Andhra petro

Stock Opportunities
1

ANDHRA PETRO

The Andhra Petrochemicals Ltd. (APL) was promoted by The Andhra Pradesh Industrial Development Corporation (APIDC) and The Andhra Sugars Ltd. (ASL) in 1984 as joint sector Company. Subsequently the structure of the Company has changed into an assisted sector.

APL was established with a licence capacity to produce 30,000 MTPA of Oxoalcohols at Visakhapatnam, Since then the capacity has been expanded to 73000 MTPA by expansion and has been operationalised since May 2010.

PRODUCTS

The company manufactures OXO-ALCOHOLS and has a market share of around 27% with balance demand met by imports . As mentioned in the last AR for fy 10, the company now has around 55% market share in oxo alcohols and the rest of the demand is met by exports.

FINANCIALS

EQUITY AROUND 85 CRORES, cmp around 22-23, market cap of about 195 crores

Debt as on March 2010 is around 143 crores.

Quarter

Mar 09

Jun 09

Sep 09

Dec 09

Mar 10

June 10

Sales

41

45

54

37

1.6

73

Interest

0.36

0.38

0.53

0.36

0.07

3.6

NP

1

-1.65

2.46

-1.73

-4.43

4.31

Now this was a stock I posted on TED when it was around 12-13 levels in Nov 09.

Link: http://www.theequitydesk.com/forum/forum_posts.asp?TID=2532&PD=1

Now comes the interesting part.

The plant was closed in Nov 09 for the purpose of assimilating the new capacities with the existing capacities. It remained shut till May 2010 when it was re-opened.

In fact this was the exact announcement:

With reference to the earlier announcement dated November 10, 2009, Andhra Petrochemicals Ltd has now informed BSE that the Modernisation-cum-Optimisation of the Oxo alcohol Plant has been implemented with an investment of around Rs. 275 crores and the Expanded Plant with a capacity of 73,000 MT per annum has commenced commercial production from May 01, 2010.

Now if you look at the June qtr results, the production effectively took place only for 1 month and company clocked a turnover of 73 crores. So for Sep quarter, when effects of full expansion are reflected, one only needs to guess where the sales figures will go.

The promoters raised their stake by around 10 lac shares between March 10 to June 2010.


INVESTMENT ARGUMENT:

The company has completed its full expansion and is set to report good robust numbers going forward, following which profits also are expected to increase. The markets seem to have factored in the expansion benefits to some extent but I feel, that better results would lead to higher levels in this stock.

The company with capacity to handle 55% of total demand in India seems to be sitting in a nice position and due to economies of scale and operational efficiencies, is now able to compete with cheaper imports.

TECHNICAL VIEW:

The stock has been in an upward sloping rising channel with resistance pegged at around 26 and support at around 20 levels If and when the resistance of 25-26 is crossed, there could be significant upsides.

1 Like
2

After some tight consolidation, Andhra Petro seems to be on is uptrend again. Volumes have started picking up again since last two days.

3

Andhra petro seems to be breaking out. It hit a 52 week high today and closed above 31.

4

Hi Hitesh what is your view about result ???

Andhra Petrochemicals net profit rises 194.20% in the June 2011 quarter

Sales rise 115.49% to Rs 157.22 crore

Net profit of Andhra Petrochemicals rose 194.20% to Rs 12.68 crore in the quarter ended June 2011 as against Rs 4.31 crore during the previous quarter ended June 2010. Sales rose 115.49% to Rs 157.22 crore in the quarter ended June 2011 as against Rs 72.96 crore during the previous quarter ended June 2010.
Particulars Quarter Ended
Jun. 2011 Jun. 2010 % Var.
Sales 157.22 72.96 115
OPM % 17.59 19.39 -9
PBDT 24.78 10.81 129
PBT 18.77 5.86 220
NP 12.68 4.31 194

5

hi

Numbers seem great and the fruits of expansion seem to be in full bloom now.

Looks like some more juice left here.

1 Like
6

Hello,

I too invested in this stock based on its plans to increase capacity and generating profits. For one year thesis proved correct, next year it failed, i guess due to FX rates and price of crude. But one thing is noticeable is that whatever cash was generated in one GOOD year was used in reducing debt, i think that is a huge positive thing. This year too i m expecting it to do good as its MD Mr Ramaiah is buying stock from market in a big way.

Ashish

7

Anyone still following this? @hitesh2710

  • Company posted its first quarterly profit in the Dec quarter, a turnaround for the company
  • Huge Demand supply gap for its product Oxo-Alcohol
  • Anti-dumping duties on its product, helped dry up imports

Results http://corporates.bseindia.com/xml-data/corpfiling/AttachHis/CEBADA12_3071_4D35_B4BB_F18C39CA595F_142006.pdf
2016 AR http://www.bseindia.com/bseplus/AnnualReport/500012/5000120316.pdf

1 Like
8

Then why stoppage of production for 1 month in dec-jan. It looks like the imports are still high

9

Consistent performance by Andhra Petro. Should continue to do good as oxo alcohols- 2EH, n-butanol and iso-butanol prices are on a rise.

Q3 results-
https://www.bseindia.com/corporates/anndet_new.aspx?newsid=6ea2196c-a072-4bd3-ab33-8a9be9cbc305

Could be a good short term commodity play.

Regards
Krishna

1 Like
10

Few points from my side:
1.monopoly business as they r the only mfg of oxo alcohol in india hv capacity of 80k MT against demand of 2.2 lac MT
2.Anti dumping duty on their main product 2 EH already there n if ADD on dioctyl phthalate DOP is put (investigation going on) then it will be big game changer
3.GST benifit since their 40% raw material is naptha whose input credit they were not getting pre GST
4.strong promoter pedigree Andhra Sugar
5.Customers like KLJ plasticizer n kanhaiyalal jain who r their main customer holds nearly 5% stake n r increasing it
6.Current capacity utilisation is above 100%. So i feel capex news on cards soon.

11

Its a interesting case, wherein there is a company which has been a major beneficiary of GST rule. Since Q2FY18 results, the company has been mentioning in its notes to accounts about the benefit due to GST and hence improvement in their cost structure and hence substantial improvement in margins. Here are few extracts from their credit rating report:

Benefits from the implementation of GST in the form of input tax credits on naphtha (a key raw material) and L.S.H.S (a fuel).

  • Which was not available earlier for the VAT applicable on these commodities as more than 95% of company’s sales were interstate sales.

  • Additional tax credits are expected to help company’s profitability and improve its competitiveness.

  • Performance witnessed further improvement during July 2017 backed by healthy capacity utilization of ~125% and availability of input tax credit under the GST

  • The company witnessed 100% YoY revenue growth during H1FY2018, aided by:

    • Improvement in product prices and
    • Capacity utilization of 109% (70% in H1 FY2017), with Q2 FY2018 witnessing sequential growth of 27.9%

Good thing is that the company has used these cash accruals to reduce debt at a fast pace.

However, one needs to be careful and need to figure out as to how much of margin expansion is sustainable. The credit report has mentioned that there may be some moderation in margins in Q4FY18 as crude oil prices have moved up

8 Likes
12

As per above announcement, it seems promoters have increased stake

2 Likes
13

Dear Ayush,

Many thanks for sharing this interesting information on GST. Is it possible for you to share mentioned Credit Rating Report in entirety on ValuePickr Forum?

Thanks.

14

As per the latest filing, Promoter shareholding for March quarter is same i.e. 45.05 percent as compared to last quarters. May be some interchange

image
image1366×768 143 KB

1 Like
15

I read it again the notification which you have shared, they have mentioned both for Andhra Surgar & Jocil. Hence, there is no change in shareholding.

16

A video on the oxo-alcohol market outlook

image

shutdown schedule

A lot of 2-EH spot market customers have covered or are going to cover themselves under contract this year as shutdown is going to take out spot 2-EH from the market.

pricing trends ---->
image

2 Likes
17

Andhra Petro results today came out on expected lines with profits for the quarter being impacted due to plant shut down for almost a month in the quarter.

All the Co.'s products namely Isobutanol, n-Butonal & Bis Phosphoric Acid are quoting at their yearly highs (perhaps multi year highs), so one could expect good results in the coming quarters. Most chemical product prices have been on a steady rise for the last year and more due to Chinese pollution issues / plant shutdowns in the developed world & this trend is likely to continue.

The stock at the current price of 49 is available at a trailing multiple of under 9. The earnings in the current year should improve considerably.

2 Likes
18

Any info available on capex plans ?
Capital work in progress is around 93L which still looks little less to me.

19

Andhra Petro came out with a spectacular set of numbers for the June qtr, easily its best ever by a long shot! It has clearly benefited by its product prices being in the multi year high range, as mentioned in my post of May 24. The stock is more than likely to get re-rated based on these numbers.

4 Likes
20

Hi,

Sales increased by Rs. 50 Crore (YOY increase around 44 percent) and cost of material increased by just Rs.11 Crore (cost of material material is 63 percent of revenue for current quarter and 79 percent for last year (approx)).Hence, bumper profits. Is this kind of margins sustainable or one of due to higher realisation on account of higher crude prices and benefit of inventory?