Q2 results concall transcript.
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Prices for glass that coats photovoltaic panels have risen 71% since July, and manufacturers are struggling to produce it fast enough to keep more than a weekâs worth of sales in inventory, according to Daiwa Capital Markets. The shortage comes as the solar industry turns toward bifacial panels, which increase both power output and glass requirements.
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This is great news for company like Borosil Renewables who is the only Indian solar glass manufacturer. No wonder stock is flying in last few daysâŚ
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More news of solar glass shortageâŚlooks like it is real issue. But even if Chinese government approves additional glass production, it would take another year for the production to come on line. This global shortage will provide good boost for Borosil Renewables as its competitors are chinese companies like is Xinyi Solar who are struggling to meet local demand so they would not be interested to dump in India at lower prices.
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This news item says prices have doubled and the shortage (and higher prices ) will persist till first half of 2021. Since it is applicable for only spot prices and assuming 70% of the glass is sold on long term contract , the quarterly revenue and profit (PBT) gain could be around 28-30 Cr (assuming 80% price increase for 30% of the sales) which mean effectively doubling its EPS. If so, the quarterly EPS can be 2.5, annualized EPS would be around 10. Looks like better days ahead for this company as it finalizes capacity addition.
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Solar Glass is sold on an order by order basis, there are no long term contracts. BR in one of the analyst calls said it takes 1.5 to 2 months to fulfil an order and prices are set before accepting the order.
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I agree with you. But like automotive industry, I expect prices would be finalized for a year (for large customers like Waree, Adani, Renew Power, Vikram Solar etc) and then POs would be released as and when required basis. So I donât think more than 50% business would be âon spot basisâ . Also since their PO execution time is about 1-2 months, full price increase impact may not be seen this quarter as POâs received in Aug/Sept would have got executed in Oct-Nov.
But whichever way you think, I expect Q3 PAT to be 20Cr+ as compared to 14 Cr last quarter. Last year, it was loss in Q3 as they were running only one furnace which was nearing end of life.
I agree with your assumptions. Letâs see how this pans outâŚ
Considering the supply shortage and price run up, do you think the government would come up with the import duty the company had been writing to them about? I think they are going to hear back from the Ministry on 9th Dec (if Iâm not mistaken).
Disc : Invested. Added more today as the opportunity seems like a no brainer to me.
Iâve sent a mail to Mr. Ashok Jain to ask him how the market is in general, whether theyâre confident of the import duty coming on and the progress wrt the expansion plansâŚ
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Thanks, any update from the management on import duty/CVD?
What i understand from market is the prices have increased from around Rs 330 per sq mtr in August to around Rs 550 per sq.mtr which for a 2 sq.mtr module is an increase of Rs 440 for a panel (66% price increase). Currently sale of 395 or 400 Wp Mono PERC modules are around Rs 20-20.5 per Wp, overall for all solar module manf almost Rs 1/Wp has increased only due to Glass. Now what is understood from market is Borosil Renewable is actually rationing the supply with an expected one more price increase in Dec. Xinyi and Flat glass prices to India is now much higher than Borosil due not only shortage but substantial price increase in container freight rates. So most of the Tier 2 manf are dependent only on BR. This does not seem to be a temporary phenomena but the higher prices are there to stay for atleast 2 to 3 quarters. BR, both Furnaces are operating at full load capacity. Though BR has been complaining of ADD not applicable from Malaysia, so Xinyi etc used to supply from there but that threat has now substantially reduced due to sudden shortage in China itself. Very strange to notice none in India including Adani have shown interest to produce solar module Glass eventhough Adani produces Cells, Modules, Back Sheet including EVA but not investing in Glass manf units.
The only complaint from manfâs of modules from BR has been the delivery issue and quality they are satisfied.
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This is a great scuttlebutt. Thanks. I am sure this demand surge as well as pricing support will motivate BR management to accelerate its plan to add new furnace (although considering lead times, global capacities would be in place by that time). But this shows long term prospects for solar glass.
About why module manufacturers are not interested in manufacturing solar glass. I think it has to do with skillsets required to finetune lower thickness solar glass. So module manufactures are better off by offloading such low value but critical components to the people who are expert in this field. Having said that, if this persists for longer duration, there is always chance of them putting up capacities.
Hi, i have a somewhat naive hypothetical question, just for educational purposesâŚ
If a big PV player such as Adani acquires BR, can they legally restrict supply of solar glass to other PV players (competition) in India? Given solar glass imports, as of now, are more expensive than BR ones, this strategy could give competitive edge to the acquirer by creating cost differentiation in PV market
I guess its possible. But then other solar modules guys will complain to the government since govt. is driving solar power growth. But technically, its possible.
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âSo module manufactures are better off by offloading such low value but critical components who are expert in that fieldâ
Why would you call solar glass biz low value? Shouldnât something critical be high value by default?
I mean to say by cost as % to module cost. Glass forms only 5-7% of the total cost of module. As compared to solar cells, it is much less complex to manufacture.
Great news for Borosil Renewables. More module production in India means more demand for solar glass in India⌠Good news keeps coming for the company⌠
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But currently ADD is already there on Glass from China, but not from Malaysia. They have to put CVD too, then the cost of glass would be non remunerative from China or Malaysia. As we know Xinyi and Flat Glass etc they have huge capacity. Currently due to vry high ocean frieght too, its not working for chinese glass manf to supply at compt rates to Indian solar module manf
Import duty imposed even on imports from other countries
Source: https://www.bseindia.com/xml-data/corpfiling/AttachLive/4ceacf0c-59e7-418d-b60a-40ad3fbfc38f.pdf
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Import duty on Malaysia as well. Much awaited development happened.
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No wonder stock hit UC today. Its ticking all the boxesâŚ
Short term tailwind - Increased global demand, increased ocean freight (important for BR since they have only overseas competition), in turn shortage and increased solar glass prices
Long Term tailwind - Focus on Atmanirbhar Bharat, Ambitious target by India of 450GW of power generation by renewable energy by 2030, Global growth of renewable energy due to US re-entering Paris agreement post Biden victory in US, 4500 Cr incentives under PLI scheme for Solar Modules production and now imported solar module under 40% basic customs duty (from 2022) and now 9.7% CVD on Malaysian imported solar glass (major competition - Xinyi Solar, Malaysia)
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