Detailed Analysis of #CosmoFirst - Commodity player moving to specialty?
CMP - ₹793
Like and retweet for maximum reach!!
1. Company Overview
-Cosmo Films is the pioneer of BOPP films in India
-It is world’s largest producer of thermal lamination films and Second largest in specialty label films
-Recently they are diversifying their business into Speciality Chemicals and Petcare (Zigly)
-Company has two state of art R&D centers in Aurangabad, India and USA
2. Business Segments
Major Business segments are:
-Film Business
Specialty Films
BOPP Films (Commodity)
- Specialty Chemicals - Started commercial production in FY22
Masterbatches
Textile Chemicals
Adhesives
-D2C Petcare (Zigly) - Launched in Q2, FY22
3. Pre Knowledge
-BOPP film is produced from Polypropylene which is a crude oil derivative
-There are several types similar films like CPP, BOPP and BOPET. Below is the properties and different applications of CPP, BOPP and BOPET
-Global BOPP demand - 8500K MT pa
India BOPP demand - 700K MT pa
India Domestic consumption - 550K MT pa
4. Film Business
-Specialty Films sales have grown 18% YoY in the last 3 years
-Specialty Film Sales stand at 70% of Total revenues during FY22. Target to reach 80%
by the end of FY23
-Current Specialty Film volumes are 64% of total. Target to reach 80% by the end of FY24
-Each 1% shift in specialty sales adds EBITDA between 4 to 5 Crores
-Total Manufacturing capacity of Cosmo is 2 Lakh MT pa and down below is the capacities of all the segments in the Film Business
5. Specialty Chemicals
-Specialty Chemicals is a very asset light business, In this business it is not about the capex, it is more about innovation
-Masterbatch is a concentrated mixture of pigments and additives used for coloring or imparting specific desired
properties to plastics
-Masterbatches India Industry size is 500K MT, growing at 11% pa
-Textile Coating Chemicals: a type of textile chemical which make the fabric more durable and more lavish
-Textile coating chemicals India Industry size is USD 1.4 Billion, growing at 12% pa
-In phase 1, Cosmo is developing textile chemicals for cotton applications. In phase 2, they are also planning to cater to Nylon and Polyester applications
-Adhesives Indian Industry size is USD 3.5 Billion, growing at 8 to 10% pa
-Manufacturing capacities of all the segments in Specialty Chemicals is as below
-Specialty Chemicals is expected to contribute 10% -15% of revenues with 25%+ ROCE in about 5 years
6. Petcare
-Pilot launch has happened in Q2 FY22 with simultaneous launch of website, mobile van and its flagship store under brand name “Zigly” - Capex for pilot launch is Rs. 15 Crores over a period of 18 months
-India Petcare industry is INR 7k crores (expected to grow at 25% CAGR)
-They Plan to launch 15 experience centers by the end of FY23, of which 5 have already started. Their Target is to launch 150 experience centers in the next couple of years
-They are Targeting Gross Merchandise Value (GMV) of Rs. 15 Crore in FY23
7. Upcoming Capex
-Total Upcoming Capex - 940 Crores
-Specialized BOPET with the capacity of 30K MT can achieve revenues of 450 Crores under full capacity utilization i.e asset turnover ratio of 1
-Payback period for BOPET line is 4 to 5 years
-Asset Turnover Ratio
Film Business - 2
Specialty Chemicals - 10
Petcare - 5
8. Manufacturing Facilities
-Cosmo First has total 4 Manufacturing facilities, 3 plants are located in India, 1 plant is located in Korea
9. Financials
-Net Sales - INR 3038 Crores
-EBITDA - INR 620 Crores
-Net debt has come down to INR 303 crores from INR 438 Crores last year
-Net debt to EBITDA is less than 0.5
-ROCE stands at 29% and ROE at 39%
-Historically Revenue from Exports is around 40% of sales
-BOPP commodity margins graph is as follows
10. Outlook
-Plans to change the packaging landscape by creating sustainable and intelligent packaging solutions
-Company’s focus is on improving the speciality films, which would further de-commoditize the present business
-Some of the key products that will drive growth in speciality films are
a. CSP (Cosmo Synthetic Paper)
b. Direct Thermal Printable (DTP)
c. Sustainable PVC free solutions for Graphic Applications
d. Shrink Label Films
e. Heat Control Films - Company is going to launch this
product by the end of FY23
f. Sustainable PVC free solutions, Shrink Label Films, Heat Control Films - these all are made from BOPET which is upcoming in Q2 FY23
11. Valuations
-Specialty Chemicals and Petcare business will get demerged in the medium term. Value unlocking may happen during the demerger
-It is trading at very low PE (Median 7 and Peak 10.9). Because it is perceived as a commodity business.
But the company is de-commoditizing their business. Now they have 64% volume share of specialty films (Non Commodity) and 36% volume of Commodity films
Key highlights from Anupam Rasayan Q2FY23 concall🧪
CMP - ₹715
Like and retweet for maximum reach!!
The company is getting orders from European companies as the energy crisis in Europe has significantly raised the cost of production for the players in that market. The company signed 2 contracts with one of the major European crop protection companies, for supplying two new life
science chemicals
The company plans to commercialize more than 30 molecules in the fluorination side which will be focused on the Polymers, Agrochemicals and Pharmaceuticals side. Out of these molecules, the company expects a revenue potential of $220-$260 million with an asset
Detailed analysis of Greenpanel Industries - Proxy to the real estate cycle!!
CMP - ₹348
Like and retweet for maximum reach!!
1. Company Overview
Greenpanel is India’s largest manufacturer of wood panels. The company was demerged from Greenply in 2017. Company has manufacturing plants in Uttarakhand and Andhra Pradesh. They make Medium Density Fibreboard (MDF), Plywood, Decorative Veneers, Flooring and
Doors
Greenpanel Industries is the market leader in MDF segment having 28% of market share in the Indian market.
2. Industry Overview
The wood panel industry includes plywood sheets, engineered wood panels (MDF [Medium Density Fibreboards] furniture board and particle board)
In India, the demand for phthalic anhydride(PAN) is somewhere around 4,30,000 tons to 4,50,000 tons. India imports 6,000 to 8000 tons of PAN every month and in the last quarter it has imported around 25,000 to 26,000 tons
In this quarter, the company has got Rs 19 crore from maleic anhydride(MAN) vs Rs 27 crore in the previous quarter. As the quantity sold remained the same in both the quarters, the realization from MAN decreased from Rs 150/kg to Rs 92-95/kg. The company produces MAN
-The reasons for drop in gross margins has been the carry over of high-cost inventory and the increase in operating and fuel cost. The company plans to utilize and sell it’s entire inventory in this quarter itself. The company expects it’s gross margins to stabilize at 50% in the
next 2-3 quarters which was 48.5% in the 1st quarter and 43% in the current quarter. The company does not expect further deterioration in their GM post the 43% level
-End of September, the company has entered into an MoU with Welspun Corporation to purchase a 90 acre land parcel along with civil structure in Dahej for a consideration of Rs130 crore. The company hopes to complete the transaction by this quarter itself and this acquisition will
enable future expansion of the business while simultaneously de-risking the operations
#Antony Waste Handling Cell - Undervalued Opportunity in a Defensive Sector? ♻♻🚛
CMP - ₹313
Like and retweet for maximum reach!!
1. Company Overview: Antony Waste has been in the business of waste management for over 2 decades. They have experience in solid waste collection, transportation, processing and disposal services. They primarily cater to Indian Municipal Corporations.
2. Business Model: The Company has 3 main business segments
• Collection and Transportation of Waste: They do door to door collection of MSW from households, slums, commercial establishments and other bulk-waste generators (community bins) from a designated area through primary