Yash Paper - Rising from ash


(krishna) #21

Several positives things are happening in this company.

  1. Tableware plant trail deliveries are completed. Commercial launching is going to happen on 21 st in mumbai.
  2. Highest monthly production in last month, average 6rs hike for Kg means 30% jump in selling price.
  3. Tie-up with food panda, food panda is having association with 15000 hotels across the country.

Technically after several months of consolidation stock price had moved above 42rs.with high volumes.

Please let us know if anyone is attending Analyst meet going to be held on 21st.


(vijay18) #22

@chaitanyak I will attend the analyst meet , will update the inputs here .
meanwhile the latest AR for FY 17 yash paper AR fy 17.pdf (2.4 MB)
is a good read .


#23

I don’t track Yash paper but am invested in TNPL and West Coast papermills, and both these companies are having huge demand, factories running full capacity. Maybe the cyclicality is in play! Moreover, margins are thin in satchets and bags. Also I don’t find any competitive advantage that Yash may have in their business.


(krishna) #24

@vijay18, thanks for update…


(vijay18) #25

Yash paper product launch & analyst meet Note –
-Management is positively surprised from the initial response to the table ware products.

  • Good enquiries from the institutions and retailers in domestic markets.
  • looking to tap exports markets too .
  • Talks with Haldiram, bikano and Sodexo for pan india deal going on , haldiram’s requirement is large.
  • CHUK is cheaper than plastic tableware and expensive than thermocol products
  • They are selling with upfront payments as of now, may give credit when need arises.
  • Company will achieve 30- 40 crore sale from the new product line in fy 18.
  • Ebitda margin 25%
  • will do 200 crore Run rate from the new product line in the next 3 years with 80% capacity utilization.
  • No major capex is required for atleast 3-4 years.
    As per my analysis Fy 18 Revenue of 200- 220 crore and Pat of 13-15 crore is achievable
    which translate into the eps of 4 to 4.5/- in fy 18.

(blueeyedinvestor) #26

Had been tracking this company closely and happened to bounce up with recent analyst meet. Although it was looking pretty exciting story before the analyst meet. But having attending the analyst meet, it is a total disaster and will stay away from this.

  1. Company came out of CDR, still as 136 crore of debt. Rs 12 cr needs to be repaid as part of yearly installment in FY18. Rs 15 crore of cash profit in FY17, and management is expecting Rs 21 crore of cash profit in FY18. By any means Rs 21 crore of cash profit is not possible in FY18.

  2. Entire debt has been funded by UCO and United Bank and raises lot of flags for me as to why only these two banks, which are under deep shit, came forward to finance the project. CHUK, the management spend Rs 60 Crore - Rs 45 crore debt and Rs 15 crore internal equity.

  3. Highly aspiring plans but no funds to finance the capex. Rs 12 to 15 crore of regular capex for FY18, Rs 40 crore for FY19 to double tableware capacity and again upward of Rs 60 crore to further double the tableware capacity by FY20. Where the funds are going to come, management has no answers. When asked about financing plan from Ved Krishna, he was like you are the analyst guys you help us understand which options management should try out for raising funds. (ARE YOU SERIOUS).

  4. When asked about QIP or equity raising plan, they denied saying they do not want to dilute as of now as the company will get the multiple of commodity business. Will do so once Chuk is established. But what I understood from the conversation, Promoter hold 45% stake and entire holding is pledged with the bankers. There is no scope fr fund raising and hence there is a big question mark as to how the expansion plan is going to be financed.

  5. With tableware they are not going for B2C segment. The company will sell through B2B but marketing will done B2C. In B2B segment, the company is aspiring to supply to McDonald, Dominos, Haldiram, but will retain it’s branding stamp CHUK on the products. Why these heavy weights / big brands allow small players to retain CHUK brand over and above their own brand. in B2C segment, it is immaterial for the consumer what they are buying as the product CHUK is still a commodity.

  6. Product CHUK, as claimed by Ved, is conducive enough for Take Away food because the longer the food remain in the tableware CHUK, the product becomes soggy, because of its nature and hence they are still working upon the sturdiness of the project.

  7. Previous auditor Mr. Himanshu Kapoor, retired by rotation, but roped in by the company as non-executive director. He was handling the queries on Finance in the Analyst Meet. DOES IT SOUND COMFORTABLE.

  8. When asked about the credit period, the management said they give zero credit and later realized their statement and corrected themselves that the usual credit period is 20 days.

  9. Analyst Meet, organised was quite unprofessional. Venue chosen was a running Pub. For the first time I attended any organised meet inside the running Pub. FURTHER THIS IS NOT COMFORTABLE.

Overall looks very weak with very stressed liquidity position, non-availability of funds will often put pressure on the management which may not be in favorable interest of the stakeholders, lower promoter stake and 100% holding pledged makes it further risky bet, no expectation of dividend in absence of no surplus funds. The valuation are crazily rich and does not make it attractive or rather not a fundamental bet.


(vijay18) #27

@blueeyedinvestor
The facts mentioned by you are not matching what management had said in the analyst meet.

Debt – Company have Operating cash flow of 20-23 crore since last 3 years . so debt repayment will be easily taken care of .
Management never mentioned the profit figure in the analyst meet. As per my analysis Pat for fy 18 could be in the range of 13 -15 crore , which is very much achievable .

Capex - Managment said that they are looking to do 200 crore turnover from CHUK in next 3 years . why will they need 60 + 40 + 60 = 160 crore of capex for doing 200 crore turnover ???
They had said they don’t need any major capex for next 2-3 years.

QIP – with the performance in earnings which can be seen in june 2017 quarter and launch of CHUK good chances that company will get good valuation , promoter can always depledge the shares and go for QIP when the time is right.

Company have plans to sell in B2B and B2C both sector for which they have appointed 9 distributors in india.

It was a product launch cum analyst meet , may be company allotted limited budget for the event and Its always better to save on costs, also they did the entire event on their own , they didn’t hire any “IR” or took help of any Broker and still managed a decent launch which is commendable.


(vijay18) #28

company not only aspires it already supplies packaging material (kraft paper) to mcdonald ,dominos , kfc ,pizza hut and other brands ,
They understand the packaging need of the QSR and other players and were researching on CHUK since last 2 years.
product improvement will be there in future.


(Hardik) #29

They did say that they will need around 40 crs for doubling the capacity from 11.5 TPD, and another 100 cr. for doubling from that level. They had estimated Rs.54 crs to set up 11.5 TPD but have actually spent around 4 crs more. You may want to keep a buffer while taking above estimates guided by the management.

The event was organised by http://integral-india.in/

They said that they would target advertising / marketing for B2C but would do sales in B2B only.


(KODURI APPA RAO) #31

Friuends, can any one throw some light on this article? Yash Papers: EBIDTA de de, Bonus le le
Source: Annual Report 2016-17 of Yash Papers

Courtesy: http://alphaideas.in/2017/10/15/yash-papers-ebidta-de-de-bonus-le-le/


(Marathondreams) #32

If Jt. MD is direct beneficiary of increased EBITDA in 1:5 ratio (5% increase in bonus for every 1% increase in EBITDA), I think it will give motivate to " create" higher EBITDA margins on paper. In other words, chance to play accounting games to puff up the numbers.

So I am not big fan of such metrics. It would be better if bonus is attached to cash position. Just my 2 cents…


(vijay18) #33

Few important inputs about the company and my apologies for the delay in posting.
1- had met their sales head western region and took samples of the chuk tableware product from him
found the sample not up to the mark. when water was filled into the bowl it started sagging within 12-15
minutes.
2- company plan to sell the product only B2B, i feel it will be a big challenge, in B2C they could have
ramp up sales much faster . nearest competitor ecoware sells both in B2B and B2C.
3- After discussion it seemed that the company is not very aggressive in tapping exports markets as of
now.
4 - Management has given the guidance that they will do 35-40 crore sale from the chuk brand in fy18
but with the current sales strategy i feel it would be difficult to reach anywhere near that figure .

Disclosure - Sold my holding in yash papers due to the above reasons.


(nowin) #34

Results are out and they are good5c9139fd-505f-4715-b565-9599ec7935ba.pdf (401.1 KB)

QoQ quaterly profit increased from 2.93 crores to 4.11 crores (40% jump)
YoY quaterly profit jumped from 1.24 crores to 4.11 crores (231% jump)


(vinay ambekar) #36

raw material cost and interest cost has improved by 2-3% of sales which has translated into better margins. any idea why?


(Sumit 2.5 C) #37

The Commercial Production of Tableware Unit (Phase - 1) of the Company started w.e.f. today i.e. 2nd January, 2018.

http://www.bseindia.com/corporates/anndet_new.aspx?newsid=536284cf-8de5-4534-a5ca-9c84ced1e21d

Story is just started playing; Yash looks like " If it seems too good to be true, it probably is "


#38

(vinay ambekar) #39

Why do you think so ? (Your last line)


(Sumit 2.5 C) #40

Hi, the last line was just to reassure myself and nothing else. :slight_smile: When I was adding Yash @30, I was excited about their product, and felt it has a huge market to capture in India. Healthy packaging is something everybody will agree, and it could be like a movement.
There was a point when I thought to take very large bet (40% of portfolio) in Yash between 30-40 price range, but then didn’t due to some doubts and taking feedback from few friends. And now the company’s consistent sales/profit growth and new tie ups making story really true.


(Sumit 2.5 C) #41

Excellent Result by Yash !

Income 50.11Cr vs 45.33
PAT 5.06 Cr vs 1.6 Cr

Sales growth 13%
Profit Growth 204%
EPS growth 182%

283996c7-bc2e-4284-908b-cf10ad934520.pdf (2.4 MB)


(Sumit 2.5 C) #42

MOU of Rs. 73.44 cr. with U.P. State Government