This article can explore the possibility of Ganesh Benzoplast Limited as a Multibagger 2021 Stock based on Value Investing principles. Ganesh Benzoplast Limited is an India-established business, which is occupied in the production, shipping and import of a variety of speciality chemicals, food preservatives and industrial lubricants.
| Website | https://www.ganeshbenzoplast.com/ |
| CMP | 67 INR |
About Ganesh Benzoplast Limited
Ganesh Benzoplast Limited founded in the year 1988, They process and export a variety series of food preservatives, lubricants and API drugs. Their field includes Sodium Benzoate, Benzoic Acid and Benzaldehyde, Food Preservatives, Petroleum Sulphonate, Lubricant Additives, Lubricant Components, API/Bulk Drugs etc. These are pure, precise in composition and secure to use so, it is broadly used in food, automobile and pharmaceutical applications. Moreover, The corporation also has two sister companies, namely Ganesh Medicament Pvt. Ltd and Agarwal Chemicals, involved in endeavouring in phenobarbitone and fumarate respectively.
Ganesh Benzaplast Limited are also possessing an Infrastructure Division, where they have Liquid accommodation tanks at the subsequent ports JNPT: 2,00,000KL GOA: 60,000 KL Cochin: 45,000 KL. They are acknowledged in the trade for the production of high-Quality premium commodities. Benzoic Acid & its Derivatives like Sodium Benzoate well-known food preservative. Benzoplast a Specialty plasticiser.
Ganesh Benzaplast Limited has a modern production unit is fitted with hi-tech machines such as a blender, reactor and mixer, which aid them in treating 12000 MT per annum. Their specialists make full use of decked machines so as to formulate outputs as per varying requirements of customers. Owing to their precise coordination, the corporation is transporting consignments within the best time of 7 days or as per the catalogued time.
About Product Brands
Ganesh Benzoplast Limited is involved in making and consigning a broad array of food preservatives, lubricants and API drugs. Treated using quality components, these merchandises are in tandem with global quality standards. Having an excellent quality and competitive price, these merchandises are widely applied in the food, automobile and pharmaceutical industries. They advise the products at variable volumes to different specifications of the industries. But, the packaging of these merchandises can be customized as per the terms presented by customers.
Company’s Business consists of 2 Segments :
- Storage facilities and Cargo Handling
- Manufacturing of Organic & Inorganic chemicals
LIQUID STORAGE TERMINAL DIVISION (LST):
- Liquid Storage Terminal division provides storage tanks that are leased on rent for storing liquid chemicals, oil products, petrochemicals, molasses, edible oils etc.
- The Company presents complete storage and handling resolutions at 3 terminals namely
JNPT (Nhava Sheva), GOA AND COCHIN. - The business has a total joined storage capacity of more than 3,00,000 kg., for storage of all types of Liquid Products.
CHEMICAL DIVISION:
- In Chemical Division, the Company is processing a quality range of food preservatives, lubricants and API drugs. Its range encompasses Sodium Benzoate, Benzoic Acid and Benzaldehyde, Food Preservatives, Petroleum Sulphonate, Lubricant Additives, Lubricant Components, API/Bulk Drugs.
- Company’s Lubricant Additives and Speciality chemicals are exported to the Middle East, Latin America, Europe, USA, Canada & South East Asia.
- The company is also examining the Chinese market and this year they will be able to make plans and begin a sizeable Trade.
The product line-up includes:
| Category | Products |
| Food Preservatives | •Benzoic Acid •Sodium Benzoate •Benzoate Plasticizers |
| Petroleum Sulphonates | •Sodium Petroleum Sulphonate •Barium Petroleum Sulphonate •Calcium Petroleum Sulphonate •Magnesium Petroleum Sulphonate |
| Lubricant Additives | •Transmission Fluid Additive •Engine Oil Additive •Gear Oil Additive •Hydraulic Oil Additive •Cutting Oil Additive •2T Oil Additive |
| Lubricant Components | •Antioxidant Chemicals •Dispersant Additives •Extreme Pressure Additives •Viscosity Index Improver •Pour Point Depressant •Polyisobutenyl Succinic Anhydride (PIBSA) •Polyisobutenyl Succinimide (PIBSI) •Aminic Antioxidants •Phenolic Antioxidants •Molybdenum Dialkyldithiophorodioate (MoDTP) |
| API/Bulk Drug | •Ferrous Fumarate |
Warren Buffet, Value & Growth Checklist
| Capitalization | ₹ 423 Cr. |  |
| Sales Increasing past 3 Year | Yes, 27.8 % |  |
| Profit Increasing past 3 Year | Yes,40.2 % | |
| Durable Competitive Advantage | Yes | |
| PE Ratio | 9.55 | |
| PB Ratio | 2.69 | |
| Debt Equity Ratio | 0.32 | |
| Intrinsic Value Discount | 71.90% | |
| Promoter Holding & Increase | 43% with Lite Increase | |
| Multibagger Returns | 300-500% 5 Year | |
Business and Industry Analysis
The markets for goods of the Company are well built with a good distribution network for domestic as well as overseas markets. Their goods like food preservatives, lubricant additives and speciality chemicals and markets its products through distributors in Africa, North America, North Europe, Australia and the Middle East, aside from providing in the domestic market.
The company has been doing operation capital expense following last years and its chemical plant has been enhanced with new instruments and devices so no new heavy expense in the near prospect. Tank farm demands constant up-gradation and safety instruments bunker so going forward we can expect that 5 crores per annum expense would be more than satisfactory. The extra cash would be used to inscribe a new place. Expansion is in the pipeline for new areas and capacity expansion at existing plants.
Still, Promoters has been increasing their stake in the last few years. Debt is dropping from 470 crores in 2007 to 150 crore with the help of capital formed by the Liquid storage business and write-offs of debt by the lenders.
Capacity utilization at Goa and Cochin is 80%. In coming quarters the new capacity added at JNPT will also come online. Growth of few quarters can be seen till the full capacity utilization is done. Planning to add LPG storage tanks at Goa site.
Positives
- If the future of the chemical industry is very bright in India then import and export of chemicals will be beneficial for this company. Valuation is sensible in this vacant market.
- An Efficient Management: The MD is a young and dynamic person and has been doing fairly in turning around the company.
- Future demerger of both businesses: The two sister companies namely, Agarwal Chemicals and Ganesh Medicament Pvt. Ltd is likely to be demerged in the future, it will unlock huge value.
- Upgrading Existing facilities for Increased output: The company has been investing in enhancing its chemical plant with new instruments and devices.
- Tank farm business will be the key growth driver for the company as it has gross margins in the range of 45 to 50%.
- Intrinsic Value Discount is 70% based on Value Investing Principles
Negatives
- Even though their Chemical storage is their main revenue, there is no new capacity addition in the Chemical storage business.
- Lack of Crisis management: Major leaks at the site and the liability part of the environment can destroy the company.
- Competition from the Chinese Industry: Being a chemical manufacturing company in the global market, you’re likely to run into competition from players from china
- Fluctuation in the prices of its raw material (crude oil) price coupled with a slowdown in the global market
SUMMARY
This stock Ganesh Benzoplast Limited is a 5X multibagger stock India based on the value investing principles of Warren Buffett keeping a long term view.
