BEPL - Q2 FY21 (UnAudited –Cons)
CMP: 97
Total revenue from operations 308.1 Cr
279.5 Cr (10.41%) YoY | 99.4 Cr (209.21%) QoQ
Half yearly revenue: 407.2 Cr Vs. 592.9 Cr (-31.24%)
Net Profit of 35.5 Cr
20.3 Cr (75.12%) YoY (1.4) Cr (243.21%) QoQ
Half yearly Net profit: 34.2 Cr Vs. 42.4 Cr (-19.06%)
EPS (in Rs.) 2.14
1.23 YoY |(0.08) QoQ
Half yearly EPS: 2.06 Vs. 2.56
View: Result is above expectation and strong. YoY revenue increased and profit also increased with good margin. Not comparable with Q1 as it was almost wiped due to Covid-19 impact.
Business Updates & Highlights:
Q2FY21 EBITDA was around INR 46.1 Cr Vs. 19.02 Cr in Q2FY20 therefore up by 142.3% in YoY. EBITDA margin is around 14.9% Vs. 6.8% in YoY. EBITDA witnessed a margin expansion of 810 bps.
Six month ending April – Sep 2020 EBITDA was around INR 42.9 Cr Vs. INR 48.9 Cr in 2019 therefore declined by 12.2% in YoY . This is not comparable as Q12020 was almost wiped out.
Due to optimum cost utilization material consumption cost was INR 225.9 in Q2FY21 Vs. 222.9 Cr in Q2FY20 therefore material cost reduced by more than 6% in this quarter.
Financial
ROE and ROCE is around 20% and 25% respectively and book value per share is around INR 22 and share is currently trading at 4.4xx of its book value. Company is currently trading at PE (forward PE) of around 13 which is good as per Industry benchmark. Promoter holding is around 56.5% in the company which is good and stable. FIIs hold around 0.4% and which is also decreased by more than 0.3% as compare to June quarter. Net cash flow from operating activities as of Sep 2020 was around INR (7.95) Cr Vs. 88.1 Cr in March 2020 (Concern Area) one of the main reason for declining of cash flow from operating activities was paid their Creditors / Trade payable which was around INR 162.6 Cr in this quarter. The good thing is company virtually debt free.
Share View: Share price high 99.7 (52 week) and now 97. BEPL is a Mumbai based company engaged in manufacturing of ABS and Styrene-acrylonitrile (SAN) resins. The company has two plants located at Satnoor (Madhya Pradesh) and Abu Road (Rajasthan). Abu Road plant manufactures SAN resins and has a capacity to manufacture 100,000 Tonnes per Annum (TPA) of ABS resins. Satnoor unit, is meant for backward integration and has a capacity to manufacture 15,000 TPA of High Rubber Graft (HRG).
Position: Share support price is INR 75. Share has given good breakout above 50 and 75 level and now bullish zone. Above 100 should be good to go with 120/140/160. Investor/trader can continue with the company and any correction will give good opportunity to add.
Opportunities: BEPL is a leading producer of ABS in India with technical expertise to manufacture over 50 grades of ABS in 1200 shades. ABS is a versatile engineering plastic with superior product properties like better heat resistance, chemical resistance and higher mechanical strength and hence finds applications in diverse range of industries. The company has a strong and diversified customer base spread across automotive, electrical, textile, household consumer durables industries among others key customers includes Samsung, Anchor, Honda etc. Except for the two financial year company had shown exceptionally well bottom line growth which was around 69% for last 5 years CAGR growth. Strong reserve which is around 365 Crs as of Sep 20.
Risk: Acrylonitrile, Butadiene and Styrene, the three major raw materials used in the manufacturing of ABS are derivatives of crude and are subject to the risk of volatility in crude prices. Raw materials constitute 70 to 80 percent of the total operating cost for BEPL in every quarter. Highly volatile operating profit margin which was on range of around 3-12% for past 5 years.
Disclaimer: Views are shared based on market research and study and personal in nature. Others can take the different view and opinions. Please do the thoroughly study before enter or exit the shares.
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