Q: Exactly, so it will benefit us positively, right?
Punit Makharia: Obviously. Don’t you think that it will benefit us? Why you are getting it reconfirmed from me, I think you are an analyst, you know better than me. (My comment - Increase in RM prices is going to impact them positively? Due to integrated model? I am not clear what he means when he says increase in RM prices is going to be beneficial. May be increase in RM prices will lead to increase in end product prices.)

Kritika Garg: No, exactly it will help us better. So you have said that crude has no impact on the business, but there is an impact of China. So I was wondering that there is a positive impact from China.
Punit Makharia: 100%. (My comment - as i said above in my comment to the first question, crude doesn’t impact, china impacts positively, RM has no relation to China…the way it was said was confusing though)

Kritika Garg: Okay and sir so we expect our margins to remain the same going forward?
Punit Makharia: Definitely.

Q: As you said RM prices for our dyes and dyestuff are increasing. So, further reaction to it is we increase the final product prices. So is there any lag between increase the pricing of final products. So, do we have to take a hit in margin in between for a quarter or so?
Punit Makharia No, impact of that comes immediately. As of now we are saying that finished product pricing have also started going upwards and my concern is that in Q4, the dye intermediate prices will start going up and the financial year 2018-2019, I personally think that would be one of the best year in this industry.

(blueeyedinvestor) #107

How conveniently the management is fooling the streets and poor uninformed guys are just buying in lock stock barrel without even getting into details.

Pushkar lost major client Huntsman on account of cheating and fraud case. Pushkar incorporated Abiss Textile to set up reactive dye capacity. Huntsman sue Pushkar on account of fruad and cheating for stealing know how and technical capabilities, influencing employees of former to share confidential information and influence distributors by offering esops in newly incorporated entity. All this happened under the cover of orders supplied by the company in early 2015 to the tune of Rs 8 cr. This Rs 8 Cr receivable, which is referred as receivable of more than six months in balance sheet, has been referred by Huntsman as liability arising out of cheating and fraud and out of malafide intention and hence the contract is voidable at his discretion and hence have been rescinded.

Huntsman further sue to company for Rs 18 cr on account of defamation with potential to raise the amount if the mudslinging intensified.

Shree Pushkar conveniently filed a suit claiming this Rs 8 cr and further Rs 300 cr on account of defamation.

How conveniently Management never gave any indication about the same - neither in the annual report, nor anything about Abiss Textile, incorporated in early 2015, in the DRHP filed in August 2015, nor in any of the quarterly earnings concall.

The case is more strong on Huntsman side and Shree Pushkar does not seem to have any merit in the case. Next hearing was slated on 20 December 2017. SLP filed by Shree Pushkar in Supreme Court has been rejected on Jan 10, 2018 and case has been referred back to Delhi High Court.

Go through this for more details.

Disclousre: Not invested (Thank God). Striking the company from my watch list.

(SMondal15) #108

Is It?.I think analyst who are covering they knows about this ongoing legal activity between Huntsman and Shree Pushkar. Evidence is earning call transcript . Search for Q1 FY18 one and see the discussion with Mr Puneet Makharia.
If investment decision is so easy Mr Warren Buffet could have sold Berkshire’s 9.4% stake in world’s most valued bank ,Wells Fargo after surfacing of its Account Fraud episode. What about hundreds of IT raids happens on each year on so many Listed company’s office in India.What about DDA Vs IGL case. Is not Indraprastha Gas’s business model attractive enough keeping valuation aside.

(Mridul) #109

I went through that October hearing. Indeed Pushkar looks to be at fault.

I do not know what the outcome of the case would be, though it seems Pushkar mgmt did collaborate with ex Huntsman employees to get confidential data to start dyestuff business.

Pushkar’s argument is that dyestuff tech is available publicly, so Huntsman’s claim that Pushkar was benefited with this confidential info in setting up dyestuff business is wrong even if they did used Huntsman labs and sensitive data

When Huntsman came to know about this (the two companies were still collaborating), Huntsman unilaterally refused to pay the bills (8 cr) on grounds of fraud and as liability…filed a lawsuit claiming 18 cr in damages.

Now Pushkar wants to get paid (receivables over 6 months) and says that Huntsman cannot decide to not pay on grounds of fraud. Even if they have committed one, they must pay for the intermediates they have used.

All in all, Pushkar’s argument is on a weaker wicket. I went through q2 concall. Mr. Makharia was disturbed when asked about this case. He said they have done nothing wrong, but court’s doc says something else. It was indeed proved in searches that sensitive docs were found at Pushkar’s premises.

(manivannan.g) #110

Thanks for the updates. Indeed, such developments don’t make me feel comfort holding this scip anymore. Booked profit, exited 100%.

(blueeyedinvestor) #111

Sorry to say…but I learned a simple lesson…If you cannot analyse a scrip on ur own…equity is not a product for us…no body is a better and loyal analyst than u urself…We should not believe in heard mentality and invest in compromised stock…

What ever the outcome of the case be…The intent of the management does not look ideal and hence should be avoided…There is no clue who is holding how much in Abiss textile - the reactive dye unit and what is the status of this entity and how the conflict of interest, if any, is avoided between this promoter own entity and the reactive dye unit within shree pushkar…

Remember of more than 4000 listed companies u only have to be in 10 to 11 quality script which will compound returns for u and ur coming generation…We cannot invest in all.

Disclosure: Have no holding in the scrip.

(vinay ambekar) #112

There is a lot of description of the events from the perspective of Huntsman and hence it appears as Pushkar being at fault. I am sure the description of events in the suit filed by Pushkar would portray a completely opposite view. We are not privy to that at this juncture.

This particular order merely restricts Pushkar from claiming their dues from Huntsman due to the other suit filed. But doesnt establish guilt on part of Pushkar.

One point that I find jarring is - why the company is not explaining its position a little more in the concalls, instead of getting overly defensive/aggressive and inviting analysts to their office to give them information. We all know their position anyways. See this for eg.

Discl. invested from earlier and monitoring. As of now, I dont plan to take any action just based on this order, inconclusive as it is.

(chets) #113

@blueeyedinvestor thank you for sharing this information.
Shree Pushkar seems to be on a sticky wicket here. Though they have been talking about this case in their concall, they have never shared details and always maintained that huntsman didn’t pay up. Just like @sammy11 I too wouldn’t make a hasty call based on one side of the story. Let’s see how this unfolds further.

(chets) #114

Results are out. Numbers are decent.

  1. 9 month EPS is 8.99 as compared to 7.32 last year.
  2. Net profit till now is 27.13 Cr. They need to clock ~13 Cr in last quarter to achieve the estimated 40 cr figure.
  3. Same goes for the topline. Right now it is at 275 Cr. They need to achieve 125 Cr in last quarter.

Conf call is scheduled at 4pm on 14th Feb. It will be a good time to ask about the Huntsman issue. If anyone is attending please try and publish your notes here.

(ragav) #115

Why is that the promoters pledging of shares have been rising steadily from the Previous Q and is at 99.5 % this Q 3 . Have the mgt commented on this earlier ? No response from the management regarding the mail sent .

(Mridul) #116

Mate, shares locked-in is different than shares pledged.

(ragav) #117

Got it . So are the promoters authorised to pledge shares that have been locked in .

(Rushikesh Kanthamani) #118

Why shares are locked in and for what period?

(Yatharth) #119

Could you or any other person get any messages from Concall?

(kumarshah) #121

I have a small tracking position and I can’t figure out reason for 15% jump today, did we miss any big news?

(R.Vivek) #122

Shree Pushkar Fundamentals are strong…It bounced from Strong support levels of 218…

42% of operating profit is convertible to Operating Cash Flows.

ALTMAN Z Score of 9.90
Debt to Equity of 0.08 ( Very low debt levels)