bad news, if that would happen. This stock will surely go into hibernation (price wise).
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Can you please explain how the sanctions on Russia will impact the business of Rain… Does Rain procure raw materials from Russia? or Is Russia a major customer of Rain?
Sorry for asking such a naive qs…
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If there are sanction on Russia by USA absolutely there is no problem for RAIN.
Remember rain is just raw material supplier for smelters & calciners. If USA stops importing aluminium they need to start local smelters. Since RAIN is majorly based on USA , smelters natural choice is RAIN CII. In fact it is positive for RAIN…
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Not sure about how large impact it can be but they have JV in Russia for CTP plant which can get affected if US place sanctions on Russia.
Thanks!
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The total capacity of the Russian plant is 300000 metric tons per annum. Aggregated CTP capacity across Belgium, Canada, Germany and Russia is 1.5 million per annum. So this has an impact of around 20% on CTP business.
Few more points:
Every Ton of Aluminium requires ~ 0.1 ton of CTP
JV Partner, PAO Severstal, has brought a long-term supply contract for the raw material - Coal Tar into the Joint Venture.
The majority of sales are made within Russia at import parity prices.
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CTP price increase will nullify a lot of impact of decrease in volumes. Minimal effect on overall profitability in my view
Revenue growth, PAT swings to loss. Growth in carbon segment is heartening.
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They continue to put out voiced over ppts instead of concalls.
In my understanding oil price rise is likely to raise GPC prices, which is already scarcely available. Advanced materials demand is robust but I foresee continued margin pressures over the next couple of quarters. They have called out possible disruption due to increased energy costs in Europe as well. The Germany plant and the Russia plant will struggle in the short term IMO.
Disclosure: Invested from lower levels. Given the likely volatility in margins over the next couple of quarters, thinking of exiting for now as risk-reward seems less favorable to me, specially with many other stocks having corrected so much and looking attractive.
Not a recommendation, I am not a financial advisor and may be completely wrong.
Full portfolio Vineet Jain portfolio
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Anyhrdrous Calcined Coke trials are being conducted at prime customer end this quarter. This patented raw material can be the dark horse for this stock, apart from current attractive valuation and all other stuff mentioned above.
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Annual Report is published:
Key highlights from my perspective are -
- Expansion projects in Germany, India and US, will start contributing from year 2022 to different extent
- Revenue from Russia operations is about 8%
- Cost pressure likely on account of geo political situation
- Company is focusing (at least trying to create a perception :)) on greener environment aspects - ESG
- They expect revenue momentum similar to 2021 in 2022
- They are indicating about higher demand for the Advanced materials launched during last year or so
- Aluminium being above $3,000 likely to support pricing power for CTP
I am still not very clear about the dividend policy of the company as the Capex cycle is largely complete.
Disc - Invested
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Further to points highlighted in your post
1 As the expansion is over, company is going to consider reduction of debt.
2 Capcity utilisation of Resin plant in Germany going to improve from 40% to 70% in 2022. As a result margin in this segment of advance materials likely to improve .
3 Company doing research on alternate material to coal tar ,something similar to ACP.
4 Mohnish Pabrai inceased stake in QE Mar 22.
Disc Invested
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Good set of number for quarter ending on Mar. 31st
Press Release - https://www.bseindia.com/xml-data/corpfiling/AttachLive/2eb1ecfd-c149-4688-a379-be96af7263dd.pdf
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Rain Industries Limited - Management Commentary on Unaudited Financial Results
Q1 earnings call: https://rain-industries.com/images/RIL-Management-Presentation-Q1-2022.mp4
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Very nice Digital Annual Report.
plant closure in Europe,the effect of impending energy crisis has began to emerge.
452746dd-00cd-4bde-94ec-42e48f8c22db (1).pdf (797.4 KB)
How much % revenue comes from Europe ?
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Earnings presentation link below.
Management is quite conservative and cautions challenging environment for next year. Considering a relatively low debt, the company should be able to come out of this better. There could be more opportunities to gauge the performance and accumulate over the next year.
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Anhydrous calcined coke is being tested at second global customer.
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Could you please explain more? I can see it has 9,198Cr debt and debt to equity
1.24.
latest credit rating shows debt reduction. Also the Debt/equity ratio has come down significantly over past few years. This company is no longer over leveraged. Natural gas prices have cooled down in Europe, the stock is not reflecting any of these positive developments.
Disc- Invested since last 2 years @ 160/- no meaningful gains.
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