• Company name: Gujarat Containers ltd.
• Market Cap ₹ 117 Cr.
• Current Price ₹ 193
• Stock P/E 10
• Book Value ₹ 61.6
• ROCE 30.8 %
• ROE 38 %
• Promoter holding 59.66 %
• Price to book value 3.14
FINANCIALS: - Gujarat Containers Ltd financial results and price chart - Screener
COMPANY’S SITE: - http://gujaratcontainers.com/
Overview
Gujarat Containers ltd. is a leading manufacturer in India offering a huge variety of specialized BARRELS (drums) under one roof.
Financial Performance (Year Ended FY2023) :-
The company has reported total income of Rs.136 crores during the Financial Year ended March 31, 2023 as compared to Rs.150 crores during the Financial Year ended March 31, 2022.
The company has posted net profit of Rs.11 crores for the Financial Year ended March 31, 2023 as against net profit of Rs.9 crores for the Financial Year ended March 31, 2022.
Further debt equity ratio, stock turnover ratio, fixed assets to sales ratio, roe, roce, working capital days, etc are continuously improving.
PRODUCTS: -
The co. offers products like Galvanized Barrels, Epoxy Barrels, Composite Barrels, All side Welded, Barrels, Open Top Barrels, M.S.Plain Barrels, NRV Barrels, Carboys & Liners, GP Sheet Barrels, HMHDPE Barrels & Jerry Cans.
Other listed manufacturer of Barrels: -
Balmer Lawrie & Company Ltd.( 40% market share in India), TPL Plastech Ltd & Sicagen India Ltd.
Industry served: -
The barrels manufactured are used for storing chemicals, dyestuffs, pharmaceuticals, resins, petrochemicals, and petroleum and its by-products.
INFRASTUCTURE and Manufacturing Capacity of GCL : –
Manufacturing capacity is 2500 barrels per shift.
• Main Plant – GCL has well established plant set up to produce 2000 BARRELS per shift. In this plant, it has sheet cutting & sizing, spot welding, line welding, seaming, degreasing and partial drying in preheating oven facilities.
• Lacquer Lancing Section – GCL has developed a special type of lacquer application system to give the best quality BARRELS. Besides, it has two-way traceability methods to detect leakage and seepage in BARRELS. Entire process is on semi-auto system and least manhandled
• GI Section – Over the period of time GCL has mastered the manufacturing of GI BARRELS. Today GCL is the only Company in India having highest capacity in producing GI BARRELS & having all the required infrastructure In-house. It has ample infrastructure and manpower to produce more than 500 BARRELS per day.
• Blow moulding section – Quality of the Composite BARRELS is penetrated in its liners. To ensure zero complaint & assure best quality liners GCL has made its own blow moulding facilities at its plant. It has 5 blow moulding machines having different capacity of production. GCL utilize HMHDPE granules from IPCL / Reliance only.
• Welding section – GCL do all-sided-welding to its BARRELS on specific demand of its valued customer. This section has different types of welding equipment’s and rotators. These BARRELS are used to fill highly hazardous products.
• Quality Lab – In this section GCL has Helium Testing Facility, Automatic Degreasing plant for cleaning barrels internally and externally without manual intervention, raw material testing facilities and analysis of raw materials and chemical compatibility test of epoxy lacquer, seaming compound & GI.
• CUSTOMERS:–
Atul Limited, Meghmani Group, Murugappa Group, Privi Organics, Reliance Industries, Sun Pharma, United Phosphorous Limited, Gujarat Insecticides Limited, Oriental Aromatics, Kutch Industries, GSP Cropscience ETC.
EXPANSION: –
Gujarat Containers Ltd has set an expansion project at GIDC, Dahej for projected capacity of manufacturing of 75000 barrels annually, at total outlay of RS.18 crs, which is being funded out of Internal Accruals. The project is likely to start trial Production by June 2023 and to commence its commercial operations by July, 2023.
INDUSTRY OVERVIEW, MARKET SIZE, DEMAND AND PROJECTIONS: -
The global steel drum market is projected to witness linear growth between 2023 and 2033 at a CAGR of 5.6%, reaching US$ 20.8 billion by the year 2033.
The steel drum is a safe and secure rigid packaging solution made from carbon steel or stainless steel. The steel container drums hold prominent features like being cost-effective, easy to handle, safe & secure for shipping, resistant to fire, reusable, recyclable, and many more, which augment the demand for steel drum.
The key reason for the swift growth of steel container drums market is that it protects the stored material against harmful UV rays, moisture and dust. Furthermore, properties such as durability, high sustainability, eco-friendliness and excellent strength make small steel drum a preferred choice in the packaging industry.
The steel drum market witnessed lucrative growth due to its demand in various industries like chemicals, petroleum & lubricants, paints, inks, & dyes, and others. The market growth for steel drum manufacturing process seems to remain sizable in the forecast period considering the benefits provided by it for storing and shipping hazardous & non-hazardous materials.
Since there is a significant correlation between the industrial output and demand for industrial packaging, demand for enhanced industrial packaging is evident, with stabilized manufacturing sector output.
Investment Thesis: -
I found GCL as a proxy play to Indian Chemical Industry.
India’s Chemical Sector Holds Market Opportunity for Steel Drum Manufacturers
India Market Size (2033) US$ 1 billion
India Market CAGR (2023 to 2033) 8%
The steel drum for sale are basically consumed by chemical industries due to the rising demand for chemicals in various end-use industries. The targeted segment is the prominently growing sector in India. The chemical sector is growing at a significant pace.
The key chemical players are targeting India market for manufacturing chemicals, which may increase the exports. Back on this factor, the market growth for steel drum manufacturers in India seems promising in the near future.
This report is very insightful on future prospects of Indian Chemical Industry.
Risks:
• The intermediate bulk containers (IBCs) are hindering the steel drum market growth. Comparing steel drums and IBCs, the latter ones are cost-effective in terms of storage and transportation. Looking through the shape, the round shape of steel pan drum results in unutilized space, whereas IBCs result in maximum space utilization. Moving towards the usability feature, steel drums have low usability as compared to IBCs.
• The availability of raw materials and the price of raw materials, more particularly iron & Steel are be subject to material changes in Pricing levels.
• As GCL is a micro-cap Stock and it is very illiquid.
DISCLOSURE: - recently invested at Rs. 156/- levels. It is not a buy or sell recommendation.