RETAIL RESEARCH High Risk Ganesh Benzoplast Ltd · RETAIL RESEARCH Techno Funda Stock Note 28 Nov 2017 High Risk Ganesh Benzoplast Ltd RETAIL RESEARCH P a g e | 1 Industry CMP Recommendation

RETAIL RESEARCH Techno Funda Stock Note 28 Nov 2017

High Risk Ganesh Benzoplast Ltd

RETAIL RESEARCH P a g e | 1

Industry CMP Recommendation Add on dips to Stop Loss * Sequential Targets Time Horizon Storage Tanks/Chemicals Rs. 94.30 Buy at CMP and add on declines Rs. 76-79 Rs 68 Rs. 121-155 4-6 quarters

*on daily closing basis Ganesh Benzoplast Ltd (GBL - established in the year 1988) is engaged in Logistic-Infrastructure and Chemicals business. Company’s Liquid Storage Tankers (LST) business is located in JNPT (Mumbai), Goa and Cochin Port. Company is also a manufacturer of food preservatives, lubricant Additives, API drugs, Sodium Benzoate, Benzoic Acid and Benzaldehyde etc. Company’s products are used in food & Beverage, automobile, paints, Lubricants and pharmaceutical industries. Its Chemical manufacturing facility is located at Tarapur Thane.

Investment Rationale: • Expansion plans at existing locations could help to boost revenues and margins from LST business going forward; • Demerger proposal of loss making chemicals business could help unlock value of LST business and lead to overall rise in

company’s valuations; • Proposed greenfield LPG terminal at Goa could provide medium term visibility to revenues and margins; • Debt reduction and higher operating profits could lead to attractive EV/EBITDA number. • Government’s plans for development of Coastal economic zone could benefit to existing players like GBL;

Concerns: • Pledged shares by promoters; • Increased competition in LST business could impact growth in top and bottom line; • Delay in demerger process and/or in expansion/greenfield plans could lead to postponement of growth and affect stock

valuations. View and Valuation: GBL has embarked on a number of initiatives to unlock/improve shareholder value. The loss making chemicals business is being demerged, existing LST business has seen an expansion recently, a new green field LPG terminal has been proposed to be set up at Goa and debt levels are being brought down. All these could lead to better efficiencies, profitability and leverage ratios and in turn higher return ratios apart from rise in topline and bottom line over the next 2-3 years.

We feel investors could buy the stock at the CMP and add on dips to Rs. 76-79 band (~9.0x FY19E EV/EBITDA and 13.5x FY19E EPS) for sequential targets of Rs 121 (13.7x FY19E EV/EBITDA and 21.0x FY19E EPS) and Rs 155 (17.25x FY19E EV/EBITDA and 27x FY19E EPS). At the CMP of Rs 94.30 the stock trades at 10.8x FY19E EV/EBITDA and 16.4x FY19E EPS.

HDFC Scrip Code GANBENEQNR

BSE Code 500153

NSE Code N/A

Bloomberg GBP IN

CMP Nov 27 2017 Rs. 94.30

Equity Capital (Rs cr) 5.7

Face Value (Rs) 1.0

Eq- Share O/S(crs) 5.7

Market Cap (Rs crs) 538.0

Book Value (Rs) -4.1

Avg. 52 Wk Volumes 272051

52 Week High 108.35

52 Week Low 31.60

Shareholding Pattern % (Sept 30, 17)

Promoters 43.0

Institutions 1.8

Non Institutions 55.2

Total 100.0 Fundamental Research Analyst Abdul Karim [email protected]

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Financial Summary: Particulars, Rs in Cr Q2FY18 Q2FY17 YoY-% Q1FY18 QoQ-% FY15 FY16 FY17 FY18E FY19E Net Sales 38.8 23.8 62.9% 36.0 7.5% 122.3 119.4 118.1 153.1 172.2 EBITDA 12.8 8.1 58.1% 12.0 6.6% 23.1 37.4 37.7 49.4 54.1 APAT 7.7 1.6 384.2% 6.8 14.5% -10.3 12.3 14.9 29.3 32.7 Diluted EPS (Rs) 1.4 0.3 384.2% 1.2 14.5% -1.8 2.1 2.6 5.1 5.7 P/E (x) -52.3 43.9 36.1 18.4 16.4 EV/EBITDA 33.3 19.0 18.6 12.3 10.8

(Source: Company, HDFC sec) Company Profile: Ganesh Benzoplast Ltd (GBL - established in the year 1988) is engaged in Logistic Infrastructure and Chemicals business. Company’s Liquid Storage Tankers (LST) business is located in JNPT (Mumbai), Goa and Cochin Port. Company is also a manufacturer of food preservatives, lubricant Additives, API drugs, Sodium Benzoate, Benzoic Acid and Benzaldehyde etc. Company’s products are used in food & Beverage, automobile, paints, Lubricants and pharmaceutical industries. Its Chemical manufacturing facility is located at Tarapur Thane. Company was awarded in three consecutive years for handling highest Liquid Cargo at JNPT.

Business Overview:

(Source: Company, HDFC sec)

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Chemical division GBL’s chemical division can be separated into three sub divisions namely Food & Pharma chemicals, industrial chemicals and Lubricants. More than 72 types of chemicals can be produced in this division.

Food & Pharma chemicals include Sodium Benzonate, Benzoic Acid and Benzaldehyde. GBL food preservatives are sold under “food guard” brand. Sodium Benzonate is also used in pharmaceutical industry as a diagnostic reagent for liver functions. Ganesh Benzoplast has manufacturing capacity of 6000MTA for Sodium Benzonate and 7200MTPA for Benzoic acid.

Its lubricants division product portfolio includes Engine Oil Additives, Gear Oil Additives, Hydraulic Additives, Metal Working Fluid, Antiwear, Rust & Corrosion Inhibitors, Corrosion inhibitor in mill oils, Rust preventatives, coatings and greases, etc

Products Overview Category Products

Food Preservatives Benzoic Acid Sodium Benzoate Benzoate Plasticizers

Petroleum Sulphonates

Sodium Petroleum Sulphonate Barium Petroleum Sulphonate Calcium Petroleum Sulphonate Magnesium Petroleum Sulphonate

Lubricant Additives

Fuel Additive Engine Oil Additive Gear Oil Additive Hydraulic Oil Additive Cutting Oil Additive 2T Oil Additive

Lubricant Components

Antioxidant Chemicals Dispersant Additives Extreme Pressure Additives Viscosity Index Improver Pour Point Depressant Polyisobutenyl Succinic Anhydride

API/Bulk Drug

Ferrous Fumarate Phenobarbital Drug Phenobarbitone Sodium Modafinil Tablets


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Liquid Storage Tankers (LST) division GBL’s infrastructure business is spread over a sprawling area of 1,10,000 square meters, its terminals are located in Mumbai, Kochi, & Goa, and are connected by pipelines to various berths for handling the export and import of hazardous chemicals, petroleum products, and petrochemicals. Company has a combined storage capacity of more than 3,00,000 KL, for storage of all types of Liquid Products such as ‘A’, ‘B’, and ‘C’ class liquids. Few esteemed Clients:


Terminals JNPT: With capacity of 2,40,000 KL and 63 (+1 water) tank containers, JNPT terminals provides export, storage, and logistics services, handling Class A, B, and C products as well as all types of chemicals. It has 30 no of bays for tank lorry filling with loading capacity of 400 road tankers per day. 8 out of the tanks are coated, while 13 are stainless steel tanks and which earn higher revenues and other tanks are MS tanks. It has 2 Stainless steel pipelines of 5 km each from Jetty to terminal. One such line is connected to BPCL jetty and another is shallow jetty. GBL has exclusive pipeline at JNPT shallow jetty and no other terminal operator has any pipe line there. One of the pipe line is insulated and with heating coils to take products which solidifies like Phenol, CPO etc. which no other operator does in Mumbai/JNPT.

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Goa: With capacity of 25,000 KL and 4 (+1 water) tank containers, Goa terminal provides import, export, storage, and logistics services, handling Class A, B, and C products as well as all types of chemicals.

Kochi: With capacity of 38,000 KL and 13 (+1 water) tank containers, Kochi terminal provides import, export, storage, and logistics services, handling Class A, B, and C products as well as all types of chemicals. Individual tank capacities vary between 1000 to 5000 KL. Sales Contribution (FY17)


JNPT Mumbai GOA Kochi Terminals

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Clients

Capacities -KL 240000 25000 38000 No of Tanks 63+1 4+1 13+1 Utilization FY17

~90% ~50% ~80-90%


Industry Overview: The oil & gas and chemical logistics business could continue to provide good potential in India due to increase in import and

export of oil products, chemicals and LPG. Consequently, India's large coastline, land area and the largest rail network provide an immense opportunity to logistics and warehousing companies.

India is emerging as one of the most important global locations for the chemical industry, with continuous growth in the demand of chemicals. The Indian chemical market is one of the fastest growing in the world, with an annual growth rate of approximately 12%.

Rapid economic growth is leading to greater outputs, which in turn is increasing the demand of oil for production and transportation. Due to the expected strong growth in demand, India’s dependency on oil imports is likely to increase further.

With the growing energy demand in India and increase in the movement of oil, chemicals and petrochemicals, there is therefore a huge potential for the expansion of pipelines, transportation and infrastructure.


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Cargo traffic at major ports in India stood at 647.43 MMT in FY17, growing at a CAGR of 4.02 per cent from FY07-FY17. In FY18 (till September 2017), major ports have handled 326.38 million tonnes of traffic. Cargo at major port in India for Liquid (petroleum, oil and lubricants) contributed 33.3% of total cargo profile in FY16, and it is expected to increase to 38.4% in FY18E.

Investment Rationale:

Expansion plans at existing locations could help to boost revenues and margins from LST business going forward: Ganesh Benzoplast has completed refurbishment of tanks/ tank farm and lying of SS pipeline from the shallow jetty to JNPT

terminal, which will handle additional ship loading. Company has expanded its storage capacity at JNPT (added 0.48 lac KL in June 2017) & Kochi terminal (added 0.10 lac KL in

Oct 2017) at a cost of ~Rs.35 cr, the impact of which on revenue generation could be reflected in the coming quarters of FY18 and in FY19.

The Company has expansion opportunities available at Goa and Cochin terminals. Ganesh Benzoplast is already working at high cent capacity utilisation. Once it reaches optimum level, GBL will go for

expansion in JNPT in land area for which it is in negotiations with port authorities. Company is also planning to set up a LPG terminal at Goa. The Company has received certain statutory approvals for setting

up a LPG terminal at its Goa facility and Strong performance of LST business: LST business contributes 61.4% of its revenue as on 31st March 2017 and this segment has played important role in improving the financials (ROCE >38 and ROA>20) of the company. This performance is expected to continue in the short to medium term without any major uncertainties and due to increased demand for imported oils, chemicals. LST business is light on working capital and hence has high return ratios. By where there is no working capital requirement and up till now, they were focusing more on edible oil and has recently migrated towards LPG storage. Rental for LPG storage is 10x compared to their edible oil storage rental. Ganesh Benzoplast plays a leading international role in the storage of refined oil products, chemicals, biofuels, vegetable oils and liquefied gases, growing logistic flows and an increasing demand for storage and transshipment services could provide more opportunities to generate revenue going forward. LST business has following niche advantage: Entry barriers because of high capital intensive nature of business and lack of spare land at busy ports Fixed rental fees for capacity Monthly invoicing in advance No commodity risk though storing commodity products Very low operating costs once operational

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Relatively high Sales to Assets ratio Long tenure contracts provide assured occupancy levels & utilizations level.

Debt reduction and higher operating profits could lead to attractive EV/EBITDA number. Company has been reducing its debt from Rs. 470 crores in FY07 to Rs.162 crore in H2FY18 with the help of cash generated by liquid storage business and write offs of debt by the lenders. Total Networth has come to negative ~Rs.9 crore as on H2FY18 from negative Rs.84 crore in FY15. Company has not gone for any type of equity dilution since last 6 years as it was not able to find any scope to equity dilution because of poor financial performance over the period. Among the large debts on its books is Rs.95 cr from Kotak Mahindra Bank which it plans to restructure by the end of FY18. This will also result in debt levels coming down and networth rising. The management expects to be net worth positive by March 31, 2018. The Company has won a case filed u/s 138 of the Negotiable Instruments Act, 1881, against Pan Asia Industries, for recovery of outstanding dues of Rs 5.50 crore plus interest. The Court passed an order directing Pan Asia Industries (the defaulter) to pay a sum of Rs 9.00 crore to Ganesh Benzoplast. The company has further filed an Enhancement Application before the Session Court, for increasing the compensation amount to Rs 11 crore. Demerger proposal of loss making chemicals business could help unlock value of LST business and lead to overall rise in company’s valuations Chemicals business of the company has been bleeding for quite some time. Segment revenue and EBIT for last five years

Particulars, Rs in Cr FY11 FY12 FY13 FY14 FY15 FY16 FY17 REVENUES Chemical Division 45.1 51.0 58.1 58.8 56.4 50.4 45.6 Liquid Storage Terminal Division 50.9 51.1 62.6 59.6 65.9 69.1 72.5 Total Segment Revenue 95.9 102.1 120.7 118.4 122.3 119.4 118.1 EBIT Chemical Division -16.6 -9.6 -6.9 -9.2 -14.4 -6.2 -8.6 LST Division 29.3 25.4 28.6 26.8 18.5 32.9 35.3 Profit/Loss Before Interest and Tax 12.7 15.9 21.7 17.6 4.1 26.7 26.7

(Source: Company, HDFC sec) There have been several reasons for this underperformance. Chinese competition, unavailability/price increase of raw materials, increasing local competition etc are some of the reasons.

The business incurred loss of Rs.8.6 cr in FY17 out of which about Rs.6 cr was depreciation loss. There is a small improvement in the performance of the business in H2FY18 as the loss has come down on higher sales.

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The Company is planning to segregate both the divisions of the Company by way of Demerger as decided by the Board in its Meeting held on August 18, 2017. The consultants have been appointed and the demerger scheme is under preparation. As both the divisions has totally different synergies & to ensure greater focus to the operation of each of the divisions & to enhance profitability & generate maximum shareholder value, it will be more beneficial for the Company to segregate both the divisions.

While there could be uncertainty about the pace and timing of the turnaround of the chemicals business, the valuations of the combined business is suffering. Hence the demerger proposal would help in unlocking the value of the two businesses separately resulting in better valuations for the company. Proposed green field LPG terminal at Goa could provide medium term visibility to revenues and margins: The Company is planning to set up a LPG terminal at its Goa facility. The Company has received certain statutory approvals for setting up of LPG storage tanks at its Goa terminal and the Company would actively pursue for the development of LPG storage tanks at its Goa facility in the coming years.

GBL already has land at Goa and plans to set up a capacity of 20000 tonnes for LPG at a capex of Rs.150 cr (funded Rs.80-85 cr from debt and rest from suppliers’ credit and internal accruals).

This business is also a high margin high fixed cost business. At full capacity and with just 2 throughputs it could generate revenues of 65-70 cr p.a. and a PBT of Rs.40-45 cr p.a.

GBL has already obtained letter of interest from oil marketing companies who could use this as a base for selling LPG in Goa, south Maharashtra and Karnataka states Government’s plans for development of Coastal economic zone could benefit to existing players like GBL: The Government of India plans to build 14 CEZs in the country to boost manufacturing and jobs. In November 2017, the first mega CEZ at the Jawaharlal Nehru Port in Maharashtra has been cleared. Apart from this, increasing trade is translating into higher demand for containerization due to their efficiency. GBL has storage tanks at Goa, JNPT and Cochin and engaged in this business since three decades. Therefore, GBL could be one of the key beneficiaries from government’s measure. Risk and Concerns:

Leakage from storage tank: Company is engaged in Liquid Storage Tank business with strong clienteles like BPCL, Cargil India, Jubliant, Allana, Pidilite, Any leakage in tank could impact its business and Environment Board and Pollution Control Board could take action against the company. During the month of July 2016, thousands of litres of edible oil stored by the Ganesh Benzoplast Limited (GBL) Company near JNPT leaked out due to some technical glitch. Nevertheless, the loss of leaked oil was properly insured and hence there was no financial impact of that event.

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Entry into unrelated business: Ganesh Benzoplast’s past experience of entry into unrelated business has not been good, as company was also engaged in Salt manufacturing business and Fire fighting vessels in the past. Any repeat of such actions could be detrimental to the objects of the company. As per the management’s decision it’s clear that they in future they want to focus only and only in Infrastructure business only.

Promoter has pledged shares: As on 30th Sept, 2017, Company’s promoter’s has pledged its 78.04% holding (of 43.02% stake). As per the management, GBL has offered the security of their fixed assets to secured lenders which is 5 times the loan exposure and the pledging of shares was just a additional collateral from prompters as a requirement of secured lender. Economy and export/import factors could impact its business: Ganesh Benzoplast’s storage business depends on export and import of oil products/chemicals/petroleum products. Oil production has been increasing steadily across the globe. The supply of oil in the market has surpassed the demand and consumption of oil. This has created a favorable market for oil storage which can be consumed in future. Any adverse factor of oil products/chemicals/petroleum products demand and supply could impact storage business. Apart from this, changes to government policies on coastal regulations, import/export or storage regulations etc could impact its revenues and margins. Chemical Business could see losses till demerger: Chemical business is loss making business and company has reported negative EBIT of Rs 8.6 cr in FY 17. There are no major signs of recovery in chemical business. Poor performance in its profitability could impact its valuation going forward till the demerger is complete. Regulatory risk for expansion of LST business: LST business requires various approvals from environmental clearance board, pollution control board, port authorities and state governments, any hurdles for clearance could hit expansion plans going forward. Why Company has reported poor performance over the past: Company has started Liquid storage business 2 decades ago and had entered some unrelated business like salt making and operation of vessels (safety vessels which carry out evacuation or fire fighting for the operating sites) for ONGC. Salt making business got destroyed in 2001 earthquake and ONGC terminated contract later. So the trouble started in 2001/2003. Company is in BIFR and it has planned to come out in FY18. Promoters brought in Rs.50 cr as part of OTS in 2005-07 and GBL gradually started to repay loans and brought down the debt figure.

Apart from this, company’s business has been lumpy from time to time. One cause for this would be the fluctuation in the prices of its raw material (crude oil based) price coupled with slowdown in global market, as it exports chemicals to Middle East, Latin America, Europe, USA, Canada and South East Asia.

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Peer Comparison: Comparing with Aegis Logistics which is trading at 28.5 times to FY19 EV to EBITDA, GBL is being traded at 10.8 times EV to EBITDA of FY19E.

Company CMP EPS P/E EV/EBITDA

FY18E FY19E FY18E FY19E FY18E FY19E AEGIS Logistic 231.55 4.4 5.6 52.7 41.3 34.1 28.5 Ganesh Benzo 94.3 5.1 5.7 18.4 16.4 12.3 10.8

(Source: Company, street estimates,HDFC sec) View and Valuation: GBL has embarked on a number of initiatives to unlock/improve shareholder value. The loss making chemicals business is being demerged, existing LST business has seen an expansion recently, a new green field LPG terminal has been proposed to be set up at Goa and debt levels are being brought down. All these could lead to better efficiencies, profitability and leverage ratios and in turn higher return ratios apart from rise in topline and bottom line over the next 2-3 years. We feel investors could buy the stock at the CMP and add on dips to Rs. 76-79 band (~9.0x FY19E EV/EBITDA and 13.5x FY19E EPS) for sequential targets of Rs 121 (13.7x FY19E EV/EBITDA and 21.0x FY19E EPS) and Rs 155 (17.25x FY19E EV/EBITDA and 27x FY19E EPS). At the CMP of Rs 94.30 the stock trades at 10.8x FY19E EV/EBITDA and 16.4x FY19E EPS.

Quarterly Financials – Particulars, Rs in Cr Q2FY18 Q2FY17 YoY-% Q1FY18 QoQ-% H1FY18 H1FY17 YoY-% Net Sales 38.76 23.80 62.9% 36.05 7.5% 74.81 57.37 30.4% Raw Material Consumed 14.30 5.88 143.1% 10.97 30.3% 25.27 14.81 70.6% Stock Adjustment -0.88 0.03 -3036.7% 0.50 -278.0% -0.39 0.07 -651.4% Employee Expenses 2.62 1.81 44.5% 2.16 21.1% 4.78 3.56 34.2% Other Expenses 9.96 8.00 24.4% 10.43 -4.6% 20.39 19.03 7.1% Total Expenditure 25.99 15.72 65.3% 24.06 8.0% 50.05 37.47 33.6% EBITDA 12.78 8.08 58.1% 11.98 6.6% 24.76 19.90 24.4% Depreciation 2.84 2.89 -1.7% 2.81 1.0% 5.65 5.74 -1.5% EBIT 9.94 5.19 91.5% 9.17 8.4% 19.11 14.16 35.0% Other Income 0.13 0.02 565.0% 0.06 114.5% 0.20 0.18 8.3% Interest 2.27 3.93 -42.4% 2.35 -3.5% 4.61 7.92 -41.8% Earnings Before Tax 7.81 1.28 509.8% 6.89 13.4% 14.69 6.42 128.8% Tax Paid 0.00 0.00 - 0.00 - 0.00 0.00 - Reported Profit After Tax 7.81 1.28 509.8% 6.89 13.4% 14.69 6.42 128.8% Extra-Ordinary Items 0.06 -0.32 -118.4% 0.12 -50.0% 0.18 -1.88 109.4% Adjusted PAT 7.75 1.60 384.2% 6.77 14.5% 14.51 8.30 74.9% EPS (Adj) (Unit Curr.) 1.36 0.28 384.2% 1.19 14.5% 2.54 1.45 74.9%


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Segment wise Performance: Particulars, Rs in Cr Q2FY18 Q1FY18 Q4FY17 Q3FY17 Q2FY17 Q1FY17 Q4FY16 Q3FY16

Revenue Chemical Division 17.2 15.0 14.9 10.7 7.9 12.1 11.1 13.1 Liquid Storage Terminal Division 21.6 21.0 16.3 18.9 15.9 21.5 18.9 14.6 Total Segment Revenue 38.8 36.0 31.2 29.5 23.8 33.6 30.0 27.7 EBIT Chemical Division -1.9 -1.9 -2.8 -2.1 -2.3 -1.5 -4.5 0.6 Liquid Storage Terminal Division 11.8 11.0 6.2 9.4 7.8 12.0 13.9 6.7 Profit/Loss Before Interest and Tax 9.9 9.2 3.4 7.2 5.5 10.5 9.4 7.3 Capital Employed Chemical Division -4.8 -0.9 0.6 0.7 1.1 0.1 1.0 7.3 Liquid Storage Terminal Division 137.7 129.2 129.3 125.1 130.1 125.4 124.9 106.0 Capital Employed in Segment 132.9 128.3 129.9 125.8 131.2 125.5 125.9 113.2

Annual Financials:

Income Statement Cash Flow Particulars, Rs in Cr FY15 FY16 FY17 FY18E FY19E

Particulars, Rs in Cr FY15 FY16 FY17 FY18E FY19E

Net Revenue 122.3 119.4 118.1 153.1 172.2

EBT 0.1 48.2 12.8 30.9 36.4 Raw material consumed 47.5 34.9 34.9 44.4 50.8

Depr- and Amort- 19.0 10.7 11.0 11.3 13.2

Changes in inventories 0.8 1.0 -1.0 -1.1 0.5

Interest /Dividend paid 14.7 15.6 15.3 9.5 7.0 Employee benefits exp 6.5 7.5 8.5 10.7 11.7

Other Adjustment -18.6 -51.0 0.4 90.4 -11.9

Other expenses 44.3 38.6 38.0 49.8 55.1

(Inc)/Dec in working Capital 11.8 18.3 -0.7 3.1 -7.2 Total Expenses 99.2 82.0 80.4 103.8 118.1

Tax Paid 0.0 0.0 0.0 0.0 3.6

EBITDA 23.1 37.4 37.7 49.4 54.1

CF from Oper- Activities 27.0 41.8 38.8 145.2 41.3 Depr and amort- exp 19.0 10.7 11.0 11.3 13.2

Capital expenditure -8.1 -20.8 -11.7 -35.0 -18.0

EBIT 4.1 26.7 26.7 38.1 40.8

(Purchase)/Sale of Inv 0.2 4.8 -2.4 0.0 0.0 Other income 0.3 1.2 3.5 2.3 2.6

Others 0.0 1.0 1.7 -1.8 2.6

Finance costs 14.7 15.6 15.3 9.5 7.0

CF from Investing Activities -7.9 -15.0 -12.4 -36.8 -15.4 Profit before tax &Ex Income -10.3 12.3 14.9 30.9 36.4

Inc/(Dec) in Share capital 0.0 0.0 0.0 0.0 0.0

Exc Income & Prior period items 10.4 35.9 -2.1 0.0 0.0

Inc/(Dec) in Debt -4.7 -8.8 -12.3 -94.5 -19.0 Profit/(loss) before tax 0.1 48.2 12.8 30.9 36.4

Dividend and Interest Paid -14.7 -15.6 -15.3 -9.5 -7.0

Tax Paid 0.0 0.0 0.0 1.5 3.6

CF from Financing Activities -19.4 -24.4 -27.6 -104.0 -26.0 Profit/(loss) for the year 0.1 48.2 12.8 29.3 32.7

Net Cash Flow -0.4 2.4 -1.2 4.4 -0.2

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Adj PAT -10.3 12.3 14.9 29.3 32.7

Opening Balance 0.6 0.3 2.7 1.5 5.9 EPS -2.0 2.4 2.9 5.7 6.3

Closing Balance 0.3 2.7 1.5 5.9 5.7


Balance Sheet Key Ratios Particulars, Rs in Cr FY15 FY16 FY17 FY18E FY19E

Particulars FY15 FY16 FY17 FY18E FY19E

Equity and liabilities

No of Equity Shares-cr 5.7 5.7 5.7 5.7 5.7 Share capital 5.7 5.7 5.7 5.7 5.7

Enterprise Value-cr 769.0 712.5 701.1 605.2 586.4

Reserves and surplus -90.0 -41.8 -29.1 97.4 130.1

Shareholders’ funds -84.3 -36.1 -23.4 103.1 135.8

EPS -1.8 2.1 2.6 5.1 5.7

Long-term borrowings 230.2 177.6 167.4 72.4 52.4

Cash EPS (PAT + Depr) 1.5 4.0 4.5 7.1 8.1 Long-term provisions 1.6 1.8 1.9 1.9 1.8

Book Value Per Share(Rs.) -14.8 -6.3 -4.1 18.1 23.8

Non-current liabilities 231.7 179.4 169.3 74.3 54.2

Short-term borrowings 6.5 0.2 0.2 0.7 1.7

PE(x) -52.3 43.9 36.1 18.4 16.4

Trade payables 40.5 43.3 52.6 62.9 66.1

P/BV (x) -6.4 -14.9 -23.0 5.2 4.0 Other current liabilities 31.5 24.9 25.5 28.1 25.3

Mcap/Sales(x) 4.4 4.5 4.6 3.5 3.1

Short-term provisions 0.3 0.4 0.5 0.5 0.5

EV/EBITDA 33.3 19.0 18.6 12.3 10.8 Current liabilities 78.8 68.9 78.9 92.3 93.5

Total 226.2 212.2 224.9 269.7 283.6

EBITDAM (%) 0.2 0.3 0.3 0.3 0.3 Assets

EBITM (%) 0.0 0.2 0.2 0.2 0.2

Fixed assets 142.3 152.3 150.2 176.7 181.4

PATM (%) -0.1 0.1 0.1 0.2 0.2 Non-current investments 0.0 0.0 0.0 10.0 12.0

Long-term loans and adv 23.8 13.9 17.9 18.8 20.7

ROCE (%) 2.9% 19.7% 20.9% 22.9% 22.9% Other non current assets 0.0 0.0 0.0 1.3 2.7

RONW (%) 12.2% -33.9% -63.7% 28.4% 24.1%

Non-current assets 166.1 166.3 170.9 206.7 216.7

Dividend Payout(%) 0.0% 0.0% 0.0% 0.0% 0.0% Inventories 5.1 2.7 5.6 6.3 6.6

Trade receivables 17.2 18.1 21.3 26.0 25.9

Current Ratio 0.8 0.7 0.7 0.7 0.7 Cash and bank balances 5.7 3.3 4.5 5.9 5.7

Liquid Ratio 0.7 0.6 0.6 0.6 0.6

Short-term loans and adv 30.9 21.6 22.5 23.6 27.1

Other current assets 1.4 0.2 0.1 1.1 1.4

Debt-Equity -2.8 -4.9 -7.2 0.7 0.4

Current assets 60.1 45.9 54.0 63.0 66.9

Interest Coverage Ratio 0.3 1.8 2.0 4.2 6.2 Total 226.2 212.2 224.9 269.7 283.6


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Technical View:


Current Observation: • The attached weekly timeframe chart of BSE stock Ganesh Benzoplast Ltd is indicating a sustained uptrend over the last many months. • The stock price has witnessed sustained upmove over the last few months as per the positive sequence of higher tops and bottoms, which is signaling a strength of an uptrend. • After the sharp rise the stock price has either shifted into minor correction or into consolidation, thereby protecting the gains over the period of time. This is also signaling a lack of selling interest after the sharp rise. • Presently, post decline of last month, the stock price is showing upside bounce from the lows and this could possibly lead to uptrend continuation pattern. • Weekly 14 period momentum oscillator like RSI is holding above the key upper levels of 60. As per the formulation of this momentum oscillator, it is sustaining above 60-65 levels could coincide with strengthening of upside momentum in the stock price for near term. • The overall positive chart setup in Ganesh Benzoplast Ltd is suggesting a long trading/investing opportunity. One may look to buy this stock at cmp Rs.94.30 and

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add more on dips at the price band of Rs.76-79. Place a stoploss of around Rs.68 (as per daily closing) and the potential upside targets to be watched is around Rs.121 and next Rs.155 over the next 1-2 quarters. 18 months Price Chart


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Fundamental Research Analyst: Abdul Karim ([email protected]) HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066 Website: www.hdfcsec.com Email: [email protected]. Compliance Officer: Binkle R. Oza Email: [email protected] Phone: (022) 3045 3600 __________________________________________________________________________________________________________________________________________________________________________________________ Disclosure: I, (Abdul Karim, MBA), authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. HSL has no material adverse disciplinary history as on the date of publication of this report. 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