Ashapura Minechem Ltd
– Multibagger Stock Analysis 2023
In this article, we can see Ashapura Minechem Ltd as a Potential Multibagger Stock as on September 2023.
Ashapura Minechem Ltd
Ashapura Minechem Ltd is engaged in the mining, manufacturing, and trading of various minerals and their derivative products. The company offers multi-mineral solutions across several industries from soaps to steel, energy to edible oils, metal to medicine, and cement to ceramics. Shri Hemul Shah is the current Executive director and CEO. Shri Chetan Shah is the current Executive Chairman.
In order to strengthen the company’s logistics and port activities; the company has acquired Equity Shares of M/s. Shantilal Multiport Infrastructure Private Limited by way of subscription to 6,63,690 Equity Shares of Rs. 10 each. Post this acquisition the percentage shareholding of the company would increase to 50%, making it an Associate Company
Product-wise Revenue Breakup
For FY20, the key product share in the turnover was Bentonite at 26.60%, Bauxite at 17.06%, Calcined China Clay at 17.69%, Ground Calcium Carbonate at 11.36%, China Clay – Kaolin at 11.32%.
The company exports its products to more than 90 countries across the world. In FY21, Export Sales amounted to ~27% of the revenue generated by the company while Domestic Sales were ~73%.
The Company is principally involved in mining, mineral processing, and logistics. Nearly all of the company’s products are natural ores or additives that form a part of the end-product, viz. Industrial Functional Minerals, Advanced Refractory Materials, Hydrocarbon Exploration Solutions, Adsorbent Solutions, White Performance Minerals, Super Specialty Refined Mineral Products, Building Materials and Chemicals.
Ashapura Minechem Limited is a mine owner and exporter of bentonite. Headquartered in Mumbai, The company has its network of operations pan-India and in 7 other countries. The company has operations in South Korea, Belgium, China, UAE, Oman, Malaysia, and Indonesia.
Shri Hemul Shah is the current Executive director and CEO. Hemul Shah has been associated with the Ashapura Group at different levels for more than 3 decades. He has strong business acumen, strategic intelligence, and execution abilities and also has rich experience in Planning; Operational and General Management.
Shri Chetan Shah is the current Executive Chairman. Chetan Shah is a perennial source of inspiration for the Group’s 2,800 + employees. Ashapura has greatly benefited from his inclination to share his dreams and their fruits with all the group’s stakeholders. The Ashapura Group over the years has imbibed its philanthropic streak from Chetan Shah, the Ashapura Foundation has touched thousands of lives through its initiatives in water harvesting, education, vocation training, and women’s empowerment and social upliftment through the restoration and promotion of arts & crafts from Gujarat.
Shri Harish Motiwalla is the current Non-Executive -independent director. Harish Motiwalla is a fellow Member of the Institute of Chartered Accountants of India. He is a Practising Chartered Accountant and has vast expertise in the field of accounts, finance, and corporate governance.
Shri Abhilash Munsif is the current Non- Non-Executive independent Director. Abhilash Munsif is a well-experienced diplomat, fully conversant with the workings of United Nations systems and the High-Level Commissions. He has worked for 8 years in the private sector in London. His last assignment was with ‘The World Intellectual Property Organization (Geneva) as the Director of Finance for 8 years.
- The Company is principally involved in mining, mineral processing, and logistics. Nearly all of the company’s products are natural ores or additives that form a part of the end-product, viz. Industrial Functional Minerals, Advanced Refractory Materials, Hydrocarbon Exploration Solutions, Adsorbent Solutions, White Performance Minerals, Super Specialty Refined Mineral Products, Building Materials and Chemicals.
- Recently, the sale and distribution of the company’s products are in three states of Gujarat, Rajasthan, and Madhya Pradesh. The company’s products are sold through B2B channels but through its Building Materials Group, the company has entered into the B2C segment recently for the first time.
- Manufacturer of Calcined China Clay (CCC) and Ground Calcium Carbonate (GCC)
- World’s 3rd largest producer of Bentonite. India’s 2nd largest producer of Kaolin.
- World’s 3rd largest producer of Bentonite.
- World’s 3rd largest Bleaching Clay producer.
- India’s largest producer of refractory material.
- India’s largest producer of proppant.
- 15% market share in global Bauxite exports.
- India’s largest white minerals solutions provider.
- India’s largest Specialty minerals producer
Products & Services
- Industrial functional minerals
- Advanced refractory materials
- Hydrocarbon exploration solutions
- Absorbent solutions
- White performance minerals
- Super specialty refined minerals
- Building materials and chemicals
- silica sand
Profit & Loss
- Expansion of new analytical and processing facility support to characterize the new materials for successful implementation of research projects.
- The company is trying to diversify its overseas resource base by setting up operations in Oman and Guinea.
- The company has also created Pilot scale facilities (200 kg capacity) for Bleaching Earth trials and has set up prepared for small-scale processing of Polymers at the Pilot Plant.
- Company is expected to give good quarter
- Company has delivered good profit growth of 37.6% CAGR over last 5 years
- Over the last 5 years, market share increased from 0.69% to 1.1%
- Over the last 5 years, revenue has grown at a yearly rate of 18.45%, vs industry avg of 8.09%
- price to earnings ratio ( 15.4x) is below the Indian market (27.4x)
- Earnings grew by 176.4% over the past year
- Stock is trading at 4.34 times its book value
- Promoters have pledged 54.8% of their holding.
- Earnings include an other income of Rs.101 Cr.
- interest payments are not well covered by earnings
- Highly volatile share price over the past 3 months
Warren Buffett Checklist
Based on above evaluation the company have multibagger properties.
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