Borosil Limited

Results
18.6% YoY Quarterly sales growth
85.2% YoY EPS growth

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Excellent results.

considering they posted loss in June quarter, still available/trading around 30-35 PE range, (Assuming around 2.5 EPS also for June quarter) reasonable for high growth consumer business.

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I am attaching my notes from their FY22 annual report.

Laboratory glassware

  • Sales: 156.2 cr. (23.4% growth)
  • 65% market share, have 2’000 SKUs. Market size is 235 cr. growing at mid-single digits
  • Had 1-day order fulfillment rate of 96%

Klasspack

  • Sales: 106.2 cr. (vs 65.19 cr. in FY21), Domestic: 92.45 cr. (vs 56.99 cr. in FY21), Exports: 13.75 cr. (vs 8.2 cr. in FY21)
  • PAT: 8.58 cr. (vs 1.22 cr. in FY21)
  • Primary packaging for pharma sector (glass vials, ampoules). Market size is 1’100 cr. and Borosil is positioning themselves as a second supplier
  • Exploring opportunities in pre-filled syringes, cartridges and siliconized vials
  • Continues to develop export of laboratory glassware products in Africa, Middle east, South east Asia and North America

Labquest

  • Sales: 21.3 cr. (vs 15.9 cr. in FY21)

Consumer Products

  • Advertising & sales promotion: 6.5% of sales
  • Network of 200 distributors, 14’000 retailers across 100 cities. Serviced by team of 100 sales personnel
  • Glassware sales (microwavable, vision glass, glass kitchen storage like lunch boxes): 146 cr. (42.3% growth)
  • Non-glassware sales (Steel Serve fresh, Hydra range, Kitchen appliances): 207.4 cr. (47% growth)
  • Opalware (Larah): 219.6 cr. (55.7% growth). Plant is running at peak revenue potential of 220 cr.
  • Market sizes:
    o Microwavable glassware products: 100 cr. (60% market share) (outsourced)
    o Vision glass (cups, tumblers, etc.): 440 cr. (manufactured in-house at Bharuch)
    o Glass storage container: 700 cr. (outsourced)
    o Kitchen appliances: 9000 cr. (outsourced)
    o Hydra bottles: 1100 cr. (outsourced)
    o Opalware: 900 cr. (growing at 15-20%)

Capex

  • Setting up India’s first borosilicate pressware capacity of 25 TPD in Jaipur for 75 cr., expected to commission in beginning of FY24. This will bring manufacturing of borosilicate pressware products in-house
  • Opalware: Doubling capacity in Jaipur from 42 TPD to 84 TPD at 175 cr. capex, expected to commission in Q3FY23
  • Klasspack: Expanding Nashik facility (300 mn to 500 mn in vials), (500 mn to 700 mn in ampoules) at 70 cr. which should be commissioned in FY24 and generate potential revenue of 200 cr.

Remuneration

  • Increased fixed remuneration of Shreevar Kheruka from 1.2 cr. to 4.8 cr.
  • Shreevar Kheruka: 6.42 cr. (vs 4.04 cr. in FY21)
  • Rajesh Kumar Chaudhary: 1.2 cr. (vs 1.79 cr. in FY21)

Technology investments

  • Focusing on usage of technology to enhance productivity
  • Borosil e-commerce platform is built on shopify
  • Adopted Salesforce CRM (will be completed by June 2022)
  • EAZY Decision Management System integrates seamlessly with distributors’ stock and accounting systems, providing visibility of secondary sales. This has improved sales forecasting inventory management

Capital employed & goodwill

  • Consumerware: 297.8 cr. vs 230.6 cr. in FY21 (excluding goodwill) + Goodwill 18.15 cr.
  • Scientific: 213.2 cr. vs 182.9 cr. in FY21 (excluding goodwill) + Goodwill: 49.52 cr.
  • Total Goodwill: 67.67 cr. (vs 67.67 cr. in FY21)

Investment into subsidiary

  • Invested 20 cr. in Klasspack (at 138 cr. valuation; 1.3x sales, 16x P/E)
  • Invested 4.63 cr. in Borosil Technologies

Miscellaneous

  • Vision to be the most consumer centric company in India
  • Struggled with supply chain issues throughout the year with availability of raw materials. Additionally, container freight rates increased dramatically
  • Real estate fund exposure: 10% of total investments
  • CSR: 1.06 cr. (2.24% of net profits for last 3 fiscals)
  • Number of employees: 753 permanent (1010 contractual employees). Contract labor charge was 30.89 cr. (3.06 lakhs vs 5.13 lakhs for normal employees)
  • Median remuneration: 5.13 lakhs (vs 4.66 cr. in FY21)
  • Share price: 164.1 (low), 498.7 (high)
  • Number of Shareholders: 74’162
  • Assets for sale: 61.38 cr. (14.2 cr. of land + 47.18 cr. of building)
  • R&D: 64.86 lakhs in Bharuch + 4 lakhs in Jaipur
  • Auditor remuneration: 81.8 lakhs (vs 81.8 lakhs in FY21)
  • Useful life for depreciation: 3 years for certain plant & equipment, 2 years for furnace (seems very low)
  • Demerger b/w consumer and scientific division will be completed in 9-12 months. There will be common legal, secretarial and HR services

Disclosure: Not invested

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Key takeaways :

Robust demand and China+1 strategy to aid exports

Post GST, organized players have increased market share

Shift from plastic to glass segment augurs well in consumer products biz

Consumer sentiment moving to branded products

Could pass price cut benefits to customers in coming months

See an increase in health and research spend for scientific & industrial business

Indigenous manufacturing for consumer business to increase from 45% to 75%

Indigenous manufacturing for scientific business to increase from 80% to 95%

Demerger expected to be completed in 9 months

Disclosure - Holding and buying on dips.

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Did anyone attend the recent AGM? Was wondering in case we have any insights that came in from there.

Disc : Invested

ADD extended

should benefit borosil/la opala.

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Short Note on Borosil Limited

Borosil Limited.pdf (1.6 MB)

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Great results from Borosil

25% increase in sales for Scientificware and 77% increase in sales for consumerware on YoY basis. 143% jump is PBT YoY mainly due to exceptional losses booked last year and exceptional gains booked this year (insurance claims paid). Removing exceptional items, PBT is up 25% YoY which is decent in current inflationary environment.

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Total addressable market of Borosil Ltd collected from Annual report.

Borosil Ltd Market Size (Cr) Market Share
Consumer Products Division
Microwavable and heat resistant glassware 100 60%
Vision glass (cups, tumblers etc.) 440
Glass storage containers 700
Kitchen appliances 9000
Hydra flasks and bottles 1100
Opal serving ware 900
Total addressable market 12240 5%
Scientific and Industrial Products
Laboratory glassware 235 65%
Lab Instrumentation 570
Pharma packaging 1100
Total addressable market 1905 14%

*Different sections are growing at different rates so future size may wary.
*Borosil is market leader in Microwavable and heat resistant glassware and Laboratory glassware. The percentage is provided in the report.
*Market share of the divisions is calculated by dividing the revenue per division by the size of the market.

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Notes from the last few management interviews.

07.07.2022 (ET interview)

  • Growth guidance: consumer (15-20%), scientific (12-15%)
  • In consumer division, currently manufacture 40-45% of products, which will increase to 75-80% in next 2-years with upcoming capex
  • In scientific division, currently manufacture 80% of products, which will increase to 95% in next 2-years with their backward integration efforts
  • Demerger timeline: might take 9 more months

15.12.2022 (CNBC)

  • Demand is robust in scientific and consumer division
  • Inflation has cooled with raw material prices stagnating, freight costs have come down
  • Margins were impacted due to delay in capex which resulted in buying more from outside. There will be one more quarter of margin pain
  • Growth momentum in H1 will continue in H2 in both consumer and scientific division
  • Demerger and listing should potentially be done by June 2023
  • EBITDA target for consumer division is 20% while maintaining 20% sales growth
  • EBITDA target for scientific division should be maintained at 25% while maintaining 12-15% sales growth

Disclosure: Not invested (no transactions in last-30 days)

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Latest OTG Campaign

Their OTGs are rated very highly on Amazon.
Recently visited myborosil.com website and surprised to see variety of items like cold press juicer, glasstop gas stove, brass akhand diyas, SS handi server, wooden chopping board etc. So looks like Borosil is working hard on brand extensions and monetizing marketing spends by expanding into related items in Kitchen.

Recently I had chance to experience Borosil after sales service. Borosil Mixer gasket got damaged. After raising complaint (post warranty period), service engineer came to my house to replace the gasket…Pleasantly surprised …If they continue to do this, this company can go long way in service deprived country like ours.

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