Monday, August 24, 2009

SRF Ltd...cmp...Rs 152.....Multibagger in making?....

Freinds,
I have posted about SRF Ltd. SRF has showed a stupendeous result for the last qr, June 09, a 100% growth in NP from last year.The NP has gone up to 92 cr from 45 cr last year ,giving an eps of 15 for June qr.The expansion plan and recent aquisition are bearing fruits for SRF Ltd and according to my thinking this can also be a Carbon Credit story.
They have done everything right at right time and that is now showing on the bottomline.SRF Ltd can fetch great returns in times to come if held for LT.

SRF-LIMITED

An introduction

Established in 1973, SRF has today grown into a global entity with operations in 4 countries. Apart from Technical Textiles Business, in which it enjoys a global leadership position, SRF is a domestic leader in Refrigerants, Engineering Plastics and Industrial Yarns as well. The company also enjoys a significant presence among the key domestic manufacturers of Polyester Films and Fluorospecialities. Building on its in-house R&D facilities for Technical Textiles Business and Chemicals Business, the company strives to stay ahead in business through innovations in operations and product development. A winner of the prestigious Deming Application Prize for its tyre cord business, SRF continues to redefine its work and corporate culture with the TQM as its management way.

SRF Today – a snapshot

Rs. 2000 crore multi-product, multi-business organisation
Market leader in Technical Textiles, Refrigerants, Engineering Plastics and Industrial Yarns
8 locations in India, one in Dubai, one in South Africa and one in Thailand
World’s 2nd largest producer of Nylon 6 tyre cord fabrics
World’s 2nd largest producer of belting fabrics
Exporting to over 60 countries
Technical Textile Business

Building on its dominant position in the domestic market, SRF enjoys a significant presence in the global market as well for all the three products under its Technical Textile Business - tyre reinforcements, belting fabrics and coated fabrics. Its tyre cord fabrics are used as reinforcement material for all categories of tyres – from bicycles to heavy commercial vehicles. The company’s Belting Fabrics are used as reinforcement material for manufacturing conveyour belts and its coated fabrics find applications as static and dynamic covers in various areas ranging from Agriculture to Defence applications.

Chemical Business

SRF's Chemicals Business includes the Fluorochemicals and Fluorospecialities business lines.
In the Fluorocarbon business space, SRF has grown to become the undisputed domestic market leader in its core product line of Refrigerant gases, while exporting two-thirds of its production to world-class international buyers spread across 60 countries. Refrigerant gases are used for a variety of industrial, commercial and household applications such as refrigeration and air-conditioning, as a blowing agent for insulating foam, as a propellant for aerosols, in mobile air conditioning, and as a propellant in metered dose inhalers for pharmaceutical companies.
SRF has also been taking responsible initiatives under the guidelines of UNFCCC (United Nations Framework Convention on Climate Change) as a part of its Clean Development Mechanism (CDM).
SRF entered into the Fluorospecialties business in 2003-04 as a natural progression of its expertise in Fluorochemicals and its strong knowledge of halogen chemistry. This business is focused on addressing the need for complex organo-fluorine compounds.

Packaging Films Business

The company’s Packaging Film Business produces PET films, which are used in packaging of food, cosmetics, personal and health care products. The focus of the business is to move up the value chain of packaging films and towards this end, it is a supplier of metallised films and holographic films apart from plain and chemically treated polyester films.

Industrial Yarn Business

In the space of Industrial Yarn Business, the company is the dominant market leader in India holding more than 50% market share in multi filament twine and caters to major fishnet manufacturers in India.

Engineering Plastics Business

Equipped with fully integrated multi-locational facilities at Manali and Pantnagar for manufacturing of Nylon 6 Engineering plastics, the business has the capabilities to compound more than 150 grades of engineering plastics in Nylon 6, Nylon 66 and PBT with consistent quality. With a brand name of TUFNYL and TUFBET the business caters to the needs of different sectors like automotive, electrical, telecom, engineering, electronics and industrial sectors.

Key Credentials

in 2004, SRF became the first tyre cord company in the world to win the prestigious Deming Application Prize for Total Quality Management
SRF’s Chemical Business awarded with Responsible Care Logo by Indian Chemical Council (ICC), Mumbai
SRF conferred with the prestigious Greentech Safety Platinum Award 2006-07
SRF conferred with the prestigious Greentech Environment Excellence Platinum Award 2007
SRF developed processes to manufacture HFC 134a, HFC 32 (different varieties of new generation refrigerant gases) through in-house R&D efforts
SRF holds a process patent for HFC 32, issued by the United States Patent and Trademark Office
SRF’s Chemicals Business received ‘Commendation Certificate’ under the prestigious CII ITC Sustainability Award for the year 2008 in the Independent Category for strong commitment towards sustainable development of the country
Chairman, Mr. Arun Bharat Ram, conferred with the prestigious Jamshetji Tata Award from the Indian Society for Quality (ISQ) for the year 2006
Chairman honoured with the prestigious Officer’s Cross of the Order of Merit, presented by the Federal Government of Germany in August 2008.





Growth & Expansion

Pursuing its ASPIRATION to achieve global leadership by 2020, SRF has embarked on a long and challenging journey of growth & expansion for all its businesses.
An investment of around Rs. 1000 crore has already been made in the last four years mainly in adding and augmenting state-of-the-art production facilities. Today, several projects involving additional investment of around Rs. 600 crore are in different stages of completion and many more are in the pipeline. As part of its growth strategy SRF in the recent past has acquired two foreign entities, one in Thailand and the other one in South Africa under its Technical Textiles Business.
Roadmap
SRF will enter the world of Polyester Industrial Yarn (PIY) Business – becoming the first player in India to do so
The PIY business will enable SRF to enter two new areas – tire cord fabric for radial tires and the reinforcement for V- cord belts
SRF is investing in setting up Wind Power projects to support development of renewable energy
Investment in R&D under Chemical Business will enable SRF to acquire capabilities to develop new fluorochemical molecules required by pharma and agro giants
Investment in R&D under Technical Textiles Business will enable SRF to develop new products using latest technologies like Nano, Plasma and Microwave
Plans are on the anvil to develop a Chemical Complex
The Packaging Film Business will attain optimum economic size by doubling its capacity.



Latest approval(capex)

The SRF Board in a meeting held on 25 July 2008 approved two capital expenditure projects at an aggregate investment of Rs. 115 crore. This includes a Polyester Polymerisation Chip Plant of 60,000 MT per annum capacity at an aggregate investment of Rs. 92.65 crore. The chip plant will be set up under SRF’s Packaging Film Business at Indore. The other project entails setting up Rs. 22.5 crore Fluorospeciality facility with a capacity of 400 tonnes per annum at Bhiwadi plant under Chemical Business.


Mergers & Acquisitions

Continuing with its commitment to become a global player SRF has acquired two foreign companies during 2008, one in Thailand and the other one in South Africa. Thai based Thai Baroda Industries Limited (TBIL) is a tyre cord company and South Africa based Industex Technical Textiles (Pty) Limited is a manufacturer of belting fabrics.
Acquisition of the Thai plant will enable SRF to emerge as the 2nd largest Nylon 6 tyre cord fabric manufacturer and 5th largest Tyre Reinforcement manufacturer in the world.
Acquisition of the South African plant will improve SRF’s world ranking from the 3rd largest player to 2nd largest player in the Belting Fabrics Business.
Fact Sheet – Thai Plant
Name of the Plant
Thai Baroda Industries Limited
Date of Definitive agreement
May 27, 2008
Date of Acquisition
September 8, 2008
Product
dipped nylon tyre cord fabric
Production capacity
12,000 TPA
Fact Sheet – South African Plant
Name of the Plant
Industrial Technical Textiles (Pty) Ltd.
Name of Joint Entity
SRF Industex Belting (Pty) Limited
Date of Definitive agreement
July 14, 2008
Date of Acquisition
July 14, 2008
Product
Belting Fabrics
Production capacity
3,500 TPA

Modernisation & Expansion

SRF in the midst of implementing Rs. 600 crore projects
wind power plants in Tamil Nadu commissioned
project on polyester industrial yarn in progress
investing in a second metalliser and a new film line
Several R&D projects underway to develop new products
SRF Limited is in the midst of implementing several projects aggregating around Rs. 600 crore. Many of these projects will begin to bear fruit within two years. The company successfully commissioned all the nine units of wind energy project to produce 15 MW of ‘green power’ in Tamil Nadu in the beginning of the year 2008-09. The project which was implemented at a total investment of around Rs. 90 crore, has been set up as a CDM initiative and the viability of this project is directly linked to its ability to generate carbon credits under the Kyoto Protocol.
( Here is where the Carbon Credit story comes in)

SRF is also setting up a plant for polyester Industrial Yarn (PIY) within the premises of its existing plant at Gummidipoondi in Tamil Nadu at a total investment of around Rs 250 crore. The work on the project is progressing as per schedule and the plant will become operational in early 2009. With the setting up this plant, SRF will become a one stop shop for reinforcement fabric to the tyre companies in India.
With its entry into the new space for polyester yarn, SRF will soon be entering two new areas – tyre cord fabric for radial tires and the reinforcement cords for V-Belts. The project assumes significance in view of the large investments already announced by the leading tyre manufacturers for enhancing radial capacity for passenger tyres.

The company is also in the midst of setting up a new 27,000 MT line for the manufacture of PET films under its Packaging Film Business (PFB) at a total investment of around Rs. 165 crore. Earlier in 2005, the company had successfully commissioned a metallised film plant in October 2005, which is running to capacity. Looking at the possibilities in this segment, SRF has commenced a similar project at an investment of Rs. 16 crore for setting up another metallising machine at its plant in Indore. Metallising films are used in food packaging and the most visible products are the ones, used for packing dry snacks. The project of holographic film plant has been commissioned in December 2007 at an investment of approximately Rs. 10 crore. The product from this plant is used for luxury packaging segments.

The company also plans to invest around Rs. 100 crore for its Chemical Business especially in the area of upgrading its R&D facilities, for developing new products under fluorospecialities and setting up of a new power plant at its Bhiwadi Plant.


20 comments:

  1. Hi Rajeevji,
    Oscar Result. Looks fantastic the proceeds from Ranbaxy has come to the books cash eps above 500!!
    What do you feel now with the future.
    Share hitting daily up circuit with increasing volume.
    Please comment.Type Un-Audited Un-Audited Un-Audited Un-Audited
    Period Ending 31-Mar-09 31-Mar-08 31-Mar-07 31-Mar-06
    No. of Months 12 12 12 12
    Description Amount(Rs. million)
    Net Sales / Interest Earned / Operating Income 10,964.05 75.39 - -
    Other Income 0.84 163.97 1,217.95 1,422.32
    Total Income 10,964.89 239.36 1,217.95 1,422.32
    Interest Expended - - -99.79 -16.26
    Expenditure -316.25 -66.72 -11.35 -10.34
    Operating Profit 10,648.64 172.64 1,106.81 1,395.72
    Interest - -46.09 - -
    Profit Before Depreciation and Tax 10,648.64 126.55 1,206.60 1,411.98
    Depreciation -1.97 -2.64 -1.59 -0.15
    Profit before Tax 10,646.67 123.91 1,105.21 1,395.57
    Tax -1,171.20 - - -
    Net Profit 9,475.47 123.91 1,105.21 1,395.57
    Equity Capital 172.81 172.81 172.81 172.81
    Basic And Diluted EPS after Extraordinary item - - 63.95 80.75
    Basic EPS after Extraordinary items 548.33 7.17 - -
    Nos. of Shares - Public 5,338,703.00 5,338,703.00 5,338,703.00 5,338,703.00
    Percent of Shares-Public 30.89 30.89 30.89 30.89
    Operating Profit Margin 97.12 229.00 - -
    Net Profit Margin 86.42 164.36 - -
    Cash EPS 548.43 7.32 - -
    Notes Notes Notes Notes
    Detailed Detailed

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  2. Dear Jay,
    I think Oscar Invt is still a multibagger in making.Let me write here to you and everyone that maybe my calls sometimes looks like failing but they are not.They remain dorment for couple of years but then comeout big winner.
    The thing that is needed in my calls is patience.
    Keep a watch on JPT Ltd and SRF Ltd which I have written on the blog.Both have the capacity to give multiple returns from here.

    ReplyDelete
  3. Excellent Analysis of SRF, Rajeev.
    Have saved a copy of the same.

    Thanks for your efforts

    Srini

    ReplyDelete
  4. Hi Rajeev,
    Are you referring to JPT Securities as a multibagger?

    ReplyDelete
  5. Hi Rajeev,
    Nava bharat ventures is looking hot in the Market with excellent result and FII limit being increased to 40%. I like to get your opinion on this company before buying. Please advice.

    ReplyDelete
  6. hi rajeev,

    should i buy srf at 150 right now OR wait for some correction... it has ran up from 70 to 150 in just two months...

    Regards,
    Priya

    ReplyDelete
  7. Yes Gurunaga I am talking of JPT Securities Ltd .It can become a big multibagger if what I am seeing come out good....

    ReplyDelete
  8. Vasanth,
    Yes Navabharat Venturers is a buy.I think I already listed in past when it was around 80-90....

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  9. Priya , difficult to answer such question when one should buy.It may come down ,it may not.....

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  10. Thanks Rajeev,,,, :-)

    What about Indage Vinteners???

    It has BV=177, EPS=20, PE=2.5 Industry PE=34, 52weeks high is Rs484, reserve of 240cr over eqty of 14 cr....

    What do you think...?

    I am looking forward to buy it tomorrow


    waiting for ur reply as always

    bye
    Priya

    ReplyDelete
  11. Priya,
    Indage Vinteners is looking good though I am not able to see last 2 qr results that of Mar and June 09...but they are going for pref allotment at Rs 88 and are garnering 100 cr which augurs well for the Co....Breweries and wine etc business is going to flourish...

    ReplyDelete
  12. Very good write up on SRF.

    Have you mentioned SRF paid 10 rupees/share in dividend?

    Another SRF group company, SRF Polymers, is now a holding company. Those interested in SRF Ltd may also look at SRF Polymers since it holds about 4.2 shares of SRF Ltd for every share of SRF Polymers.

    ReplyDelete
  13. Thanks Kumar,
    No I have not mentioned the Rs 10 Div but then I use to leave something for my readers to find out...

    ReplyDelete
  14. Rajeev,

    I saw this announcement in NSE on xltl. When current price is at 44, following FCCB are issued at 160.

    6,21,718 to Credit Suisse
    2,48,687 to Shanti India. (who is shanit india?)

    Is this going to be start of another bull run? and followed by distribution?

    Xl Telecom & Energy Limited has informed the Exchange that: "A Committee of the Board of Directors at the meeting held on 25th August, 2009 have allotted 621,718 (Six lacs Twenty One Thousand Seven Hundred & Eighteen only) Equity Shares of Rs. 10/- each of the Company at a premium of Rs. 150/- per share to "Credit Suisse (Singapore) Limited" upon conversion of Foreign Currency Convertible Bonds to the extent of US$ 2.50 million. Consequently, the paid up Equity Share Capital of the Company has been increased from 19034139 Equity Shares of Rs.10/- each to 19655857 Equity Shares of Rs.10/- each".

    Xl Telecom & Energy Limited has informed the Exchange that "A Committee of the Board of Directors at the meeting held on 24th August, 2009 have allotted 2,48,687 (Two lacs Forty Eighty Thousand Six Hundred & Eighty Seven only) Equity Shares of Rs.10/- each of the Company at a premium of Rs.150/- per share to "SHANTI INDIA" upon conversion of Foreign Currency Convertible Bonds to the extent of US$ 1.00 million. Consequently, the paid up Equity Share Capital of the Company has been increased from 18785452 Equity Shares of Rs.10/- each to 19034139 Equity Shares of Rs.10/- each".

    Thanks
    siva

    ReplyDelete
  15. Hi Siva,
    I also saw that annoucement today.What I am making out of it is the management is trying to get money so for the liquidity as with 400 cr loss the co is facing cash crunch.
    They have to find someways to handle this otherwise it is a question of survival for XL Tele.
    With sales coming down to mere 50 cr according to last qr, they need to have cash to pay int and other things ...
    Seems the down side for XL Tele is capped somewhat at the present stage as it didn't go down after disasterous June results and to me seems it will languise at the same level for next 6 months unless some great annoucement can come for orders and it may move up.

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  16. Thanks Rajeev for the view on XL telecom.

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  17. hi rajeev....should we hold scanpoint geomatics for the long term...or do u think its jus another of those small operator driven stocks??

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  18. Dear Deepak,
    That is why I wrote to look at the website and see what they are upto.
    And for any big profit I have always said , sell 50% at double and keep the rest FREE.......
    Ofcourse it depends upon what one needs to do....I can't give a sell call.Take your own call...

    ReplyDelete
  19. hi, rajeev, which one is better
    SRF / Gujarat Fluorochemicals

    ReplyDelete
  20. Gokak Mills places a high premium on employee welfare. The company hospital, residential complex, educational institutions are one of the best in the region. More than half the company's employees were born and educated at these facilities.
    Yarn Exporters, Yarn Manufacturers, Technical Textiles, Dyed Yarn Manufacturers.

    For More Details Visit http://www.gokakmills.com

    ReplyDelete