Why BEPL is becoming more attractive day by day? INVESTMENT IDEA
업데이트됨
This post is not for traders who want to trade with stop loss. This is for long term investors who wants to buy fundamentally strong beaten down names at a good entry points.
BEPL
Bhansali Engineering Polymers Ltd is engaged in manufacturing and sale of ABS Resins, AES Resins, ASA resins, SAN resins and their alloys with other plastics in the Indian market. Its customers include leading companies dealing in Automobiles, Home Appliances, Electronics, Healthcare and Kitchenware.
Why is it a good buy right now?
The Company had entered into a 50 : 50 Joint Venture Agreement with Nippon A&L Inc., Japan (NAL) and incorporated a Joint Venture Company namely Bhansali Nippon A&L Private Limited which provides sales support and technical support to the Company. This JV has enabled the company in catering the growing demand of ABS resins, ASA resins, AES resins and other specialty polymers. Nippon A&L Inc. was established in 1999 as a JV between Sumitomo Group and Mitsui Chemicals, which focused on polymerisation of Styrenics and enjoys high reputation in the field of manufacturing and marketing of ABS, AES, ASA resins and SBR/PBRLatices. Technical expertise, as and when required, is deployed from NAL Japan, in the purview of the JV between the company and NAL. With the help of the technical support BEPL has developed several new ABS grades and going ahead also the company believes that they will continue adding new SKUs to its product portfolio.
Indian ABS market has duopoly situation with only two players BEPL and INEOS, while the rest of the market demand has been catered through imports. Despite the availability of a market in India, global players find it difficult to meet the demand of the Indian market as the scale of operation is not favorable. Further, every segment requires a different colour and performance specification so manufacturing such a wide variety of colours requires a strong balance between investment and sectional capacity utilisation. Need for high grade technology is another strong entry barrier. Both these domestic companies have technical collaboration with foreign partners and have long standing relationships with end user industry. The market is niche which acts as a natural entry barrier for the new players.
The Indian automotive industry is undergoing significant transformation, with respect to its sustainable growth and profitability. The industry is witnessing megatrends that are expected to transform the industry in a significant way. Rapidly evolving customer needs, disruptive impact of technology, a dynamic regulatory environment, changing mobility patterns etc. are impacting the way auto companies are doing business in India as well as abroad. The industry now aspires to double its contribution to manufacturing GDP with a four-fold growth in size and a six-fold growth in exports by 2026. These bold aspirations, along with the trends shaping the industry, create new opportunities in the years ahead. India is becoming a global manufacturing hub of two wheelers as well as four wheelers. As a result of which, international giants in the automotive field, viz. Suzuki, Hyundai, Honda, Toyota, Volkswagen, General Motors, Ford, Nissan, Renault, Fiat have established their respective manufacturing facilities in India, with growing degree of indigenization of its components. For components manufactured out of ABS, BEPL’s presence is well registered with all such international giants.
Indian appliance and consumer electronics (ACE) market is expected to double by 2025 according to Indian Consumer Durable Report. There is immense scope for growth of these products in India as the penetration level is immensely low as compared to global average. Demand for consumer electronic goods is likely to witness an increase in the coming years, especially in the rural areas as the Government plans to invest significantly in rural electrification, supplemented by rising influence of social mass media and the popularity of online sales. The Government of India’s policies and regulatory frameworks, such as relaxation of license rules and approval of 51% Foreign Direct Investment (FDI) in multi-brand and 100% in single-brand retail, are some of the major growth drivers for the consumer market. The Production-Linked Incentive (PLI) scheme in 10 key sectors (including electronics and white goods) shall boost India’s manufacturing capabilities, exports and promote the ‘Atmanirbhar Bharat’ initiative.
Near-term outlook for Appliances and Consumer Electronics (ACE): Pent-up demand (most seasonal categories missed out massively in
the previous two seasons), work-from-home (to support convenience driven categories), improving housing activities, and resumption of
Capex will sustain strong revenue traction in the coming quarters too.
Average ROE (Return on Equity) for last 3, 5 and 10 years are 40%, 39% and 25% respectively (all above 15%)
5year CAGR (Compound annual growth rate) Sales and Profit at 19% and 82%
TTM (Trailing 12 months) Sales and Profit growth at 33% and 147%
Promoter Holding increased from 55% in Dec'19 to 56.45% in Mar'20 (greater than 45% is good)
Dividend Yield at 1.56% (consistent dividend payer since 2011)
Debt to equity at 0.00 (less than 1 is good), Interest Coverage at 1070 (greater
than 3 is good), Current ratio at 6.81 (greater than 1.5 is good), FCF to CFO at 78%
(company won’t have to raise debt for expansion)
Current PE at 4.82 is much lesser than 10-year average PE of 26
BEPL is trading at a very good support point and is heading towards another important support point at Rs.100.
If anyone consider it for buying, put only 3% of your capital right now, buy with another 3% if it falls another 40% and invest the rest 4% (don't invest more than 10% of your entire capital in one stock) when the share closes at a 52 week high.
BEPL Bhansali Engineering Polymers Ltd is engaged in manufacturing and sale of ABS Resins, AES Resins, ASA resins, SAN resins and their alloys with other plastics in the Indian market. Its customers include leading companies dealing in Automobiles, Home Appliances, Electronics, Healthcare and Kitchenware.
Why is it a good buy right now?
The Company had entered into a 50 : 50 Joint Venture Agreement with Nippon A&L Inc., Japan (NAL) and incorporated a Joint Venture Company namely Bhansali Nippon A&L Private Limited which provides sales support and technical support to the Company. This JV has enabled the company in catering the growing demand of ABS resins, ASA resins, AES resins and other specialty polymers. Nippon A&L Inc. was established in 1999 as a JV between Sumitomo Group and Mitsui Chemicals, which focused on polymerisation of Styrenics and enjoys high reputation in the field of manufacturing and marketing of ABS, AES, ASA resins and SBR/PBRLatices. Technical expertise, as and when required, is deployed from NAL Japan, in the purview of the JV between the company and NAL. With the help of the technical support BEPL has developed several new ABS grades and going ahead also the company believes that they will continue adding new SKUs to its product portfolio.
Indian ABS market has duopoly situation with only two players BEPL and INEOS, while the rest of the market demand has been catered through imports. Despite the availability of a market in India, global players find it difficult to meet the demand of the Indian market as the scale of operation is not favorable. Further, every segment requires a different colour and performance specification so manufacturing such a wide variety of colours requires a strong balance between investment and sectional capacity utilisation. Need for high grade technology is another strong entry barrier. Both these domestic companies have technical collaboration with foreign partners and have long standing relationships with end user industry. The market is niche which acts as a natural entry barrier for the new players.
The Indian automotive industry is undergoing significant transformation, with respect to its sustainable growth and profitability. The industry is witnessing megatrends that are expected to transform the industry in a significant way. Rapidly evolving customer needs, disruptive impact of technology, a dynamic regulatory environment, changing mobility patterns etc. are impacting the way auto companies are doing business in India as well as abroad. The industry now aspires to double its contribution to manufacturing GDP with a four-fold growth in size and a six-fold growth in exports by 2026. These bold aspirations, along with the trends shaping the industry, create new opportunities in the years ahead. India is becoming a global manufacturing hub of two wheelers as well as four wheelers. As a result of which, international giants in the automotive field, viz. Suzuki, Hyundai, Honda, Toyota, Volkswagen, General Motors, Ford, Nissan, Renault, Fiat have established their respective manufacturing facilities in India, with growing degree of indigenization of its components. For components manufactured out of ABS, BEPL’s presence is well registered with all such international giants.
Indian appliance and consumer electronics (ACE) market is expected to double by 2025 according to Indian Consumer Durable Report. There is immense scope for growth of these products in India as the penetration level is immensely low as compared to global average. Demand for consumer electronic goods is likely to witness an increase in the coming years, especially in the rural areas as the Government plans to invest significantly in rural electrification, supplemented by rising influence of social mass media and the popularity of online sales. The Government of India’s policies and regulatory frameworks, such as relaxation of license rules and approval of 51% Foreign Direct Investment (FDI) in multi-brand and 100% in single-brand retail, are some of the major growth drivers for the consumer market. The Production-Linked Incentive (PLI) scheme in 10 key sectors (including electronics and white goods) shall boost India’s manufacturing capabilities, exports and promote the ‘Atmanirbhar Bharat’ initiative.
Near-term outlook for Appliances and Consumer Electronics (ACE): Pent-up demand (most seasonal categories missed out massively in
the previous two seasons), work-from-home (to support convenience driven categories), improving housing activities, and resumption of
Capex will sustain strong revenue traction in the coming quarters too.
Average ROE (Return on Equity) for last 3, 5 and 10 years are 40%, 39% and 25% respectively (all above 15%)
5year CAGR (Compound annual growth rate) Sales and Profit at 19% and 82%
TTM (Trailing 12 months) Sales and Profit growth at 33% and 147%
Promoter Holding increased from 55% in Dec'19 to 56.45% in Mar'20 (greater than 45% is good)
Dividend Yield at 1.56% (consistent dividend payer since 2011)
Debt to equity at 0.00 (less than 1 is good), Interest Coverage at 1070 (greater
than 3 is good), Current ratio at 6.81 (greater than 1.5 is good), FCF to CFO at 78%
(company won’t have to raise debt for expansion)
Current PE at 4.82 is much lesser than 10-year average PE of 26
BEPL is trading at a very good support point and is heading towards another important support point at Rs.100.
If anyone consider it for buying, put only 3% of your capital right now, buy with another 3% if it falls another 40% and invest the rest 4% (don't invest more than 10% of your entire capital in one stock) when the share closes at a 52 week high.
노트
News Update: -Bhansali Engineering Polymers (BEPL) advanced 5.23% to Rs 137.90 on BSE after the company received approval from the Madhya Pradesh Pollution Control Board for expansion for expansion of high rubber graft from 15,000 TPA to 50,000 TPA.
The company said it received nod for its Satnoor Plant located at Bhansali Nagar, Taluka Sausar, Chhindwara District in the state of Madhya Pradesh.
Earlier in September 2021, the company received environmental clearance from the Impact Assessment Division of Ministry of Environment, Forest and Climate Change under the provisions of the EIA Notification, 2006.
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