ATS Research Desk

ATS Research Desk Company Name: India Glycols Fundamental Report

Introduction: India Glycols Limited is Recommendation Target

engaged in the manufacturing and marketing of Chemicals including specialty Chemicals, Ethyl Alcohol (Potable), Nutraceutical and herbal extraction, Natural Gum & its derivatives, Industrial Gases, etc. The company having a turnover of approx. 2330 crores, has the advantage of producing chemicals through agro route in comparison to other manufacturers who adopt petroleum route.

: BUY 226-246

Time Frame

3-4 months

Potential upside

15%-20%

Stock Data CMP as on 31/7/2017 52 Week High/Low Market Cap (Cr) Total Debt (FY-17)(Cr) Enterprise Value(FY-17)(Cr) Cash and Investment (FY-17)(Cr) Equity Capital (Cr) Face Value Share Holding Pattern Promoters&Promoters Group Holding (%) Public Holding (%) Grand Total

197 93/208.9 609.32 18 4300.1 201.9 30.96 10

Investment Rationale  Strong leadership in specialty and performance chemicals.  Forays in new products.  Strong balance sheet with strong financial position  Export as a strong key driver for future

61.07 38.93 100

Valuation Summary FY-15 P/E EV/EBITDA P/BV ROCE (%) RONW (%)

Net Sales Operating Profit PAT EPS

-3.776 4.52 0.55 -7.18 -13.47

FY-16

FY-17E

FY-18E

-6.8738

-12.404

5.45 0.62 -2.71 -7.99

6.31 2.10 2.2 2.6

6.48214 6.37 2.3 2.6 3.1

FY-14 2,955.1 221.05

FY-15 2,542.1 166.17

FY-16 2,289.8 188.24

FY-17E 2,656 233.43

FY-18E 2,811 230.98

-161.36 -52

-88.64 -29

-49.12 -16

94.00 30

103.17 33

ATS Wealth Managers Pvt Ltd.

Outlook: Overall outlook for the Company remains bullish. The Company has diversified its activities from Mono Ethyl Glycols (MEG) and Ethylene Oxide (EO) derivatives to other specialty chemicals, Ethyl Alcohol (potable), Natural Gums and its derivatives, neutraceuticals and Herbal extractions and Industrial Gases Strong margin recovery at EBITDA level i.e. 11.54% in Q4 FY 17 as compared to 2.64% in Q4 FY 16, and Strong growth of 13.25% on Y-O-Y basis in terms of revenue and trading below Industry P/E of 11.75 gives a positive outlook.

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Product portfolio:

Chemicals

Others

• Glycols(MEG,T EG,DEG,Heavy Glycols) • Ethyl oxide derivatives

Ethyl Alcohol Extra Neutral Alcohol

• High sulphur alcohol • Hydro choloric acid • Natural gum • industrial gases

Segment Break-up 2%

36% 62%

Chemicals

Ethyl alcohol

Others

Chemicals: The Company is the largest manufacturer of Bio-Mono Ethylene Glycol (Bio-MEG) in the world made out of renewable feedstock i.e. Molasses and Ethanol. Bio-MEG has an application, inter-alia, in making PET bottles, which is used for packaging of beverage products. Sales of Glycols [Monoethylene Glycol (MEG), DiethyleneGlycol(DEG),TriethyleneGlycol(TEG) andHeavyGlycols] have increased from 90,140 MT in FY -15 to 94,268 MT in FY -16.


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ETHYL ALCOHOL (POTABLE) AND EXTRA NEUTRAL ALCOHOL The thrust was given on the export of high quality Extra Neutral Alcohol (Potable). The company has gained the position of premium quality ENA suppliers in the international markets. The company registered a total sales value of 1150 crores in FY-16 as compared to 691 crores in FY15 in the Ethyl Alcohol division. Sales Value(Cr) 1150 657

691

FY-14

FY-15

FY-16

Sales Value(Cr)

INDUSTRIAL GASES: The Company produced 21235 MT of oxygen and 1074 MT of nitrogen in FY-16. Oxygen and Nitrogen are sold in the market and used for in house requirement. Industrial gas division also produces Industrial grade liquid carbon di-oxide at Kashipur plant. The company also produces ETO (ethylene oxide and carbon dioxide gas mixtures) under the trade name IGL-STERI GAS at its kashipur plant. It is suitable for sterilization of disposable surgical and medical devices, spices and packing substance like rubber plastic etc. The company has in house facility for production of EO and LCO2 which are also used in production of ETO and it is the only plant in India to have a manufacturing facility which gives it a distinct edge over other suppliers in the market. The segment registered total sales of all gases of 38 in FY-16

Sales Value(Cr) 40

FY-14

38

38

FY-15

FY-16

Sales Value(Cr)


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Industry Overview: The chemical industry in India is a key constituent of Indian economy accounting for about 2.11 percent of the GDP. The chemical industry is the 3rdlargest producer in Asia and 6th output in the world. The industry is projected to reach USD 403 billion by 2025. Major segments of Indian chemical industry:

Base Chemicals

Speciality Chemicals

•Petrochemicals •Manmade fibres •Industrial gases •fertilisers •Chlor-alkali •Other orgabic and inorganic chemicals

•Dyes and Pigments •leather chemicals •construction chemicals •Personal care ingredients •other speciality chemicals

Production share of major chemicals in FY-16 3.08%

Pharmaceuticals

Agrochemicals

Biotechnology

•Active pharmaceutical ingredients •Formulations

•Insecticides •Herbicides •Fungicides •Crop protection chemicals

•Bio-pharma •Bio-agri •Bio services •Bio industrial products

Growth outlook for the Indian Chemical Industry

1.90%

CAGR 17.4%

10.13% Alkali Chemicals Organic Chemicals Inorganic Chemicals

118

224

144

16.08% 68.82% 2013

2015

2017E

Growth outlook for the Indian Chemical Industry


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Chemical Exports of India (USD Million) 26.45

26.44

Chemical Imports of India (USD Million)

26.97

22.43 13.58

FY-13

FY-14

FY-15

FY-16

FY-17

FY-13

Chemical Exports of India (USD Million)

4.36%

Miscellaneous chemicals Dyes and Dyes stuff

11.07%

FY-16

FY-17

Shares in imports of chemicals FY-16 Organic

8.91%

Others

FY-15

Chemical Imports of India (USD Million)

Shares in exports of chemicals FY-16 Organic

FY-14

Others 41.53%

34.12%

Inorganic

Miscellaneous chemicals

4.00%

12.67%

10.39%

38.94%

Dyes and Dyes stuff 34.00% Inorganic

More than 70,000 commercial products such as petrochemicals & basic chemicals are covered under chemical sector. More than 16% of the world’s production of dyestuff and dye intermediates, particularly for reactive acid and direct dyes, is contributed by India. India is currently the world’s third largest consumer of polymers and producers of agrochemicals. The specialty chemical market is expected to reach USD 70 billion by 2020


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Investment Rationale: Strong leadership in specialty and performance chemicals: The Company has the advantage of producing Chemicals through agro route (green route) while the other manufacturers are manufacturing through Petroleum. The Company has diversified its activities from Mono Ethyl Glycols (MEG) and Ethylene Oxide (EO) derivatives to other specialty chemicals, Ethyl Alcohol (potable), Natural Gums and its derivatives, neutraceuticals and Herbal extractions and Industrial Gases. The Company is promoting Glycols as Bio/ Green MEG to potential customers interested in meeting their objective of using environment friendly chemicals made from natural renewable resources. The Company has converted this concept into a good business opportunity which will gradually enable full capacity utilization with better realization. Moreover, the niche markets of Bio-MEG in the packaged water, automobile, personal care and cosmetics are going to give the Company better margins. The company strong leadership position in specialty chemicals gives a sign of remarkable growth and healthy margins for future. Forays in new products: The Company aims to increase its business by developing new products and applications especially in areas of textile chemicals, oil field chemicals, paper chemicals, home care & personal care applications. The Company is making all possible efforts to diversify the business and exploring new markets and launching new products. In this line, the Company had launched its premium products under the brand name of “V2 O Vodka” in three flavors viz. Orange, Green Apple and Smooth in Vodka category and Soul mate in Whisky category. The Company has also extended the launch of Beach House Premium XXX Rum. Beach House Premium Rum for supply to Indian Defense forces through CSD has been approved Strong balance sheet with strong financial position: The Company registered total sales value of 1317.39 Crores in FY-16 as compared to 1162.63Crores in FY-15 in the Ethyl Alcohol (Potable) division With respect to Industrial Chemicals, company registered total sales value of 2143.38Crores in FY-16 as compared to 2043.81 in FY-15. In addition to this, company registered a sales of 148.61 crores in FY 17 compared to 70.17crores in FY 16 in Neutraceutical division. During the year the Gross Fixed Assets has increased to 1,881Crores in FY-16 from 1,811 Crores in FY- 15.The company strong financials holds a key point for its future growth in near term Export as a strong key driver for future:The Company has identified exports as a key future growth driver. Company has established itself as a major domestic specialty ethoxylates, and with the increased capacities, the scope for exports would be explored for higher growth. The major export markets are the South East Asia, Middle East and China as we have logistic advantage in these region. The company exports their chemical products to more than 40 countries worldwide and the thrust for exports would be to other regions in Europe, USA, and Japan & Latin America for promotion of Bio-MEG and Bio-EODs ATS Wealth Managers Pvt Ltd.

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Top 10 Shareholders Rank Name 1. General Insurance Corporation of India 2 Bervin Investment and Leasing Limited 3. AnirudhaBubna Trust

Latest Filling Date 31-03-2016

% OS 1.81%

Position(m) 5.63M

31-03-2016

0.72%

2.21M

31-03-2016

0.33%

1.04M

4. Spark Securities Private Limited 5. Noble International Pvt Ltd 6. MotilalOswal Securities Ltd 7. M Prasad and Co ltd

31-03-2016

0.32%

0.99M

31-03-2016 31-03-2016 31-03-2016

0.3% 0.28% 0.0.2%

0.9M 0.86M 0.07M

8. Maple VyapaarPvt Ltd

31-03-2016

0.18%

0.57M

9. SanjeevBubna (HUF) Sbubna 10. Anita JaideepSampat

31-03-2016 31-03-2016

0.18% 0.16%

0.55M 0.48M

Key Personnel

Designation & Experience

Mr. U.S.Bhartia

Chairman and Managing director

Share Holding Compare (%holding) Dec-16 March-17 Promoters 61.07% 61.07% FIIs 0% 0% Mutual 0.17% 0.21% Funds Insurance 1.81% 1.81% Companie s Other DIIs 0.08% 0.12% Non 36.8% 36.8% Institution al Investor

Change (%) 0.00% 0.0% 0.04% 0.00%

0.04% +0.00%

Auditors

His Directorships includes Kashipur Holdings Limited, IGL Finance Ltd., Shakumbari Sugar & Allied Ind. Ltd., Polylink Polymers Ltd., and Hindustan Wires Limited. He is an Industrialist and has overall 32 years of experience in managing scale Industrial Companies Mr. RakeshBhartia

Chief executive director Mr. Bhartia is by qualification, a Chartered Accountant, Cost Accountant and Company Secretary. He has worked earlier with various organizations including Bajaj Hindustan Ltd. as Chief Executive Officer, Rabo India Finance as Executive Director and Bank of America as Director.


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Key Ratio:

Key Ratios Debt/Equity Ratio Quick Ratio Current Ratio Turnover Ratio Asset Turnover ratio

FY-12 2.74

FY-13 3.75

FY-14 3.39

FY-15 2.30

FY-16 3.48

0.55 0.92

0.70 1.01

0.64 0.92

0.59 0.80

0.63 0.91

112.4 8 7.23

87.46

77.31

80.98

4.57

5.40

89.91 5.27

EBIDTM (%) EBITM (%) ROCE (%)

8.33 6.04 -2.71

7.04 3.87 -7.18

8.26 5.38 -9.31

11.40 8.93 8.21

13.14 10.13 8.25

RONW (%)

-7.99

-13.47

23.64

19.22

23.52

Payout (%)

0.00

0.00

-2.58

15.36

7.99

0.62

0.55

0.58

0.63

0.72

6.91 0.11

10.04 0.10

7.76 0.10

4.52 0.12

5.45 0.14

Inventory

4.16

Debtors Interest Cover Ratio

Sales/Assets (X) Price/Book Value(P/BV) EV/EBITDA Market Cap/ Sales EBITDA GROWTH TREND 15% 10%

336.16 8%

379.9 7.0%

400 221.05 8%

5%

166.17

188.24

11.4%

13.14%

0%

200 0

EBITDA


MARGIN

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Consolidated Income Statement 2012

2013

2014

2015

2016

2017 E

2018 E

3,063.28 384.09

3,928.91 528.38

3,526.54 571.4

3,113.90 571.74

3,242.23 952.39

3375.85 719.487

3514.97 702.995

2,679.19 27.94 2,707.13 7.18 2,714.31

3,400.53 22.04 3,422.57 10.64 3,433.21

2,955.14 21.43 2,976.57 19.32 2,995.89

2,542.16 37.34 2,579.50 42.27 2,621.77

2,289.84 35.93 2,325.77 6.77 2,332.54

2,656.36 33.3206 2,689.68 23.1297 2,712.81

2,811.98 40.2329 2,852.21 26.5183 2,878.73

1,174.52 484.75 30.9

1,728.23 561.73 -27.36

1,558.61 510.31 10.32

1,386.48 329.34 43.78

1,239.24 266.19 -38.52

1437.6 370.549 -34.5327

1521.82 392.257 -33.7438

611.66 76.32 2,378.15 336.16 85.32

701.59 89.12 3,053.31 379.90 90.18

608.83 86.77 2,774.84 221.05 90.61

603.86 92.14 2,455.60 166.17 88.78

589.65 87.74 2,144.30 188.24 57.56

620.765 85.0036 2,479.38 233.43 54.3295

683.063 84.3594 2,647.75 230.98 51.2208

250.84 134.48 116.36 3.34 119.70

289.72 150.09 139.63 0 139.63

130.44 150.34 -19.90 -191.73 -211.63

77.39 163.39 -86.00 -57.96 -143.96

130.68 138.03 -7.35 -60.07 -67.42

179.10 29.9005 149.20 0 149.20

179.76 15.9908 163.77 0 163.77

52.29 67.41

44.09 95.54

-50.27 -161.36

-55.32 -88.64

-18.3 -49.12

55.2038 94.00

60.5937 103.17

24 24

31 31

-52 -52

-29 -29

-16 -16

30 30

33 33

Income Revenue From Operations [Gross] Less: Excise/Sevice Tax/Other Levies Revenue From Operations [Net] Other Operating Revenues Total Operating Revenues Other Income Total Revenue EXPENSES Cost Of Materials Consumed Purchase Of Stock-In Trade Changes In Inventories Of FG,WIP And Stock-In Trade Other Expenses Employee Benefit Expenses Total Expenses EBITDA Depreciation And Amortisation Expenses EBIT Finance Costs EBT Exceptional Items Profit/Loss Before Tax Tax Expenses-Continued Operations Total Tax Expenses Consolidated Profit/Loss After MI And Associates OTHER ADDITIONAL INFORMATION EARNINGS PER SHARE Basic EPS (Rs.) Diluted EPS (Rs.)


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Consolidated BalanceSheet 2012

2013

2014

2015

2016

27.88 27.88 413.94 413.94 441.82

30.96 30.96 504.85 504.85 535.82

30.96 30.96 341.49 341.49 372.45

30.96 30.96 266.09 266.09 297.05

30.96 30.96 223.45 223.45 254.41

715.96 112.93

717.09 156.79

709.3 106.54

400.68 48.75

214.73 25.74

5.71 2.64 837.25

7.07 3.21 884.17

8.75 3.65 828.24

4.08 5.2 458.71

658.59 5.61 904.67

1,203.62 247.3 356.65 27.85 1,835.41 3,114.47

840.14 516.75 328.54 12.42 1,697.85 3,117.84

1,110.07 491.14 434.34 6.61 2,042.17 3,242.86

1,417.59 246.53 729.54 4.99 2,398.65 3,154.41

1,016.10 480.44 337.27 3.65 1,837.46 2,996.54

1,155.80 35.21 104.85 0

1,181.97 3.77 201.38 0.5

1,276.79 2.3 136.93 0.5

1,114.76 0.77 161.38 0.49

1,127.94 0.16 199.95 0.5

1,295.86 1.89 167.93

1,387.61 1.88 97.89

1,416.52 4.04 58.27

1,277.40 4 58.16

1,328.56 3.95 69.95

15.4 1,481.07

6.36 1,524.13

3.24 1,512.47

3.14 1,373.09

42.65 1,475.50

15.9 699.32 298.9 303.51

171.92 570.79 295.89 132.91

0.1 586.75 440.61 164.47

0 487.09 437.2 161.92

0 526.12 368.48 45.78

296.83

419.43

536.07

690.43

568.02

18.95 1,633.41 3,114.47

2.76 1,593.70 3,117.84

2.4 1,730.39 3,242.86

4.68 1,781.32 3,154.41

12.64 1,521.04 2,996.54

Equities and Liabilities SHAREHOLDER'S FUNDS Equity Share Capital Total Share Capital Reserves and Surplus Total Reserves and Surplus Total Shareholders Funds NON-CURRENT LIABILITIES Long Term Borrowings Deferred Tax Liabilities [Net] Other Long Term Liabilities Long Term Provisions Total Non-Current Liabilities CURRENT LIABILITIES Short Term Borrowings Trade Payables Other Current Liabilities Short Term Provisions Total Current Liabilities Total Capital And Liabilities ASSETS NON-CURRENT ASSETS Tangible Assets Intangible Assets Capital Work-In-Progress Intangible Assets Under Development Fixed Assets Non-Current Investments Long Term Loans And Advances Other Non-Current Assets Total Non-Current Assets CURRENT ASSETS Current Investments Inventories Trade Receivables Cash And Cash Equivalents Short Term Loans And Advances OtherCurrentAssets Total Current Assets Total Assets


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Stock Performance Chart:

Megha Mohnot [email protected] Equity Research Analyst

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