Hello Sir,

Hope you are doing well.

As they say, it takes a prepared mind to capitalize on the opportunities and we therefore keep searching for new Investment opportunities for our Premium Members.

Recently, Bharat Rasayan came to our notice. The stock has done extremely over the last 10 years and has created huge wealth for its shareholders by compounding at 50% +.

The numbers looked decent and we decided to dig deeper. Below, we have shared notes from the Dec'21 and May'22 CARE credit rating reports of the company.

Hope you find the details useful in your search of investment opportunities.

 

We have been running stock recommendation services since 2011. For the sake of transparency (good, bad, everything), we have put up the entire list of recommendations (as latest as Sep'22) for everyone to see @ - Click HERE

 

Bharat Rasayan (BRL) - Notes from CARE credit rating reports

  • Basic business details:
    • BRL is one of the leading manufacturers of technical-grade pesticides in India
    • BRL is majorly in the manufacturing of technical. It also manufactures intermediates, which is the raw material for manufacturing technical grades
    • BRL was incorporated in May 1989 by its current Chairman and Managing Director, SN Gupta. BRL is the flagship company of the Bharat group, which also comprises BR Agrotech Ltd (BRAL)
  • Capacity:
    • BRL commenced its operations by setting up a manufacturing plant with an installed capacity of 5,000 MTPA at Mokhra, Haryana, in 1989 and later increased its production capacity in 2012 by setting up a plant with an installed capacity of 12,000 MTPA at Dahej, Gujarat
  • Product portfolio:
    • BRL product portfolio comprises of wide range of pesticides including insecticides, fungicides, herbicides, weedicides, intermediates and plant growth regulator to cater to all the pest problems of major crops grown in India including paddy, cotton, soybean, sugarcane, wheat, groundnut, maize, cumin, all vegetables and horticulture crops including their formulations & intermediates
    • BRL has a market leadership in many technical products including Lambda Cyhalothrin Technical, Metaphenoxy Benzaldehyde, Metribuzine Technical, Thiamethoxam (Insecticides) and Fipronil (Insecticides) among others for which BRL is a preferred supplier in the international markets
  • Exports:
    • BRL has around 107 international registrations and has been exporting its products (technical grade, intermediates and formulations) to more than 60 countries across the globe and is a preferred supplier for several MNCs for their global demand of several molecules
    • Domestic sales account for around 63.23% of total sales of BRL in FY 21 (51.52% in FY20) and 60.40% in H1 FY 22 (H1 FY 21: 60.64%)
    • BRL has a large institutional customer base in the domestic market as well as in the international market with long standing relationship and low client concentration risk. In the international market, the group has strong presence in East Asia, South America, Europe and Middle East
    • Few large customers like Syngenta and Sumitomo contribute to both the domestic and export pie of BRL
  • Product Concentration:
    • There is a product concentration risk as the top 10 products of BRL accounts for around ~70% of total sales of BRL in FY 21 (PY: 71%) and around 62% of total sales of BRL in H1 FY 22
  • Seasonality:
    • Around 60% sales for the whole year is done on the first half of the year for the BRL and most of the sales are done on a credit of around 90 days-120 days to its customers
  • Foreign Currency exchange:
    • BRL is exposed to foreign currency fluctuation risk as the total export sales constituted 37% of total sales of the company in FY 21.
    • BRL is also importing raw materials for manufacturing of technical grade pesticides. The mix of Domestic & imported raw material is 45:55 and 70% of the imported raw material is from China (the mix has reduced from 80% from China in FY 18 to 70% in FY 20 & FY 21)
  • Fire incident:
    • BRL has intimated about the occurrence of a fire accident in one of its four blocks at its Dahej plant (Bharuch district, Gujarat; 12,000 MTPA) on May 17, 2022
    • The estimated loss of production or the financial impact is, at present, not shared by the management as the process of ascertaining the same is underway. However, the plant and machinery, including the inventory and production loss, are completely insured

 

Recently, we released our new stock recommendation for our Premium Members. It's a leading Pharmaceutical company with global leadership in its product segment, net debt free and available at very reasonable valuations. Can read about the company HERE

 

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Disclaimer: This is not a recommendation to buy/sell Bharat Rasayan. These notes are as announced by the companies on exchanges and only for the purpose of information and education.

 

Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/

 

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Name: Ekansh Mittal     Email Id: [email protected]    Ph: +91 727 5050062

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Disclaimer: http://www.katalystwealth.com (here in referred to as Katalyst Wealth) is the domain owned by Ekansh Mittal. Mr. Ekansh Mittal is the sole proprietor of Mittal Consulting and offers independent equity research services to investors on subscription basis. SEBI (Research Analyst) Regulations 2014, Registration No. INH100001690

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