Kesra Petro is the leading manufacturers of Phthalocyanine Blue Crude and its downstream products in India and contributes around 15% of the entire Copper Phthalocyanine market of India.It took over shreyas internidiates in 2014 which was under BIFR and with new management in place turn around the company in 3 years. The company has a global presence in 15 countries and approx. 8% of revenue comes from export .It has manufacturing unit at Lote Parshuram,Distt Ratnagiri.
Customers:
Sudarshan Chemicals
Unilex Colours & Chemicals Limited
Alliance Organics LLP
Heubach
Sun Chemical
Kolorjet Chemicals Private Limited
Mallak Hindprakash Tradelinks Private Limited
Rasayano
Financials
The outlook for the Company’s business is positive : the cooling period between the time the Company exited BIFR and the time when it can mobilise bank funds has come to an end; the Company is at the point when it can prospect for working capital financing from banks with the objective to procure a larger quantum of raw materials, increase capacity utilisation and report higher revenues.
Investment Positives :
1. Company is targeting 700 crores revenue by 2019-20.
2.Currentlt running with 33% capacity utilization ,once 100% capacity utilization is achieved the revenue has potential to treble and the target revenue looks achievable
3.KP is working on improving margins ,cost control and focussing on exports and confident of improving .
4. Debt free company
5.Due to environment concerns and high labour cost India is experiencing higher export and local demand.
6. Supplies to key Indian customers and MNCs.
7.If company becomes successful in achieving 700 crores revenue by 2019-20 at NP margin of 18-20 percent it could deliver profit of 140 crores at EPS of approx. 15 at a conservative PE multiple of 15 stock would touch 225 making it a multi bagger ,currently available at 52-55.
Long term investor can invest buy it and hold for immediate target of 75 in one year .
Stay away from this counter ,compliance and governess issues .
Customers:
Sudarshan Chemicals
Unilex Colours & Chemicals Limited
Alliance Organics LLP
Heubach
Sun Chemical
Kolorjet Chemicals Private Limited
Mallak Hindprakash Tradelinks Private Limited
Rasayano
Financials
(in Cr.)
| 2018-E | 2017 | 2016 | 2015 | 2013 | 2012 |
| Revenue | 200 | 173.33 | 144.05 | 145.77 | 44.38 | 15.83 |
| Other Income | 1.7 | 0.98 | 0.49 | 0.41 | 0.08 | -- |
| Total Income | 201.7 | 174.31 | 144.54 | 146.18 | 44.46 | 15.83 |
| Expenditure | -148 | -147.6 | -128.6 | -138.6 | -43.8 | -15.8 |
| Interest | 0 | -0.58 | -0.13 | -- | -- | -- |
| PBDT | 53.7 | 26.66 | 15.84 | 7.58 | 0.65 | 0.05 |
| Depreciation | -1.7 | -1.3 | -1.1 | -0.97 | -0.42 | -0.4 |
| PBT | 52 | 25.37 | 14.74 | 6.6 | 0.23 | -0.35 |
| Tax | -11 | -5.28 | -2.64 | -1.5 | -0.04 | -- |
| Net Profit | 41 | 20.08 | 12.1 | 5.1 | 0.19 | -0.35 |
| Equity | 9.67 | 9.67 | 9.27 | 7.27 | 7.27 | 7.27 |
| EPS | 4.24 | 2.08 | 1.31 | 7.02 | 0.27 | -- |
| OPM % | 26.00% | 15.38 | 11.09 | 5.2 | 1.46 | 0.3 |
| NPM % | 20.50% | 11.59 | 8.4 | 3.5 | 0.44 | -2.21 |
The outlook for the Company’s business is positive : the cooling period between the time the Company exited BIFR and the time when it can mobilise bank funds has come to an end; the Company is at the point when it can prospect for working capital financing from banks with the objective to procure a larger quantum of raw materials, increase capacity utilisation and report higher revenues.
Investment Positives :
1. Company is targeting 700 crores revenue by 2019-20.
2.Currentlt running with 33% capacity utilization ,once 100% capacity utilization is achieved the revenue has potential to treble and the target revenue looks achievable
3.KP is working on improving margins ,cost control and focussing on exports and confident of improving .
4. Debt free company
5.Due to environment concerns and high labour cost India is experiencing higher export and local demand.
6. Supplies to key Indian customers and MNCs.
7.If company becomes successful in achieving 700 crores revenue by 2019-20 at NP margin of 18-20 percent it could deliver profit of 140 crores at EPS of approx. 15 at a conservative PE multiple of 15 stock would touch 225 making it a multi bagger ,currently available at 52-55.
Long term investor can invest buy it and hold for immediate target of 75 in one year .
Stay away from this counter ,compliance and governess issues .
Sir, I think this stock will not wait for a year to touch 75!
ReplyDeleteOne or two quarter result is enough.
Thank u for wonderful pick....
Not much data to analyze
ReplyDeleteNot much data to analyze
ReplyDeleteHi Mukeshji, A very Happy Pongal to you ..... Looks like this company has lot of potential for growth with improving margins and a must long term hold.. Thanks for digging this hidden gem for us...
ReplyDeleteRegards,
Venu.
Sir, company's current low capacity utilisation, is it becasuse of working capital issues or due to lower demand for its finished product?
ReplyDeleteThe management of Kesar Petro had bad reputation / very manipulative of prices etc in the past. Any comments?
ReplyDeleteDear Pankaj
DeleteI M not aware about rapport of previous management but there is now new promoter and they have double there stake to approx 63%.They are a le to turnaround the company in 2years..whuch is commendable.It gives us impression that company is in safe hands now if they are a le to deliver what they are targeting then for sure valuations should change..
Sir
ReplyDeleteMost of your recommendations are closer to 50% returns in one year. Any specific reason or its just coincidence?
Dear Arun
DeleteMost of my recommendations are in small and mid caps which are undervalued at that time and if I see potential of 40 to 50% kind of returns then i pick them for investment recommendedation.. And fortunately most of given targets have been achieved less than an year
sir, in 2017 AR, their cash flow from operation and other incomes are about 6 & 1 respectively. if so, then how they are able to report PAT about 20 ?
ReplyDeleteSir
ReplyDelete20% below recommended price. Can we add?
Sir
ReplyDeleteYour view on kesar results
i find the results very good. as mentioned by the managment earlier, the operating margin is up this shows that what they claimed is really happening. thats a good indication. we need to follow future results and see if its as per the projections discribed in recent investors presentation, particularly related to revenue growth, operating margin rise and working capital issue. if things continue to go as per projected plans then we are for a good rise inure. fut
DeleteSir
ReplyDeleteNot active for 45 days..
Awaiting for comments/ inputs
Dear Arun, KP results are on expected lines..they are able to maintain the margins and profitability... Once they increase capacity utilisation.. Results should improve ...you must hold accumulate in rangeof 40 to 5o....
ReplyDeletesir good evening
ReplyDeletewhat do we do with KESAR PETRO its come down to 35 is this worth an average at this prices or shall be held
please confirm
Dear Atul
ReplyDeletePlease hold KP..Fundamentals are intact only sentiment is disturbed after introduction of LTCGT and recent reportings of bank frauds.All midcaps and small caps are witnessing correction due to poor liquidity.I am confident once sentiment improves..may be in new FY mid cap and small cap could see a recovery.
Hi
ReplyDeleteCan i add kesar petro at rs 18
madhusudanrao boyina