Bad results, maybe the APC has lower margins than GPC.
AL cycle up-tick has not yet started, global slowdown has depressed recovery.
Domestic auto sector is also a drag.
Presentation:
https://www.bseindia.com/xml-data/corpfiling/AttachLive/3fa87cd7-73a7-4396-8788-eb7b05d3d751.pdf
Results are not that bad after adjusting for one-offs. Adjusted eps is 5.2 and their ebitda margins have come back to normal.
Capex cycle is coming to end and things should be a lot better from here on.
Post Q3CY2019 results update. Some nice insights.
Goa carbonâs Oct production data is out: they produced 23cr worth cpc in Oct 2029(115840MT) vs 31cr worth CPC in Oct 2018(10987MT). Looks like indeed small players are struggling due to supreme Court import ban.
Discl: invested
Few concerns with regards to company:
My initial premise was that the industry as a whole will not be able to keep increasing their production due to limited GPC availablity. But that doesnât appear to be the case. So instead of ramping up capacity the focus of company should be on debt reduction, which hasnât happened yet.
On the plus side, their focus on migrating to better margin products and market expansion is commendable.
rain industry.pdf (2.4 MB)
Rain Industries Limited
stating that it has imported its first shipment of Anydrous Carbon Pellets
(ACP) into India. This specially engineered, value-added material will be used as a
feedstock by Rain CII Carbon (Vizag) Limited,
advantages include:
⢠Higher-density anodes that last longer in the smelter cell
⢠Reduced energy consumption
⢠Reduced emissions
Company started what they were mentioning in concall
Thanks
Rain recently announced that it has successfully Imported First Shipment of Anhydrous Carbon Pellets (ACP) for New Calciner in India. ACP is a patented raw material that has tremendous potential for anode and aluminum producers.
Does it mean ACP will eventually replace CPC. And with this the need for Green Petroleum Coke will not be there?
rain industry.pdf (2.4 MB)
Vizag plant has been inaugurated. Production and export likely to commence from mid March.
https://truthinkers.com/apsez-poised-to-achieve-turnover-of-%E2%82%B94500-crore/
Quarterly Results are out:
Dec 2019 PAT = 1,491.64
Sept 2019 PAT = 1,084.58
Rest can be checked below:
RainIndustriesLimitedAuditedFinancialResults31122019 2.pdf (2.8 MB)
On the Carbon side of our business, volumes were up about 7% and revenues were down about 1% sequentially from the third quarter. Despite lower revenues, EBITDA for the Carbon segment was Rs. 3.848 billion, a 7% increase over the previous quarter. CPC sales drove the volume increase, and we benefited from having worked through high cost GPC inventory in the previous quarters. Average CPC sales realisation were lower compared to the prior quarter as we secured volumes during the period that we believe will help long-term demand for our product.
From the Concall
Can someone through light, whether less Brent crude price is beneficial for Rain industries ?
some of there ACM prices are indexed to crude so it aint good, however they will save on transportation cost.
How is the GCP (green petroleum coke) cost linked with Crude ? As GCP comes from Refinery.
Remember that GCP is produced/one of the outputs of processing Crude. Lower the cost of crude, lower should be the GCP price. But the way our company works is - from the AR - âIn general, CPC and GPC prices move in parallel. Hence, CPC producers are converters with ability to pass on the increase/decrease in GPC cost to their customers. However, there may be a time lag of one or two quarters for adjusting the changes in prices of GPC and CPC. In the interim, the difference, if any, may have to be absorbed by the CPC producersâ
From my understanding as mentioned in the earlier post its neutral irrespective of the Crude price as all the parties involved - Rain and the end customer gets the cost benefit of getting the CPC at the low price as the GPC would be procured at a low price by Rain.
Disclaimer : Invested
I said ACM and not anything about pet coke. Go through previous con-calls of the company. What I had said is not my opinion but the observations shared by the management in one of the con-calls.
Here is my write up on Rain industries in the stock story formatâŚthat Donald has been pushing for. Hope you guys can add information to this and plug any loopholesâŚ
Hey ganeshrpl, Thanks for your write up. But I think at this juncture, it would be good if we could analyze the worst case scenario, rain might face due to this crisis and even post recovery, if things donât recover so fast so soon. What are the different liabilities (interest payment, debt repayment, capex) which is coming in rainâs way in immediate time (in 1 or 2 year)? What do you think will be impact on sales and margin of rain, if the issue persists for some time (around 1 or 2 quarter)? In that situation, would rain have sufficient to pay its interest? Rain has cash equivalents worth of 1168 Cr and quarterly interest payment seems to be off 113 Cr. So they can keep paying interest for sometime. but What about capex plans? Do they have any debt principal payment in next year? I think there might also be working capital cycle elongation, which can take some of the cash away.
Hi @ganeshrpl, very good write up.
What is the % of business for Rain or its subsidiaries from Europe & US, for CPC/CTP from Middle East specifically from GCC Almunuim Smelters?
If it is not significant then its not a real threat in near future but sooner or later there could be one or two CPC manufacturing companies may come up in GCC region.
There are several companies aiming to setup plants to capture big opportunities underlying with big Aluminuim Smelters concentrated in GCC region.
*Ownership structure changes, after formation of EGA (Emirates Global Aluminium)
Source: Courtesy: Gulf Aluminum Council
hey @jhasuraj, i understand this might not be the time to present a write up on this, but understand this was part of our meetup and presenting a company to learn from each other.
Great questions by the way on the worst case scenarios.
Here are my 2 cents on them:
What are the different liabilities (interest payment, debt repayment, capex) which is coming in rainâs way in immediate time (in 1 or 2 year)?
From their presentation: They have no repayments due at least until 25, which gives them 4-5 yearsâ cushion on principal re-payment back. Also since the central banks in USA (& assume other across the world might follow through) are trying to reduce interest rates, there is a possibility of refinancing at a lower interest rate, if needed.*
⢠Finance cost of Rs.452.4 & Rs.456.5 Crores in Cy 19 and 18 respectively. On avg. close Rs.450 Crores is their yearly avg finance cost. Their cash(CCE) on hand is Rs.1095.16 (cover of 2 on annual basis, in the worst case).
What do you think will be impact on sales and margin of rain, if the issue persists for some time (around 1 or 2 quarter)? In that situation, would rain have sufficient to pay its interest? â They should be able to cover with the cash in hand. Marginâs might not be compressed but the volume and revenue might go down. (read page 8 & 9 of the latest conf call transcript for additional insights)
Rain has cash equivalents worth of 1168 Cr and quarterly interest payment seems to be off 113 Cr. So they can keep paying interest for some time. but What about capex plans? Do they have any debt principal payment in next year? I think there might also be working capital cycle elongation, which can take some of the cash away. â I have covered for this on annual basis already above and they have sufficient cover. On WC elongation- yes can impact them but by how much is hard to quantify. If you look at their latest comment on this âWorking capital has continued to be a source of cash for us in the year, and until prices stop falling and the new projects become operational, we expect this trend to continue.â Remember this was because of the high cost inventory before this quarter & they almost extinguished all of it.
Sources used: 1) https://www.rain-industries.com/assets/pdf/rainindustrieslimitedpressreleaseonafr31122019_20200228095840.pdf
2) https://www.rain-industries.com/assets/pdf/consolidated-afr-31.12.2019_20200228095710.pdf
3) https://www.rain-industries.com/assets/pdf/rainindustrieslimitedearningscalltranscriptonafr31122019_20200305104502.pdf
There is no data specifically called out in the AR related to GCC. Its a smaller portion (6-7%) of the total revenue (Carbon & Advanced materials) from this geography.
For the carbon segment:
even if there is a competition by new emerging players in the carbon segment, Rainâs ability to generate & satisfy custom specs need for these smelters, at a competitive cost will be a big advantage.
