Monday, December 20, 2010

Borosil Glass Works Ltd: Bake & Serve your portfolio ! !

Borosil Glass works Ltd is the market leader in microwavable kitchenware and laboratory glassware.
Products:
Scientificware: Laboratory glassware, Explosion proof glassware, Liquid handling systems
Key end users are Pharma research companies, college labs,R&D labs.
Consumerware: microwavable  and flameproof kitchenware,glass tumblers,lantern chimneys, solar thermal systems.
The brands strength can be gauged from the fact that  in the kitchenware segment in India, the word‘Borosil’ is generic with microwavable glassware
Growth prospects :
Microwave market in India:
-          Around 15 lakhs / year currently and growing at 20% plus
-          Fastest growing category amongst consumer durables
-          Sales grew 85% yoy in Nov 2010
-          Key growth factors : increasing acceptance of microwaves as a cooking device rather than only a reheating tool , microwave recipe books, increased perception as a convenience device rather than a luxury device
Borosil ‘s consumerware product range of microwavable kitchenware will increasingly be a big beneficiary of the growth in microwave market
Financials:
Equity : 3.96 cr
Debt : 0.62 cr
Investments : 688 cr (including about 20 cr investment in Gujarat borosil)
Investments in books include 648 cr nett of tax from property sale. Tax of about 162 cr has been paid and the balance i assume must have been paid to Ambit and also Khaitan & Co who were the financial and legal advisors to the 18 acre Marol plot sale which fetched the company 830 cr.
For the 6-months ended sept 2010, Borosil's 2 key segments have fared as follows:
Consumerware :
Sales: 18.52 cr
Profit: 5.35 cr
Scientificware:
Sales: 35.27 cr
Profit: 6.79 cr
From the above it is clear that Consumerware margins are very high and reflect the strength of the Borosil brand.
Concerns:
The company has not indicated when it will commence production at its 110 acre facility at Bharuch in Gujarat.
It is currently dependent  on  imports , third party manufacturing and stock in hand .
Valuation:
Borosil paid an interim dividend of Rs.25 per share.
At the current price of Rs.617 , Borosil is available at a market cap of Rs.245 cr.
The company is poised for tremendous growth in the consumerware segment and steady growth in the scientificware business. The key concern that remains is whether it will be able to service this demand .
Currently there is no clarity on whether the investments have been parked in Debt/Equity MF or capital gain bonds.  The value of the investments (realized from property sale) is more than 2.5 times its current market cap.
Considering the growth ahead and investments on books, the stock offers a comfortable cushion to sleep on at the current price.
At the time of writing this report, the author /his family have an investment interest in the stock mentioned above. Under no circumstance does the information in this report represent a recommendation to buy or sell the above-mentioned stock.  This report has been prepared and issued on the basis of publicly available information, internally developed data & other sources believed to be reliable. This is just a suggestion solely for information purposes and does not constitute a solicitation to any person to buy or sell a security. While the information contained therein has been obtained from sources believed to be reliable, no responsibility (or liability) is accepted for the accuracy of its contents. Readers using the information contained herein are solely responsible for their actions and are advised to satisfy themselves before making any investments.

1 comment:

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