where can i check the caustic soda price in indian market on daily/weekly basis trends ?
Q1 results are out. Results are good keeping in mind covid impact and lockdown.
Gross margins are down due to higher contribution from sugar and lower caustic prices.However OPM has improved from 16.5 in Q4 to 19.3 in Q1 due to better cost control.
Segment wise, Sugar losses has increased.
EBIT Margins in caustic soda have dropped to 17% from 27 % in last quarter. this is mainly due to fall in caustic prices.landed cost of caustic soda has dropped to 250-280 $ FOB.Domestic prices have fallen even more due to excess capacity.
Power segment has nearly doubled and industrial chemicals has tripled margins as compared to last quarter.
Negatives:
next 1-2 quarters may be weak for the company as caustic soda prices are on a downtend. Overcapacity and less demand from end user like paper and textile industry is likely to weigh in on caustic soda prices.
Positives:
no fresh capex in caustic soda by any big player.Both DCM sriram and grasim have put a hold on capex for a time being.
Hold of operation at tanuka sugar plant to aid margins.
Disc: invested at an average price of 279.
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Came across andhra sugars via a filter in screener. Their financials for a company in a cyclical commodity industry are sound. Their low dependance on sugar and high priority on chemicals is good. Dividend payout is fantastic. PE is currently just under 5 PE. however, was looking for a growth driver to help break its previous ceiling of 10 PE and found this in their latest annual report:
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āYour company is setting up a project at J.N.Pharmacity, Parawada, Visakhapatnam in non-sez area to manufacture
100 TPD Sodium Hypochlorite. The estimated project cost is about Rs.10 crores. The important raw materials
required are Sodium Hydroxide and Chlorine gas, which can be supplied from our Chemicals Division, Saggonda.
Sodium Hypochlorite has its applications in Bulk drugs / Pharmaceuticals, Fine chemicals, Water treatment and
Sea food industries. Most of the civil construction works are completed. All the bought-out components required
for this project have already been procured. Fabrication of all the process equipments and main storage tanks
are completed. Fabrication and erection of pipe racks / bridges are also completed. Erection of process equipment
is in progress. It is expected to complete the project by the end of December, 20ā -
Theyve also expanded caustic soda capacity to 500 TPD
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āKeeping in view the need for your Company to expand the base of its Chlor-Alkali operations an application to
the concerned authorities has been made for establishment of Plants at J.N.Pharmacity, Parawada, Visakhapatnam
for 245 TPD Caustic Soda, 50 TPD Caustic Potash, 600 TPD Hydrochloric Acid, 300 TPD Sulphuric Acid and
200 TPD Chlorine.
To meet the International customersā requirement, capacity of Aspirin Plant has been expanded to 2000 TPA
from 1000 TPA.ā
Almost all of the above look like they follow some backward integration and use their own power so operating margins look like theyāll be pretty high. however considering demand is cyclical Iām not sure how to interpret the above and where in the curve we are currently. Considering the price, low valuations, high dividend payout and these potential growth drivers I canāt see much downside. However, I am new to the company and so am still in the process of discovery. Hoping this post renews discussion from the esteemed members here since I donāt really understand the growth drivers too well since most of the products are alien to me so I canāt tell if the above warrants a re rating in the future
Disc: Studying. Not invested
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The more time I spend researching andhra sugar the more it reminds me of one of my favorite companies : Deepak Nitrite. Slave to commodities and cycles so itās a company on the lookout for diversification and secularity of income. Backward integration allows increase in operating margins. They use byproducts of their products to create new products which shows nimble management and great chemistry skills. Addition of products like sodium hypochlorite shows that management isnāt averse to jumping on trends smartly(using their own products and byproducts to create it). Deepak did the same thingā¦ and slowly managed to counter cyclicality by just continuously adding huge volume of cyclical products they produced and by maintaining good margins and look where we are now with deepak. This looks like itās happening here too but with better margins and infact they have higher profits than deepak last year and look at where deepak is this year. I dunno if I have recency bias but I can see a similar inflection point happening here as I saw there especially with sugar, caustic soda etc forming and explosive cylical base aspirin offering stability and now bleach/other chemicals providing growth. I dunno if Iām imagining this. But I canāt get it out of my head and wanted to run it by the previous owners and members in this thread to check if Iāve got my thesis correct? I am not saying this is another deepak nitrite. They just have very similar stories. After pouring through thr AR Iām honestly shocked that itās valued at just 4 times earnings and Iām sure thereās something huge I am missing @ayushmit . I could really use your help here. Sorry for disturbing you
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Hi @Malkd - yes, Andhra Sugar seems to be a very well managed company and pretty well integrated. Despite the big fall in end product prices of caustic soda by almost 40-50%, the recent quarters havenāt been that bad. I have been positively surprised to see the margins in recent quarters. The positive surprise was the liberal dividend of Rs 20 per share given by the company in around March 20.
Have been invested for last few years but sadly the stock has seen de-rating in valuations. Few possible reasons - 1. it has 2-3 segments and sugar has been a big drag for them 2.its been a dull company zero interaction with investors/analysts (and growth too).
8 Likes
And also not listed on BSE. Getting any informatjon from NSE big task. Even disclosure are difficult to get. While BSE may not have volume but website is quite good in my opinion. Further, the company long track record of dividend payment. The consolidated results also include part of Jocil which had good Q1 due to soap and detergent segment where is operate.
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Thanks ayush and dd1474ā¦ think il just leave it on the watchlist then. Lack of concalls/commentary and difficulty in getting information makes it too difficult to track and considering Iād only be putting a small amount of capital it doesnāt seem worth the trouble. May look again if thereās a technical breakout (52 week/all time highs etc). Cheers.
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Only very few companies are conducting AGM through physical mode without providing additional facility of VC. Andhra Sugars is one among that. Really disappointed to see from the notice that the AGM is scheduled today at 3 pm through physical mode at Tanuku (Registered Office) without VC facility. In this pandemic situation, considering the size of the company and the area of business they operate, they should have provided the facility of VC also so that all the members can participate in corporate democracy. I feel management is not valueing shareholders. This is one classic example. Also many times it is observed that the company is not giving timely disclosures to BSE. They give disclosures to NSE only. As far as Q1 2021 results are concerned, they have published it on NSE only. Still it is not published in BSE. This is not acceptable.Request all value pickr forum members who are tracking this company to write a mail to CS of Andhra Sugars expressing the strong disappointment.
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Andhra Sugars is actually a chemicals co. It has in 2020 closed 2 of 3 sugar units. Third unit does breakeven. If i eliminate sugar losses of the past then chemicals business is very profitable and surprising more stable than what one expects from a caustic soda/chlorine derivatives play. Reasons are approx 50% chlorine is used in captive. Also we may at be a new dawn for this sector as this is the third year that chlorine prices are positive, so possible that new profitability metric is higher than historical median (though lower than fy18 and fy19 which were a caustic soda cycle). Vals and b/s reassuring. There are growth plans too. And ADD investigation on caustic soda offers additional comfort.
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Hi All,
Sharing my notes from AR21. Key takeaway is that company has been able to increase its Caustic soda capacity by 100 TPD in FY20 and has further plans to add 100 TPD at Saggonda unit by mid of FY22 and the long term plan is to build an integrated complex at JN Pharmacity with 245 TPD cautic soda and several other products & by-products.
Though the prices of caustic soda were under pressure for last yearā¦things have improved considerably now and prices are much higher and have even gone beyond their previous highs of 2017 (This is not part of Andhraās AR but is my understanding by tracking other industry players).
Hope this helps!
Regards,
Yogansh Jeswani
Disclosure: Invested
2 Likes
Sharing a quick update on the progress of the EC filing for the Chlor-Alkali operations planned by the company at JN Pharmacity.
As highlighted in the AR21 as well, this unit will have 245 TPD Caustic Soda, 50 TPD Caustic Potash, 600 TPD Hydrochloric Acid, 300 TPD Sulphuric Acid and 200 TPD Chlorine.
The cost of this project is 300 Cr
Companyās file for this project has progressed further and in Oct 2021 was forwarded to SEIAA for EC approval (please see below image)
However, additional details have been sought from the company and grant of EC will be dependent on the response/action needed for the same (please see below image).
These things may or may not take timeā¦so one will have to wait and watch the developments.
Regards,
Yogansh Jeswani
Disclosure: Invested
6 Likes
Stock split 5:1
Sugar division posts profit on inventory gain and export incentive. Chemicals business should ideally reflect caustic buoyancy from Q3 (like grasim). 33% Andhra Petro continues to add cash in super-cycle.
Andhra Sugars 10 year roe is 12% and 5 year roe is 14%. Like most manufacturing cos outlook might be brighter. Risk-reward favourable.
Andhra Sugar Q2 results
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