Indo Borax and Chemicals

Stock Opportunities
1

Indo Borax and Chemicals

CMP= 110. P/E= 5.31

Debt= 4.79 cr.

MarketCap = 38.50 cr

Q4 results are yet to be announced.

Request seniors and everyone to have a look

Established in 1980. Modern plant in Pithampur, M.P. It manufactures boric acid in different forms :

1). Boric Acid ( Tech grade powder )

Uses

Welding and in steel industry

Fire insulation

Nickel and Chrome plating

As a micronutrient

2). Boric Acid ( Granular )

Uses

As fused products in glass, glass fibre ceramics and porcelain enamels

Nuclear Applications

3). Boric Acid ( I P )

Uses

Ointments ( Acne )

Eye-washes

Shampoos

Mouthwash & Anti-bacterial applications.

The products are also used inDish-washingproducts, leather and lubricants.

Investment Theme-

1). Undervaluation

2.The plant is approved by Food and Drug Administration for boric acid used in pharma.

3). Boron ( Raw material for boric acid ) availability is controlled by Rio tinto and Etimine a Turkish company.

4). Promoters have increased their stake from 41 % to 46 % in Q4.

Risks-

1). Availability of Boron ( Raw material ).

2). Micro-cap.

3). Import of finished products.

4). Recession may slowdown growth.

5). Can’t vouch for Subsidiary company and related transactions

Subsidiary-

Indoborax Infrastructure Pvt Ltd. Residential project in Santacruz delayed due to regulatory approvals. ( Have no idea about the size of the land )

Regards

5 Likes
2

Hi,

Yes, the co seems interesting and quite undervalued as they seem to be leaders in a niche area and have done pretty well. The co has very high margins in a simple product…so seems they have some sort of major advantage.

The negative are:

The co has ventured into a real estate project in Santacruz, Mumbai. The project is 60% owned subsidiary. The project is getting delayed again and again

Here is a video 3 years back -http://www.moneycontrol.com/news/business/mumbai-project-to-add-rs-8cr-to-pat-indo-borax_430121.html

The co has low div pay-out at less than 10%.

The co has again invested 12 Cr in property. So in a way its a dead investment with no returns to shareholders

Regards,

Ayush

Disc: I hold

2 Likes
3

Dear Ayush

1. Other listed co in the same segment is Borax morarji. They are in loss.

2. Ayush due to import regulations, traders and importers were hard hit and Indo-borax gained.

3. Indo borax has bought a small mine in Argentina in 2009.

1.http://www.icwa.in/pdfs/Argentina_new.pdf( Last line page no 4 )

2.http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aDpdazToiWvY

** (**Separately, a boron mine in Argentina bought by Indo Borax for about $2 million may deliver about $225 million of the raw material used to make borax, Jain said )

(Another 100 acre plot bought in the south-western state of Goawill be used to develop a township in Mopa, nearby an airport being planned by the regionas government.)

**
**

4). Government of India release on Boron Minerals

http://ibm.gov.in/IMYB%202011_Boron%20Minerals.pdf

Some extract

** FUTURE OUTLOOK**

Increased usage of ceramic tiles will keepconsumption of boron minerals in end use like

enamels, frits and glazes. Demand as a fertilizerwill remain high, whereas, usage in

soaps anddetergents will be low because ofenvironmental concerns. Some cars have

beenreplacing metal parts with reinforced fibreglassplastic parts of reduced weight to

increase theefficiency of gasoline consumption. This willenhance the demand of borax

for the productionof fibre glass.

5. But they have mentioned,** imports have increased and exports have decreased in Foreign trade para**. Then how come Indo borax is performing well ?. ( The data is for 2010-11)

6. And presently US and India are fighting it out in WTO

http://www.wto.org/english/news_e/news12_e/impl_27apr12_e.htm

Thanku Ayush for the video link… They have mentioned about Argentina mine in the video.

**
**

7. Has the management lost credibility due to their real estate venture?

Regards

1 Like
4

Is anyone tracking this stock? The stock price has corrected over the past week and is at a P/E of 4, with a P/BV <1). IB recently did a successful share buy-back increasing promoter share to 56% (from 41% in Sept 2013), which is a very good sign.

Positives

  • Buyback
  • Good 20% revenue growth in FY14, though profits declined
  • Strong B/S with limited debt
  • Overall company is a leader in its niche, has a decent dividend yield and is undervalued
  • RE venture is finally bringing in some revenues

Negatives

  • Balooning inventories
  • Reduction in profits from FY 14

Seems like a good investment to me. Seniors, any views?

Rgds.

Varun

p.s. This is my first post, so please forgive any mistakes and hasty conclusions

6

Hi Varun

Sorry… Am not tracking IndoBorax and Chemicals

Regards

mallikarjun

7

Recently a news came in money life about indo borax. it may help you.

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Link: http://www.moneylife.in/article/indo-borax-chemicals-good-mix-of-quality-and-product-range/38629.html

Hi Naveen,

I don’t think it’s possible to read this article, unless one subscribes to it. If you do have access, can u please shed some more light on what is mentioned in it. Does it say anything about the mine that the Co. is supposed to have acquired in Argentina & just how significant is it to the fortunes of the Co.?

I had recently attended the AGM in Mumbai n was was perhaps the only share holder interested in knowing more about the Co. On my specific query, I was reluctantly informed about the proceeds from the real estate venture. Top line of 40 Crs & profit of 5 Crs. The guys seemed to be in a rush to wind up the meeting. I came back with the impression that this was not a mgt. to spend 4 crs. on a share buyback, unless there were huge gains for the Co., more importantly for the promoters themselves.

Recently, there was a bulk deal on BSE on September 8, where Wallfort Fin Services Ltd. (itself a BSE listed Co.) purchased 16293 shares @ 261.44.

Something’s cooking here. I am not quite sure what!!!

Disc: Invested

1 Like
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Indo Borax and Chemicals

1).

Uses

2).

Uses

3).

Uses

inDish-washingproducts,

Investment Theme-

1).

3). _** controlled

company.4.

**_

** 41

Q4.

Risks-

1). **

2). Micro-cap.

3).

4).

10

In that article they mentioned at current price is the stock is undervalued (193 Rs/-at that time) and buy back of2,72,000 sharesearly this year & 1.5 rupees div shows good turnaround.It don’t have any info about the acquisition plan.

Key Financial results :-

Stand-alone(Cr) Dec-13 Mar-14 Jun -14

Revenue 14.18Cr 17.71Cr 18.39Cr

OP 2.69 3.29 4.48

OPM 19% 19% 24%

Y-o-Y Rev.Growth -17% 1% 24%

Y-o-Y OP Growth -47% 69% 55%

March Ending FY11 FY12 FY13

RoNW 18% 15% 19%

Tomorrow (14/nov/2014) is next qtr result… share price coming down last 3 days. will see the result.

Disc:invested

11

The company has purchased the remaining 40% of the promoters stake in the Real Estate Project (IIPL) as on 31st March 2015.

Company didn’t make any filing of its performance since last March '14. And no mention about the price paid by the company for the 40% balance is disclosed too.

Does anyone has any idea of the status of the project in Santacruz?

12
  1. Q1, Q2, Q3 results are available on the BSE website.
  2. Present capacity is 14.4k mtpa, an expansion has been approved on 29-Dec-15 to 20k mtpa
13

Question was on performance of the real estate subsidiary and price paid to acquire balance 40%… Not about the main operation of the parent company.

1 Like
14

Consolidated revenue fy15 = 87cr up 15% YoY, Net Profit = 13.1cr up 30% YoY. Long term debt = 4.6 cr , Short term debt = 0, Non Current Investment = 13.2 cr, Cash = 16cr.

Capacity expansion underway.

Debt free company growing at 30% available at PE = 7.7. Value investors delight with ample margin of safety.

15

The q1 result is out and there is a drop in revenue and profit in comparison with the last year same period though it is higher than the last qtr

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There is slight drop in revenue and net profit. But the main point is expansion is underway and expanded capacity will be operation from Sep-15, which is almost a month away. Once expansion kicks in investors could major upswing in revenue and nprofit.

It is hold for fy16 annual result. Could double from current levels in 6-8 months time.

17

Could you tell when there are environmental concerns for usage of Boron in Soaps & Detergents. The element seems to be needed by organisms, although concentrated amounts in soil are bad for plants, would that be the case?

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Hi Aveek,

Trust by now you would have gone through the AR and got your answer.

Price paid for balance 40% is ~1 Cr which seems ok. Also in the last FY ~8 Crores of loan from holding company was paid back by Indoborax infra to Indoborax chemicals which is another positive.

Overall, I see positive developments and good times to come for the company after expansion.

P.S. Invested at CMP

3 Likes
19

Any recent update on this script.

20

Both topline/bottomline down in June quarter. No idea why despite the capacity expansion. Anybody following?

Discl. Invested

21

Dear All,

Company has invested almost Rs.10 crs for expansion. As per annual report there will be no problem on selling of this additional capacity so we can see some expansion in turn over over next years.
What i have not understood is their Non- current investment of Rs.30 crs, as per annual report Fy2016 - " During the year company has invested Rs.18 crs in new office premises at BKC in addition to earlier investment of Rs.12 crs" - Can anyone explain what is the purpose of this investments. one more question is Why company is investing in direct equity when they can not manage it well.

I think company has completely sold of their Santacrutz property as per annual redeport and only one flat is remaining to be sold.

Thanks

Prashant

Disc : not invested

1 Like