Thread by @itsTarH

#BorosilRenewables Q3FY22 Earnings Review 🧵⬇️

Before we proceed, a disclaimer, that I am invested and biased

All information presented in this thread, should be consumed with a pinch of salt (maybe two)🧂

This is not a buy or sell recommendation

Please do your own due-diligence and you will live happily ever after!

Let Zoom Out and Review Last 12 Quarters Topline

Last 12 Quarters Bottom Line

Last 12 Quarters EPS Growth

In all the above charts, Sep 2020 is the key Quarter where Top Line along with Bottom Line started to change

Why?

Few things happened in 2020

1. Sep'20 was the first Q when both their furnaces started to function uninterrupted

2. New import duties from Glass Import from Malaysia were levied in Dec'20

3. Domestic Manufacturing of Solar Modules Increased

4. Global Solar Glass Prices ⬆️

Another key industry change that took place since second half of 2020 is the demand for BI Facial Modules have increased

These are modules with glass on both sides, this effectively doubled Borosil's Market Size over night

I have talked about Borosil Renewables and Entire Solar Industry in Depth in my 5 Hour webinar, you can check it out at below link

Tailwinds for #BorosilRenewable

1. Growing Market (Domestic & Exports)
2. 3rd Largest Producer of Solar Glass Globally

research.investkaroindia.in/s/store/course…

Lets talk about Margins

Sep'20 : First Instance of Both Furnaces Running at Full Capacity
Dec'20 : Domestic Demand Increased
Mar'21 : Global Solar Glass Prices Increased due to shortage in China
Jun'21 : Glass Prices started to Stabilize
Sep'21 : Input Costs Increased

Q3FY22 Margins came in at 41%, my assumption is they were able to pass on higher input costs to end consumers (will confirm in concall)

The company doesn't work on contracts, all orders need to be booked 2 month in advance and payment comes 60 days after order leaves factory

Pricing Power for Borosil Renewables comes from Global Solar Glass Prices and Essentially what is the landed cost of imported solar glass in India

As long as they can sell for the same price, they are in good business and should be able to maintain margins in 33% to 40% range

Of all the components in a Solar Value Chain ☀️

Solar Glass Prices are Most Stable
Solar Wafer (Poly) Prices are Least Stable
*Poly Crystalline Wafer is going out of demand*

Here are all global prices as of Jan'26th

Lets Talk About Exports

Exports are growing fast (small base)
Those who attended my Renewables Webinar know about demand & supply scenario for each geography

Borosil Renewables Exports have effectively doubled over a 9 Month Period & I don't see the trend changing anytime soon

Exports is a key area for them to grow, as they add more capacities starting Q2FY23 these exports should grow more

Here is yours truly asking them about this in Aug 2021 Con Call 📞

Are Operating Margins of 35% to 41% Sustainable?

I think so

Why?

This is a manufacturing commodity business, as the plant expands, operating & fixed costs ⬇️

Utilization Levels will not drop below 100% anytime soon

Op. Leverage kicks in such scenarios & leads to high margins

This is evident in this Quarters results

While the Top Line grew by only ~5%, Bottom Line grew by ~30%

Topline cannot grow beyond ~170 to 200cr per Q
(depending on glass prices)

New capacities coming online in Q2FY23 are required to increase it further

Another Common Question Bears 🐻 throw around is new capacities coming online by other glass manufacturers

Here is a stat, 60% of all new solar glass capacity announced to date in India belongs to Borosil Renewables

Slide from my Renewables Webinar Deck 👇🏻

What should the next quarter look like?

From Aug '21 import duties on solar modules were removed till Apr'22
Post Apr'22, there is a 40% import duty on these modules

When an imported module lands in India, it has glass pre installed in it

As such increase in imports mean lower sales for Borosil Renew

This along with higher input costs was my key reason to be expect lower margins in this quarters results

But, I was wrong

https://twitter.com/itsTarH/status/1490877638092951554?s=20&t=BX_xP0Gvbxo1hWLo-r-rjw

They were able to protect margins by passing on the increased input costs

And the domestic demand must be many times over than I estimated caused their topline didn't reduce at all!

In my opinion next quarter should be similar results with topline of ~160 to ~170cr and OPM between 35% to 41%

Q1FY23 should also be the same while Q2FY23 should be bumper as topline should double on account of new furnace going live

EPS Estimates

FY22: ~13
FY23: ~22

Upside Triggers
1. New Capacity

Downside Triggers
1. Highly Valued Stock (most of the immediate upside is captured)
2. Any change in Solar Glass Import Duties
3. Sudden Drop in Global and Imported Solar Glass Prices

Needless to add nothing here is Buy/Sell advice, please do not ask me if you can buy at CMP

Started buying at Rs 35, loaded at Rs70 and SIP till Oct'21

My Margin of Safety is huge and I am incredibly biased.

https://twitter.com/itsTarH/status/1423168565058830337?s=20&t=BX_xP0Gvbxo1hWLo-r-rjw

Will be attending tomorrow's con call and update this thread with management commentary

Dhanyawaad 🙏

Notes from Concall ⤵️