NAME :- GULSHAN POLY
CMP :- 235
BUYING RANGE :- 230 – 240
TARGET :- 500+
TIME FRAME :- 6-9 MONTHS
CONVICTION :- EXTREAMELY HIGH
DOWNSIDE :- MAXIMUM 10% FROM CMP (WORST CASE)
ALLOCATION :- IT IS A HIGH ALLOCATION STOCK ONE SHOULD READ THE THESIS RISK REWARD AND BUILD YOUR OWN CONVICTION.
STOCK HAS CORRECTED FROM HIGH OF 425 WHICH WAS MADE IN FEB 2022 AND HAS BOUNCED 10% FROM RECENT LOWS. COMPANY HAD ALSO DONE A QIP AT 325 LEVELS IN MARCH 2022 WHERE IN VERY
GOOD MUTUAL FUND HAD PARTICIPATED.
WHY GULSHAN POLY ?
Gulpoly is doing a major capex of Rs 600 crore and expanding its existing capacity which are all running at 100% utilisation. Major part of the capex coming online from current month and will reflect in Q1fy24
numbers.
LET US NOW LOOK AT THE BUSINESS OF THE COMPANY :-
The group was established in 1981 and Gulshan has completed more than 40 years in the industry.Gulpoly is India’s leading manufacturers of specialty-based chemicals as well as manufacturers ofethanol and biofuel with a global presence in 35 countries across various continents.Gulpoly started journey as Gulshan Sugar and Chemicals with the primary business of manufacturing calcium carbonate and gradually expanded into a multi-product manufacturing company engaged in the manufacturing of ethanol. Specialty Chemicals like Sorbitol, Starch, Starch derivatives, and various grades of calcium carbonate and on-site PCC plants helped Gulpoly cross the milestone of 1,000 crore revenue in FY22 and company is likely to cross Rs 2500 crore revenue by end of FY24 driven by a big expansion program.
LET US LOOK WHERE THE NEW CAPACITY ARE COMING UP :-
Gulpoly operates in three segment First is the grain processing segment, second is the bio fuel or distillery segment and third is the mineral processing segment. Grain processing segment :- This segment mainly comprises of products such as sorbitol, maize, starch, liquid glucose, fructose syrup and other starch derivatives like Malto Dextrine, Dextrose Monohydrate
and agro based animal feed. Currently companies capacities are based across two locations one is in Muzaffarnagar Uttar Pradesh and others being in Gujarat in Bharuch. In Gujarat company is currently
manufacturing sorbitol which has a capacity of 72,000 metric tons per annum and at Muzaffarnagar company is producing maize starch at a capacity of 70,000 metric ton per annum. Company is also producing fructose syrup which has a capacity of about 36,000 metric ton per annum. So all put together
gulpolys combined capacities and the grain processing segment is about 150,000 metric ton per annum which company is expanding by about 20% that is from 1,50,000 to 1,80,000 ton which will come online by April 2023 . At end of March all products in all our facilities are currently running at 100% capacity utilization. Company has a very strong customer base in this segment. For sorbitol gulpoly supply to mostly FMCG it goes in the oral care industry, Lever, Dabur, Asian Paint, Patajali. company also export to more than 35 countries.
Starch derivatives :- it is mainly used with semi craft paper industry and with a whole robust demand in the e-commerce segment and rise in the corrugated demand for packing and corrugated boxes. Currently companies plant is at 100% capacity utilization and company is able to sell our entire products with the 100 kilometers of thier facility being in the paper belt of Muzaffarnagar which is surrounded by paper mill.
Fructose Syrup :- It is also a sweetener it is currently being used in the beverage segment and gulpoly is one of the largest in the segment in the country.
Ethanol & distillery segment: Currently Gulpoly has a 60 KLPD grain-based ethanol plant as well as distillery in MadhyaPradesh Chhindwara. Currently distillery is running at a 110% capacity utilization this was set up in 2020 and by the expansion looking at the EBPP program of the government and having faith in the whole blending program of petroleum with ethanol. At present company is expanding capacity from 60KLPD to 500 KLPD and this plant should be operational by April 2023.
Gulpoly is also setting up another plant for grain-based ethanol in Assam with a capacity of 250 KLPD. This is going to be in Assam in Goalpara. This should be ready by FY25.
Third major segment is mineral processing segment :- in this segment company has various grades of calcium carbonate and onsite PPC plant. This is a small segment, but with good contribution. So, various
grades of calcium carbonate like precipitated calcium carbonate, brown calcium carbonate this mainly
goes in the paper industry and also in the PBC industry. At present all the companies plant are running at 100% utlisation and company is spending 600 crore in
capex vs current fixed asset of 200 crore. In last few quarters company was facing hit in its margins are both its raw material that is coal and maize had seen unprecedented increase due to Russia Ukraine war. Now as the things are normalising and price returning to normal levels we will se good recovery in margins from Q4FY23 itself. And from FY24 new capex is coming online which will more then double its topline and PAT. We @DIALWEALTH expect company to deliver topline of 2500-2600 crore and pat of more then 210-215 core vs current mcap of 1150 crore which means stock is just trading at 5 times current year earnings which is extremely attractive. We @Dialwealth feel that stock can easily double in next 6 -9 month and has very limited downside.
IT IS SAFE TO ASSUME THAT ME AND MY CLINETS HAVE LONG POSITION IN THE STOCK DISCUSSED AND VIEWS ARE BIASED.
I AM NOT A SEBI REGISTERED RESEARCH ANALYST
CONSULT YOUR FINANCIAL ADVISOR BEFORE INVESTING
Those who wish to be a part of our whatsapp broadcast list by paying a one time fee can whatsapp us your name to 9930441584.
You must be logged in to post a comment.