Business Model
- Confidence Group is a vertically integrated company, the cylinder manufacturing units assist in providing an in-house infrastructure for its LPG Cylinder marketing (Go Gas), which is further supported by
LPG Bottling & Blending units. - Further, the LPG Bottling & Blending units also serve as a hub to store Auto LPG Dispensing Stations for logistical advantages, a rare combination amongst the industry players.
- The Packaged Cylinder segment and Auto LPG Dispensing Stations industry have received strong tailwinds from various State Governments and Central Government owing to their stable prices and in a bid to curb emission and pollution.
Cylinder Manufacturing
- Confidence Group owes the credit of being the largest cylinder manufacturer in the industry with 15 facilities having an installed capacity of around 42 lakh cylinders per annum. Its 7.5 lakh unit per annum plant in Halol in Gujarat is a 100% export-oriented unit (EOU).
- The range manufactured at the Vizag plant will have all the regular sizes & comply with various quality requirements both in India & International markets. The plant also has the capability to provide a complete range of High-pressure cylinders for various applications like Medical Oxygen, Industrial Gases, Nitrogen cylinders, and cylinders for other Hi-Pressure gases.
- With Rich 26 years’ consistent experience, Confidence petroleum cater to our Major PSU’s like Oil Majors Bharat Petroleum, Hindustan Petroleum, Indian Oil, and private players like Reliance & Shell.
- Confidence petroleum We also export cylinders to various esteemed Government & Private Companies in Asia & Africa.
LPG Bottling & Blending Service
- Confidence Petroleum is the Largest LPG Bottler PAN India.
- Confidence Group has installed 58 LPG Bottling & Blending plants in 19 states at strategic locations.
- LPG Bottling & Blending plants are duly licensed by PESO and this is the reason why all our plants are well secured for all the safety measures.
- Company owns 58 plants & Company’s upcoming project for LPG Bottling & Blending is 15 approx & in near future Confidence Group aims to reach the pinnacle with its precious 100 LPG Bottling & Blending Plants across the Nation.
Packed LPG Marketing
- Confidence Petroleum brought ahead its own brand in LPG Packed cylinder section in the year 2012.
- Range Of Products: Go Gas (Metal Cylinder): 12Kg, 15Kg, 17Kg, 21kg, 33Kg
- These cylinders are used majorly for Industrial, Commercial Sector here, hence are at advantage in terms of weight & Prices as govt. subsidies are not applicable in these sections they provide Gas which is much cleaner & pocket-friendly prices.
- Industrial Usage: Textile Industry, Automobile Industry, Heavy load Industries, Glass & Ceramics, Building & Cement, Metal Industry, Railway Track Construction, Paper & Printing Industry, Food Processing, Agriculture & Farming Leather Industry, Mining Industry
- Commercial Usage: Hotels, mess, school, college, canteen, office, hospital, tea kiosks.
- Within the packed cylinder business, company have maintained our network of Packed Cylinder retail dealers to 2,000 dealers as was during the start of the year. Within the cylinder manufacturing business, the Company expects the orders which were on hold to be released soon as well as new orders, due to Ujwalla 2.0, recently launched by the Central Government.
- The Company may also pilot the introduction of 450 kg LOT cylinders for industrial and commercial applications.
Auto LPG Dispensing Stations
- GoGas has instituted 209+ Auto LPG Dispensing Stations spanning PAN India. The team aims to set up 500 stations over the next 5 years
- Economical: 40-50% cost saving in comparison to petrol.
- Efficient: Improves engine life and reduces recurring maintenance costs.
- Easy: Trouble-free conversion of petrol/diesel vehicles to run on GoGas using Auto LPG Dispensing Stations conversion kits.
Peers
Guru Analysis
Technical Charts
- It clearly shows that whether it is a daily or weekly chart, the buying volumes have been very good.
- The corrections show were healthy and did not have any major volume sell.
- Price action is clean and promising.
Deliveries
a. Past few months
b. Past few weeks
c. Past few days
Corporate Actions
Return Ratios
Efficiency Ratios
Growth Ratios
Solvency Ratios
Cashflow Ratios
Valuation Ratios
Profit and loss
Cashflow
Shareholding pattern
Recent Insider Purchasing
Accelerator pitch
- Nominated by Gail Gas based on techno-commercial expertise to set up 100 CNG stations in Bengaluru. This is an example of our capabilities to execute projects on a war footing. Our efficiencies and expertise have been recognized by most CGD companies in India who would want to associate with your Company.
- The future market will be sustainable fuels and CNG and Auto LPG will continue to co-exist in India and augment each other’s presence, to lead a faster transition of gas-based vehicles in the country.
- The consistent hike in excise duty of automotive fuels such as diesel and petrol has made commercial LPG a favorable option for the automotive segment as well. The steep hike in the prices of petrol has provided larger incentives for vehicle owners to shift to Auto LPG (having superior fuel economics and is a cleaner fuel).
- India consumes 20 million tonnes per annum with an average growth in excess of 8% per annum. The prevailing Covid-19 pandemic had further improved the acceptability of composite cylinders, marketed under the brand name (“Go Gas Elite”) and has given selling opportunities within the upscale residential segment. LPG penetration in the rural areas also continued to be Government schemes. Under these schemes, more than 90% of Indian households have access to LPG, up from 55% in 2016.
- LPG demand from the residential segment is expected to witness heavy growth momentum in the months, or until the pandemic is brought under control. As per Oil Ministry projections, LPG consumption is expected to grow to 30.3 million tonnes by 2025 and 40.6 million tonnes by 2040. (Source: Economic Times). As the economy opens up after the devastating second wave of Covid-19, they expect the demand to rise from Auto LPG (as mobility increases), commercial and industrial consumption. Ujjwala 2.0 launched by the Government is expected to keep the demand robust for LPG cylinder manufacturing for the next 2 years.
- As the country invests in expanding its CNG network the upcoming 8,000 new stations, provide large opportunities to the company.
- Company is expected to give a good quarter. The company has delivered good profit growth of 114.92% CAGR over the last 5 years.
- [Confidence Futuristic Energetech Limited] (a subsidiary of Confidence Petroleum India Limited) has announced that after foreseeing the upcoming demand of CNG/High-Pressure Cylinders, the company has decided to raise its production capacity in its proposed unit in the name of Confidence Enterprises Private Limited (100% subsidiary of Confidence Futuristic Energetech Limited) situated at Umred Nagpur from 360000 p.a to 540000 p.a.
- Acuité has reaffirmed & assigned a long-term rating of ‘ACUITE’ A- (read as ACUITE A minus) to the Rs 117.21 crore bank facilities, and a short-term rating of ‘ACUITE A2+’ (read as ACUITE A two-plus) to the Rs. 21.38 crore of bank facilities of Confidence Petroleum India Limited (CPIL). The outlook is ‘Positive’. Acuite Rating 1 DEC
Concern/ Red Alert/ Threat
- The company, does not foresee any major threat within the LPG industry. However, over the next 7 to 10 years the major threat is from the Piped Natural Gas network and Electrical Vehicles. However, the complexities and investments, involved to make PNG and EV a success, especially the lower disposable income, larger geographical bottlenecks of the country, the time frame may extend.
- The impact of any future waves of Coronavirus and consequent lockdowns of varying degrees of severity, as well as the decline in the economic activity, will result in uncertainty, and the impact on volumes, margins, and earnings is also uncertain.
- Over the twelve months to September 2021, Confidence Petroleum India recorded an accrual ratio of 0.32. Unfortunately, that means its free cash flow was a lot less than its statutory profit, which makes us doubt the utility of profit as a guide. In the last twelve months, it actually had negative free cash flow, with an outflow of ₹937m despite its profit of ₹972.6m, mentioned above. It’s worth noting that Confidence Petroleum India generated a positive FCF of ₹120m a year ago, so at least they’ve done it in the past.
- Company has had a low return on equity of 13.66% for the last 3 years.
Probable Targets:
With the perspective of long-term investment 150, 200 look promising. CMP 78/-
Disclaimer:
- Equity research is my hobby and I am not SEBI Registered.