Mumbai: Global markets have fallen sharply in the last few days of last week due to geopolitical tensions and the threat of the US slipping into recession. On the one hand, while Israel continues to aggressively seek the elimination of Hamas and its enemies, on the other hand, global tensions are increasing with Iran, Lebanon and now preparing to wage a direct war against Israel. The US, European countries, already facing sluggish growth rates due to inflation and high interest rates, are likely to face even more difficulties in case of a war in the world over the Israel-Iran issue. Undoubtedly, on the other hand, apart from the circumstances of this factor of war increasing, India is becoming an advantage, as the investment flow of foreign funds is currently giving high returns and given India's growth story, it is likely that it will reduce in India in the coming days. Along with this, there will also be a possibility that the boom coming through the continuous investment flow of local funds will make new highs after a little pause or periodic correction. As Indian corporate results are overall good and monsoon is successfully gaining momentum, these factors are strong and the upward trend in international crude oil prices is not sustained but the downward trend is a positive factor for India. Amid geopolitical tensions, turmoil in global markets and corporate results, progress of monsoon, next week Nifty may break the resistance of 24977 at 24444 to reach 22222 and Sensex may break the resistance of 81555 at 80111 to reach 79333.
Arjun's View: Panama Petrochem Ltd.
BSE (524820), NSE (Panamapet) listed, Rs. 2 paid-up, established in 1982, Star Export House, FDA Registration, ISO 9001:2008, ISO 14001:2004 certified, Forbes ranking Panama Petrochem Ltd.) is one of India's leading manufacturers and exporters of more than 80 types of petroleum specialty products with four manufacturing units in India. The company manufactures essential, useful products for industries such as inks and resins, taxol, cosmox, power, cables and other industrial purposes. The company's products are used in industries such as pharmaceuticals, inks and resins, transformer manufacturing, rubber and tyres, textiles, cable manufacturing, automotive oils, drilling fluids, oils and greases, waxes, cosmetics, etc. The company derives 24 percent of its total revenue from cosmetics and pharma, 21 percent from inks and resins, 19 percent from rubber process oil, 19 percent from textiles and 17 percent from others in FY2023. While 49 percent of the total income is derived from domestic and 51 percent from exports. The company exports its products to more than 75 countries.
Global Presence: The company is expanding its exports to cover international markets. The company exports petroleum jelly, liquid paraffin, transformer oil, rubber process oil and other products to various countries such as the USA, UK, Europe, Middle East, Australia, African Subcontinent and South East Asia. The company's products include white oil, thermoplastics, transformer oil, ink and coating oil, rubber process oil, textile process oil, lubricants industrial and automotive, liquid paraffin oil, petroleum jelly, oils and greases, drilling fluids, waxes. As of March 31, 2023, the company's sole subsidiary is Panel Industries RMC FZDE Ras Al Khaimah-UAE. It is a 100 percent owned subsidiary.
Customers: The company's customers include Huber Group India Private Limited (for ink), Reliance Industries Limited, Dabur (for cosmetics) and ATC Tyres (for rubber oil) etc. The company's top 10 customers accounted for 25 per cent of the company's total revenue in FY 2023. Which was 38 per cent in FY 2022.
Manufacturing Facilities: The company has four manufacturing facilities in the Western region of India, one in Ankleshwar-Gujarat, one in Daman-UT, one in Taloja-Raigad Maharashtra and one in Dahej-Bharuch Gujarat. It has a combined installed capacity of 2,15,000 metric tonnes in FY23. The company also has a manufacturing facility in Ras Al Khaimah (UAE) with an installed capacity of 30,000 tonnes per annum. The facility aims to manufacture petroleum specialty products in the GCC and MENA regions.
New Products: The company has announced four products in the pipeline. These include fragrance-free distillates for the ink and coating industry, fragrance-free solvents for the paint industry, biodegradable oils for drilling and oil exploration and fragrance-free and non-carcinogenic new generation oils for the rubber industry such as TDAE and RAE.
Capacity Expansion: The Company has added 30,000 tonnes to its capacity in FY23 and commercialised more than 50% of the capacity expansion in Q4 FY23. The Company has expanded an additional 30,000 tonnes in FY24 at a capex of Rs 20-25 crore per year. The Company is funding the entire capex from internal accruals.
Fox: The company aims to increase its share in value-added products to 90 to 95 per cent in the future. (Product mix including 68 per cent share from value-added products in FY23)
Shareholding pattern: Promoters Rayani family holds 61.94 per cent, Nomura Singapore Limited holds 1.29 per cent public shareholding, LGOF Global Opportunity Fund holds 3.53 per cent, Konekor Investment Enterprises holds 3.72 per cent. While Abridge Investment holds 4.34 per cent, total FII stake is 16.17 per cent. HNI Ramesh Damani holds 1.12 per cent, Anil Kumar Goyal holds 1.24 per cent and others hold a combined 8.67 per cent. While retail individual share capital holders up to Rs 2 lakh hold 13.22 per cent.
Dividend: 60 percent in 2020, 200 percent in 2021, 450 percent in 2022, 400 percent in 2023, 200 percent in 2024
Book value: Rs 110 in March 2022, Rs 148 in March 2023, Rs 180 in March 2024, likely Rs 222 in March 2025
Consolidated Financial Results:
(1) Full year April 2022 to March 2023: Net income of Rs 2,255 crore, Net Profit Margin-NPM of 10.33 per cent, Net Profit of Rs 233 crore and Earnings Per Share-EPS of negative Rs 38.51.
(2) Full Year April 2023 to March 2024: Net Income growth 5.14% to Rs 2,371 crore Net Profit Margin-NPM 8.22% Net Profit to Rs 195 crore EPS per share to Rs 26.
(3) Last Quarter Jan 2024 to Mar 2024: Net Income grew by 45% to Rs 744 crore, NPM grew by 20% to Rs 61.72 crore from NPM of 8.28%, Earnings Per Share – EPS was achieved at Rs 10.08.
(4) Q1 April 2024 to June 2024: Net Income increased by 26% to Rs.673 crore, NPM-Net Profit Margin increased by 7.46%, Net Profit increased by 9.33% to Rs.50.17 crore, Earnings Per Share-EPS achieved Rs.8.29.
(5) Expected Full Year April 2024 to March 2025: Expected net income is expected to grow by 16% to Rs 2,734 crore. Net profit is expected to be Rs 252 crore. Earnings per share-EPS is expected to be Rs 41.66.
As follows (1) The author has no investment in the shares of the above company. The authors may have direct or indirect personal vested interests in the research sources. Consult a qualified investment financial advisor before making any investment decision. The author, Gujarat Samachar or any other person will not be responsible for any potential loss on investment. (2) Rayani family promoters hold 61.94 per cent stake (2) India's leading manufacturer of over 80 types of petroleum specialty products with four manufacturing units in India and one (3) exporter Companies expanding capacity through internal sources of finance (4) 60 per cent share in revenue with 50 per cent capacity expansion and 90 per cent value-added products share (5) Full year expectation from April 2024 The stock is currently trading at Rs 425.10 on BSE (Rs 422.50 on NSE) on Friday, August 2, 2024 at a P/E of just 10.20, while expected earnings per share of Rs 41.66 in March 2025 is expected. Estimated book value is available at Rs 222.