One more problem with this report: Report estimates the 2018E EPS as Rs.5.9. That would mean an EPS of Rs. 1.59 for Q4. Hence, estimated Q4 EPS is lesser than the Q3 EPS of Rs. 1.75. What is the justification for the reduced EPS for Q4? Traditionally, Q3 has been the seasonally weakest Quarter for BEPL
my estimate of EPS for the quarter is 7.
The stock is showing some signs of weakness. Might be time to get cautious if it drops below 170.
As a value investor or similar philosophy, I feet BEPL growth will be muted next 1-2 quarter as it is getting reflected in Q-o-Q revenue growth, forcing management to scramble to reduce CAPEX amount and hasten to 20KTPA by March 2018.
I read through PL report carefully more from how cos is coping in. Found it is operating at 90% capacity. It is an excellent business. Improving management. I have excited it and will come back when mean reversion happens
I may be wrong but I felt to share it
Greetings.
My first post at Valuepickr. Nice initiative.
I am a novice in trading and know very few basics. Read few books on Buffets and Grahmas.
BEPL caught my attention when it was at ~140 and I invested in it.
At current levels ~180, still the PE is 87 and PB is 20.
This is way much higher if we adhere to principles.
Is it safe even to enter again at ~160/170 ?
PL report on BEPL was published when BEPL was 200. The report still says accumulate at level of PE 100.
Please share your thoughts should I enter again at 170-180 levels ?
The stock is indeed overpriced. With constant increase in the raw material price, looks like there is some negative signals on the chart.A small correction may be in the offing. Watch out.
TTM EPS is ~ ₹5. So at ₹200 price, PE is 40.where did you get 87 PE from?
1 Like
Dear @skhanbir,
Welcome to the forum!
BEPL’s TTM EPS is Rs. 5.19. Hence, its P/E as of current market price is just 35 (and not 87 as you mentioned). I think, Marketsmojo site is incorrectly showing the P/E as 87, whereas the Moneycontrol site shows it correctly as 35.
Now, I feel, it is reasonable to expect higher EPS for the Q4 quarter (say, Rs. 2), as compared to Q3 which had an EPS of Rs. 1.75. Following are the key reasons for my above optimism:
- As per the various news/reports/opinions, ABS price is constantly on an upswing, especially driven by auto and appliances industry
- BEPL has not yet reached 100% capacity utilization out of their 80KTPA capacity
- No new competitors (industry has an oligopoly with INEOS) in the near-term visibility (industry has multiple entry barriers) and only 48% of the domestic demand of ABS is met by the domestic producers; the remaining 52% is still met with imports
- Margins are all time high of 16.8%
- Q3 has been seasonally a weak Quarter for the company and in spite of that, it has improved on its Q2 results this year
- Going forward, BEPL’s growth is very likely to be driven by more specialty grade offerings (i.e. higher-margin products) than general grade offerings
Now, let us assume that, BEPL will be nearing its 100% capacity utilization (I think, currently it is around 90%) by Mar-18 and achieve an EPS of Rs. 2 in Q4. Its capacity increases by 20KTPA starting from 1-Apr-18, which is an increase of 25% from its current capacity. With the increased capacity, let us assume that, it will be able to generate about 25% more profit (as compared to Q4’18) over Q1, Q2 and Q3 of FY19. This translates to a cumulative EPS of Rs. 7.5 for those 3 Quarters.
Now, the additonal capacity of 37KTPA will be commissioned by Dec’18, which will be 37% more than the capacity as on Apr-19. Let us assume that, 20% of the above additional capacity will be utilized during Q1’FY19. Hence, the Q1’19 EPS can be estimated to be as Rs. 3.
Hence, from the above rough estimations, we can see that, there is a good chance of BEPL generating an EPS of at least Rs. 10.5 for FY19, assuming that, all the positive factors mentioned by me above prevail throughout FY19 also.
Assuming that, it utilizes about 27% of the above additional utilization over the 4 Quarters of FY20, the overall EPS of FY20 can be roughly approximated to Rs. 12.7.
Please note that, in all the above calculations, I have considered only the impact due to capacity expansion and not taken into effect any positive effect of margin expansions due to better fixed cost absorption or richer product mix. If the company is able to sell higher-margin products more in the future (I think, they will be able to do so), the margins also will improve accordingly. I have also not considered any increase/ decrease in the costs of their products or raw materials.
As per my understanding, BEPL typically follow a formula-based pricing (which changes on a monthly basis, with prices derived using average prices over the previous four weeks) to price their raw material contracts as well as revenue contracts with key end-user OEMs and the above method provides considerable stability to their margins.
Also, BEPL has now pre-poned the port based plant commissioning date from March 22 to March 21. This future expansion plan will keep us interested in this stock beyond FY20. However, at this point of time, I am not able to extrapolate the EPS figures beyond FY20, as the finer details of the above expansion are not yet available.
8 Likes
Thankyou Madhavikutti and Mahesh for correcting me in calculating EPS.
I do apologize for incorrect PE calculation.
I just went by marketsmojo and PL report in calculating PE. That is incorrect.
EPS for last 4 Qtrs is (1.75 +1.51+1.05+0.91) ~ 5.2 and with the current price of 180 it’s PE ~ 34.
Thank you, Madhavi for taking time and writing details on the outlook of BEPL. This is very helpful.
This form is really helpful and corrected me. 
1 Like
see even promoters are entered at 170/- 180/- and i think no one knows company batter than promoters.
and for PE , every sector has its PE and we cant judge on standard PE like 15
stock liiike avenue supermart are reasonable at higher PE and but few stocks of PE 10 looks comparatively costly
PE really prices in Long term growth expectations of the market. While I agree PE should not be set at a number, merely looking at sector pe and treating it as correct is insufficient. The PE should be looked at with reference to our expectations for that industry (revenue pool, profit pool, Competitive landscape) and the company (management, intangible, competitive advantage) in question.
2 Likes
Great Analysis Madhavi. TTM EPS is a historical data and does not indicate future prospects.It only tells about how the management/company fared in the past and throw an indication about the quality of the company and its ability to respond to changing market conditions in future.Estimated EPS for FY18,19 and 20 should be good enough basis for taking a call on any company as of now.Again we cannot rely on reports that goes beyond FY20 as its too much of an astrology than probability.
1 Like
Feb 1, hit UC limit
Feb 2, hit LC limit
Jan 30/31 Jayesh Bansali bought 2,60,000 shares @ ~ 170
Thought will share the info.
2 Likes
Can we see this info on exchange website? If yes,the route pl?
Thanks for sharing this very useful information.
In few days govt will have to reduce stt to improve market sentiments.
Its in the BSE Disclosures
LC limit LC limit Search for Bhansali. The ticker stopped at 168.15
The same happened yesterday for UC.
Not sure how to get yesterdays UC limit data.
Here it is…under the disclosure section of each company
http://www.bseindia.com/stock-share-price/stockreach_insidertrade_new.aspx?scripcode=500052&expandable=2
you can also see the daily insider trading details in BSE
http://www.bseindia.com/corporates/Insider_Trading_new.aspx?expandable=2
1 Like
Promoter bought yesterday & today also - 2.5L shares.