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Bhansali Engineering Polymers Ltd - Buy - HEM Securities

Posted On: 2018-04-11 00:03:59

Bhansali Engineering Polymers (BEPL) is a leading name in the petrochemical sector in India. BEPL is a vertically integrated petrochemical company that is into manufacturing of ABS (Acrylonitrile Butadiene Styrene) - a raw material used extensively across industries like automobiles, home appliances, telecommunications, luggage and other sectors.

Reputed Clientele: As co's products find application in automobiles, home appliances, telephones, electrical and electronics appliances, business machines, luggage, stationery, novelties and various other products ,its clientele includes strong names like HMSI, Maruti, Whirlpool, Samsung, LG, Toyota, Mahindra, Bajaj, Godrej ,Hero Motocorp, TVS Motor & many more..

Zero debt company: Company has paid entire dues outstanding leaving no dues remaining in lieu of which company gets release of all the prime and collateral securities charged in favour of Allahabad bank to secure their aforesaid credit facilities of Rs. 216.50 Crore including exclusive Equitable Mortgage of Land and Building, Hypothecation of Plant & Machinery and all other Fixed assets of company related to its Abu Road Plant and Satnoor plant, Release of pledge of 5,00,00,000 (Five Crore) Equity Shares belonging to Promoter and Promoter Group of company and release of Personal Guarantee extended by its Managing Director for securing the aforesaid credit facilities thus maintaining the zero debt status of company Successful implementation of co's capex plan: ABS capacity expansion plan of the company from 80 KTPA to 100 KTPA at its Abu Road Unit has been successfully implemented within the envisaged cost and time frame i.e. Rs. 20 Crore and 31st March, 2018 respectively. Hence being cost effective expansion strategy, it will benefit the company going forward.

Valuation

The company is currently trading at 29x of FY19E eps of Rs 7.26. On the back of increase in global ABS prices, co stands to benefit from its capacity expansion plans. Along with that co's effort to deleverage its balance sheet & funding its expansion plans through internal accruals shows strength in fundamentals of company. Going forward, co expects to save its logistics cost & increasing quality competitiveness against international giants in ABS manufacturing field. Hence, we recommend "Buy" on the stock with price target of Rs 255(appreciation of almost 20%) for long term investment.

Shares of BHANSALI ENGINEERING POLYMERS LTD. was last trading in BSE at Rs.212.75 as compared to the previous close of Rs. 217.75. The total number of shares traded during the day was 729255 in over 8466 trades.

The stock hit an intraday high of Rs. 224.4 and intraday low of 207.5. The net turnover during the day was Rs. 157131541.


Source: Equity Bulls

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