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Recently we came across Transpek Industry which is one of the largest players in Acid Chlorides and services the requirements of customers from a diverse range of industries including Textiles, Pharmaceuticals, Agrochemicals, Advanced Polymers, etc.
The numbers of the company looked interesting with moderate growth, no equity dilution, low debt, etc. and we therefore decided to dig deeper.
Below, we have shared notes from the Q1 FY 23 con-call transcript of the company:
Before that, few days back, we released our New Stock Recommendation for Alpha and Alpha + Members
It's a 1000 crore market cap stock, one of the largest players in its segment, has great operating performance track record, expanding aggressively and available at only ~10 times pre-tax earnings
To know more about the company Click HERE
Transpek Industry - Notes from Q1 FY 23 con-call transcript
- General Points
- Our business performance has been steady over the last few quarters led by healthy demand for our key products
- Demand for acid and alkyl chlorides has remained strong primarily due to growing importance of chloride as it is a crucial component in a variety of end markets such as pharmaceuticals, polymers and other industries
- Our capacity utilization for Q1 FY2023 is nearly 90% to 92%
- Capacity and capacity expansion
- We have a manufacturing facility at Ekalbara near Vadodara in Gujarat with a complex of over 100 acres out of which around 55% is open area in green belt
- The entire production capacity, which includes captive consumption of some of the products, is about 66,000 metric tonnes per annum
- Our application for an increase in production quantity has been granted primary approval recently. This application that we have made is 450 metric ton per month of alkyl and acid chloride
- Even though we have got 450 metric ton approval, when we have final approval and if we take a look at conditions we may not be able to actually increase capacity by more than 200 to 250 metric tons
- We have also taken up capex of about Rs 35 Crores for replacement for an old plant for one existing product. The new plant will add capacity to the tune of 70% of the current plant capacity
- Product development and diversification
- We are working on couple of areas to mitigate risk on concentration of clients and product profile in addition to doing things like new products and all that, so we have added few acid chlorides to our product portfolio and we will continue to add a few more on a regular basis
- We identified some products in the non-chlorination category as well, some of these are in still early stages and we will get more clarity in the coming period
- Raw material imports
- Largely the import happens from three areas - one is China, China of course not very significant but we do import from China, but many of our raw materials also come from Europe and some of the raw materials come from Korea
- Peak revenue possibility on current capacity
- We can consider our capacity utilization at a mix of products and normalized pricing and all that then about 750 to 800 Crores
- Growth expectation
- We have added 4-5 products and one of the product is catching up some volumes. The potential from each can be around 10 to 20 crores per annum
- Secondly the expansion or rather not expansion but the replacement of the old plant with expanded capacity. It can add another Rs 20 crore because it is only one product where we are expanding this capacity
- Third, assuming that we are able to add 250 metric ton per month and then considering product mix of different products then you can safely assume that another 50 to 60 crores worth of turnover can be added to the current level
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Disclaimer: This is not a recommendation to buy/sell Transpek Industry. These notes are as announced by the companies on exchanges and only for the purpose of information and education.
SEBI Research Analyst Registration No. INH100001690
Research Analyst Details
Name: Ekansh Mittal Email Id: [email protected] Ph: +91 727 5050062
Details of Associate: Not Applicable
Analyst Certification: The Analyst certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.
The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision
This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Ekansh Mittal/Mittal Consulting/Katalyst Wealth is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Ekansh Mittal or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Neither Ekansh Mittal, nor its employees, agents nor representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. Ekansh Mittal/Mittal Consulting or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement.
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