CMP Rs 55 (FV 10) Analyst : Janak Shah (M.B.A. Finance)
Market Cap Rs 607 crs Date: 5th Feb 2016
Target : Rs 75 Time frame : 1 year target
About the Company:
Bodal Chemicals Ltd. is one of the leading manufacturer and exporter in the Dyes and Dye Intermediates industry. Its core business is manufacturing of Dyestuffs, Dyes Intermediates and other Chemicals falling under the broad category of Chemicals. It has a unique and integrated product line covering forward and backward integration to dye intermediates.
Company’s final product i.e. Destuff is further used in Textile, Leather and Paper Industry. The Company has total 8 separate units having manufacturing facilities located in Gujarat. Due backward Integration from dyestuff division, Bodal uses about 60% of our own raw materials when it produces Dyestuff and they use about 60% of own raw materials when they produce dye Intermediates. Bodal exports about 40% while rest is domestic.
Bodal is a leading manufacturer of Reactive, Acid and Direct Dyes. Bodal has manufacturing capacity of more than 150 different products of Dyes to cater to Textile, Leather and Paper Industry.
Bodal the largest manufacturer of Dye Intermediates in India and amongst the leading manufacturers of Dye Intermediates globally. The company manufactures more than 25 Dyes Intermediates. These Dye Intermediates are directly sold as well as consumed captively for manufacturing different kinds of Dyes.
Bodal is also a manufacturer of other Chemicals like Sulphuric Acid, CSA, Oleums, Beta Napthol, Acetanilide etc. These Chemicals are used as key raw materials for production of Dye Intermediates, which is highly beneficial in terms of improving profitability of the company.
For the year ended March 2012, the company reported sales of 603 crores and reported a net loss of 28 crores.The equity stands at 21.82 crores. The year ended that is March 2013 the company has seen sales of 523 crs and Net loss of Rs 21.12 crs. For the year March 2014, the sales of the company was at Rs 959 crores and the Net profit for the year came at Rs 30.59 crs. The year 2015 saw sales at 1045 crores and Net profit of Rs 92 crores. EPS stood at Rs 8.43 per share. They year 2016 has already seen sales of Rs 500 crore for the first 6 months. Net profit of 43.5 crores is already posted. Full year EPS will be 9 plus this year. The only concern is that 70% of promoter holding is pledged.
Promoters hold about 70% while the public hold’s around 30%.
Comparisions to Peers:
The company can be compared to Tata Chemicals, Kiri, Atul Ltd, Camlin Fine sciences, Sudarshan Chemicals etc.
Multi Effect Evaporator (MEE) has been successfully commenced at investment of about Rs.30.00 crores at Bodals Unit VII, Dudhwada, Ta. Padara, Dist. Vadodara during the financial year 2015. Normally at the end of manufacturing process there remains effluent water and the same cannot be dispose off without giving proper treatment. For the said purpose company has installed the said MEE plant which is modern and advanced technology plant. It not only treats the effluent water but also there is recovery of salt, which can either be used for captive consumption or sold in the market. So by using this technology company can save related treatment cost to some extent. The company has made a 15 crore in a company called Trion Chemicals. It expects the turnover to be 240 crores in the 1st year from this company itself. It expects commencement of production from July 1st 2016.
The share which is quoting at Rs 55 has the potential to cross the 65 mark in the medium term and can also cross the 75/- mark in the next 1 year given that . It is a fundamentally very sound company with a large capacities and now is diversifying into niche products which will boost up profitablility.
( Disclosure: The analyst has no holdings in the company as on date of issue being published)
Sebi Registration No: INH000001717