How Ethanol Policy changed the fortunes of GLOBUS SPIRITS❓

👉So, Globus spirits is one of the largest grain based distillers in India.
👉They sell country liquor in the markets of Rajasthan ,Haryana,West Bengal and Delhi.
Have 30% mkt share in Rajasthan in IMIL segment.
👉They enjoy around 30%+ Ebitda margins in IMIL segment (earlier they were 20%+)
👉So, the co. decided to enter Bihar market and set up a distillery there.

👉And when all the capex was completed,they faced a huge setback from the state govt.
👉After Nitish Kumar was sworn in as C.M., he declared Bihar a Dry state,as a result of which their plant was shut down.

👉After all the legal struggles and battle they received an order from High Court in oct 2019 whch allowed them to operate d plant in order to produce ENA.
👉And with the change in Govt. policies allowing Grain based Ethanol to be included in blending with the fuel, they got shot in the arm.

👉Now wat happened is the Grain Based distilleries which were earlier producing ENA , started diverting their supplies towards EThanol to OMCs
👉As a result of which supplies of ENA got impacted & realizations started to improve.

👉Earlier it ws buyers market & distillers were at d mercy of beverage mfg. but after the supply of ENA dried up, the buyer's mkt hv totally changed to seller's mkt.
👉ENA realizations earlier used to be in the range of Rs.45-47 but now they have improved to Rs.51-52 & they are revised annually on 1st dec of every year by the govt.

👉GS enjoy even higher ethanol prices in the range of Rs.57 in deficit states such as W.B & Rajasthan.
👉Though IMIL is far more profitable buss. but in W.B. due to scarcity of ENA, they enjoyed better profitability than IMIL, though IMIL margins has picked up now.

👉So, due to favorable govt. policies their margins have picked up in the ENA and Ethanol space.
👉Presently they sell very lil quantity of Ethanol & majorly ENA cz its more profitable to do.
And out of Total Capacity of 500KLPD about 160KLPD is fungible.

👉Since demand for Ethanol is about to inc further due to 20% blending program by 2025, they have decided to almost
👉Double their capacity to 920KLPD within next two years.

Now the question is whether they will be able to sustain these margins? 🚨

👉RM prices right now are 25% lower than what they usually are. Since all their RM is broken rice which is waste product from the mills.
👉The prices are determined by the mills and it all depends upon paddy production every year and obviously the MSP inc by the govt.

👉Rise in RM prices might effect d margins but unlike last few years, now sellers determine the prices in ENA buss. and they can easily pass it on.
👉And Ethanol prices are revised annually in order to adjust any inflationary pressure on the RM side.

👉In IMIL buss the prices are revised yearly or within 2 years by the state govts.

👉Going forward, looking at the major push by the govt. towards ethanol blending and
👉Soaring crude prices ,it's unlikely that govt. will back out on this program.

👉In order to meet 20% blending target by 2025, India need 1500cr ltrs of yearly ethanol supply vs current 600-700crs ltrs.
And that is evenly split between 50% for sugar based ethanol and 50%
for Grain based ethanol.

👉Therefore, we can confidently say that it's not a hyped story, rather a Structural Change for Ethanol or ENA mfgs.

Even after current run up the stock still trades at 12x P.E. (TTM) and operating with healthy return rations of 25%+
👉With 30% inc in capacity by Q3 onwards and doubling by next year, it feels like story has just begun.

👉Not to forget , they r also planning on a 3year Strategic plan to grow their IMIL & IMFL (Unibev) further.

@nid_rockz @pd_log @mmvRavindra

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More from @aditya942000

11 Sep 20

FOIL is in d oleo chem based additives buss with majority of additives sales coming from food (30%) & plastic(40%) segm. together contributing 70% to d overall revenues & rest being contri. by additives like paints, rubber, cosmetics etc.
Founded in 1970, by Mr. Ramesh Shah, a Mumbai-based businessman wid experience in chem. trading and Mr. Prakash Kamat, a skilled technocrat from Institution of Chemical Technology.

Promoter hold 75% stake & only 3.48% (10.65 lacs shares) r available for Retail shareholders.
Co. claims to be d largest organised player of Oleo-chem based green additives in India.
-Amng top 6 global players in the specialty food emulsifiers
-1 of d 5 global players in d polymer additives industry
-dey also claim to develop proprietary tech. to mfg green additives.
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15 Aug 20
Adi-Finechem #FAIRCHEM

-Adi Finechem Ltd. Founded in 1985 by Shri R.Harivallabhdas and Shri Nahoosh J Jariwala.

-It is engaged in mfg of Oleochemicals & Neutraceuticals.

-They operate through only one plant in SANAND,AHMEDAAHMEDABAD,GUJARAT.
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-The plant has one of the largest processing capacities for natural soft oil-based fatty acids in India.

-Their main products are
i) OLEOCHEMS-dimer, monomer, linoleic acid etc.
ii)Neutraceuticals - (Natural) Mixed Tocopherol and Sterol Concentrate

They r further undergoing expansion:
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-to manufacture bio-diesel using three by-products of its manufacturing process:
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30 Jul 20
LAURAS LABS Q1FY21: Marvellous no's
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-Finance cost ⬇️
-PAT 11x🚀
-Rev. +77%
- Ebitda Marg.- 29.29% vs 15%
-Pat Marg. 17.63% vs 2.74%

Co. has successfully derisked its business from mainly an ARV API co. to diff segments.
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-Good predictability of buss. bcoz healthy order book in both Tender & non-tender seg.
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29 Jul 20
-A HYDERABAD based pharma co. having presence in 4 VERTICALS - API’S, GENERIC–FDF(fixed dosage formulations), Synthesis and Ingredients.
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-750+ scientists and 50+ PHDs
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- Total capacity 3615 KL, 751 reactors and 5 billion tablet capacity
-65% is export revenue and 35% is domestic revenue REVENUE BREAKUP In Rs.Mn
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-Unit-6 is for captive API consumption
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6 Jul 20
- 30years old co. engaged in R&D, mfg & marketing of bulk drugs, intermediates and custom synthesis of APIs (CMS)
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-Business is divided into 2 main segments
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1.GENERIC DRUG SUBSTANCE (GDS) contributed 68% to FY20 Topline
is further divided into 2 verticals.
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Read 11 tweets
24 Jun 20
A specialty chemical co. into mfg of AROMA CHEMICALS, NUTRACEUTICALS & OLEOCHEMICALS.
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- Fairchem came into exitence in after FAIRFAX INDIA HOLDINGS acquired 45% stake in Adi Finechem in 2015.
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-But mgt later realized that both these businesses r different in nature in order for them to grow they should be separated.
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