ANDHRA PETRO
| The Andhra Petrochemicals Ltd. (APL) was promoted by The Andhra Pradesh Industrial Development Corporation (APIDC) and The Andhra Sugars Ltd. (ASL) in 1984 as joint sector Company. Subsequently the structure of the Company has changed into an assisted sector. | |
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| APL was established with a licence capacity to produce 30,000 MTPA of Oxoalcohols at Visakhapatnam, Since then the capacity has been expanded to 73000 MTPA by expansion and has been operationalised since May 2010. |
PRODUCTS
The company manufactures OXO-ALCOHOLS and has a market share of around 27% with balance demand met by imports .
FINANCIALS
EQUITY AROUND 85 CRORES, cmp around 22-23, market cap of about 195 crores
| Quarter | Mar 09 | Jun 09 | Sep 09 | Dec 09 | Mar 10 | June 10 |
| Sales | 41 | 45 | 54 | 37 | 1.6 | 73 |
| Interest | 0.36 | 0.38 | 0.53 | 0.36 | 0.07 | 3.6 |
| NP | 1 | -1.65 | 2.46 | -1.73 | -4.43 | 4.31 |
Now this was a stock I posted on TED when it was around 12-13 levels in Nov 09.
Now comes the interesting part.
The plant was closed in Nov 09 for the purpose of assimilating the new capacities with the existing capacities. It remained shut till May 2010 when it was re-opened.
In fact this was the exact announcement:
With reference to the earlier announcement dated November 10, 2009, Andhra Petrochemicals Ltd has now informed BSE that the Modernisation-cum-Optimisation of the Oxo alcohol Plant has been implemented with an investment of around Rs. 275 crores and the Expanded Plant with a capacity of 73,000 MT per annum has commenced commercial production from May 01, 2010.
Now if you look at the June qtr results, the production effectively took place only for 1 month and company clocked a turnover of 73 crores. So for Sep quarter, when effects of full expansion are reflected, one only needs to guess where the sales figures will go.
The promoters raised their stake by around 10 lac shares between March 10 to June 2010.
And since then prices have moved up from levels of around 13.14 to currently 22-23.
INVESTMENT ARGUMENT:
The company has completed its full expansion and is set to report good robust numbers going forward, following which profits also are expected to increase. The markets seem to have factored in the expansion benefits to some extent but I feel, that better results would lead to higher levels in this stock.
TECHNICAL VIEW:
The stock has been in an upward sloping rising channel with resistance pegged at around 26 and support at around 20 levels If and when the resistance of 25-26 is crossed, there could be significant upsides.
I fully agree with all your comments. The expansion will come into full effect in the second qtr and we could see a significant upswing in both the topline as well as bottom line. Is worth adding.
ReplyDeleteHi Hit DADA,
ReplyDeletehow much sales are we looking at until mar'11-mar'12, and what ebidta margins can we expext?, if we go by the trend, we can look for sales of 280 crores for f.y.11 and if we take a 5yrs median for margings it comes to around 18%, so by that we will have 50 crores in ebidta for f.y.11, kindly correct me if i am wrong.
Hi
ReplyDeleteIf they can do sales of around 75 crores in a single month, they can easily clock 200 crores per quarter and for remaining 9 months it will be around 600 crores and add to it 75 crores of june qtr and you have a turnover of around 675 crores. If u consider a margin of around 7% as displayed in this quarter, then you can have a net profit of close to 45-50 crores for fy 11 which amounts to eps of around 5-6 per share. If operational efficiencies for next three quarter kick in and there is margin improvement you can be looking at higher earnings.
On the flip side, some kind of demand slump or raw material price variation could alter the projections significantly. But at a price of around 22-23, it seems to be a risk worth taking to me. And on the charts, it does look good.