ANDHRA PETRO-- dark horse?
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=2532
Printed Date: 21/Apr/2025 at 11:22pm
Topic: ANDHRA PETRO-- dark horse?
Posted By: hit2710
Subject: ANDHRA PETRO-- dark horse?
Date Posted: 23/Nov/2009 at 2:57pm
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ANDHRA PETRO The Andhra Petrochemicals Ltd. (APL) was promoted by The Andhra Pradesh Industrial Development Corporation (APIDC) and The Andhra Sugars Ltd. (ASL) in 1984 as joint sector Company. Subsequently the structure of the Company has changed into an assisted sector. APL was established with a licence capacity to produce 30,000 MTPA of Oxoalcohols at Visakhapatnam, PRODUCTS The company manufactures OXO-ALCOHOLS and has a market share of around 27% with balance demand met by imports . FINANCIALS EQUITY AROUND 85 CRORES DEBT AS ON MARCH09 14 CRORES MARKET CAP 110 CRORES YEAR MAR05 MAR06 MAR07 MAR08 MAR09 SEP09(6M) SALES 230 225 309 281 245 98 NP 11 2 36 36 16 0.81 The business was satisfactory until September, 2008 after which the global meltdown has affected it as well. After considerable impact during the quarter October-December, 2008 markets have recovered partly during the quarter January-March, 2009. The signs of Economic recovery is expected to further improve the prospects of Oxo-Alcohols business in future. EXPANSION The Optimisation and Modernisation of the existing facilities thereby increasing the installed capacity of the Plant to 73,000 MTPA was undertaken by the company and has been completed in Oct-Nov09 and the plant has been shut down temporarily to assimilate new capacities. The best thing about this company is the level of debt since almost five years, d/e ratio has come down from 0.6 to 0.08 in March 09. Even in the June and Sep quarters of 09, the interest payment has not risen significantly. Hence the expansion seems to be funded entirely through internal accruals. TECHNICALS The stock made a high of 42 in Jan08 and along with the market fell down and created a low of around 8 in march 09 and then rallied along with the market to register a high of 19.5 in June 09 and currently consolidating between 12 and 14. Cmp is around 12-13. THIS STOCK IS FOR THE HIGH RISK HIGH RETURN KIND OF INVESTOR BECAUSE IF THE EXPANDED CAPACITIES ARE USED TO MAXIMUM, THEN THE SALES AND PROFITABILITY OF THE COMPANY WILL WITNESS GOOD GROWTH AND STOCK PRICES COULD FOLLOW SUIT. ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Replies:
Posted By: excel_monkey
Date Posted: 23/Nov/2009 at 4:18pm
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hit2710
"Even in the June and Sep quarters of 09, the interest payment has not risen significantly. Hence the expansion seems to be funded entirely through internal accruals." though I don't know the financing terms of this expansion project In terms of generic project financing, one starts paying interest only when the project goes on stream |
Posted By: hit2710
Date Posted: 23/Nov/2009 at 5:53pm
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Here is the company's announcement regarding plant shutdown for integration of expanded capacity. Probably means there would be no production for two months.
"Andhra Petrochemicals Ltd has informed BSE that the Company has been implementing Modernisation - cum - Optimisation of its Oxo-Alcohols Plant, thereby enhancing the production capacity from the present 39,000 MTPA to 73,000 MTPA. Modernisation - cum - Optimisation of the Plant requires the shut-down of the existing Plant for integrating new facilities with the existing facilities. The Company this integration may take around two months during which period the mechanical completion of the Project shall be achieved, followed by commissioning of the Expansion Plant. In view of this, the Plant will be shut-down from November 11, 2009." Maybe a good time for punters to accumulate stock bcos not much expected in terms of next quarter financial results? ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: hit2710
Date Posted: 23/Nov/2009 at 10:57pm
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I would like to know net liquidation value of such a company. Can someone explain how this could be arrived at? Do we consider the net current assets and add the sum used for expansion? Any use for accumulated depreciation?
Vivek/Basantji/Gobind/Subu, anyone can help out? ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: hit2710
Date Posted: 10/Dec/2009 at 11:19am
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Andhra Petro is consolidating above its 200 dema at around 13.9. today it has broken out of a falling wedge formation and currently around 14.5.
On the charts, stock looks good for further upsides. ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: TCSer
Date Posted: 11/Dec/2009 at 6:01pm
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Andhra petrochemical was the first IPO I applied in 1991 fresh out of college. Got 300 shares for 10 rs & sold for 26 rs & thus began my fascinating stock market sojourn. But has this company ever broken the range of 20-30 rs.Its parent com andhra sugar has also been a similar underperformer. The owners are 3rd generation Kamma community & seems dont have the typical fire in the belly. |
Posted By: hit2710
Date Posted: 09/Jan/2010 at 6:56pm
In follow up to the above update, the stock has broken out of falling wedge pattern with good volumes, and last week gave a close at around 16 near the high for the week. The stock has consolidated above its 200 dema around 13.90 for many sessions and after that this upmove has happened and seems to be a good buy on declines if there are any near the 14-15 levels. Going forward the 14 levels should offer strong support. Chart pattern is of multibagger. If the fundamentals about the expansion benefits kicking in play out in next 6-12 months, this could be a stock to watch out for. ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: paashjaya
Date Posted: 11/Mar/2010 at 10:48am
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Hello Hit 2710,
I have gone through ur postings on andhra petro, thanks for giving overview of the company, i have few queries
- what will be the book value of andhra petro after expansion and modernisation.
- in your opinion what will be the EPS for FY11 & FY12.
- When should be right time to buy this script.
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Posted By: hit2710
Date Posted: 11/Mar/2010 at 11:07am
Hi Regarding book value after expansion etc I dont have any idea but could be close to current price of even higher than it. Regarding profits and eps of the company after expansion, it is anybody's guess because if full benefits of expansions accrue, you can take the best numbers of net profits in last five years (pre-expansion) and expect the company to surpass it. Basically for turnaround companies it is difficult to predict exact profits and such things. At current price markets expect nothing from this scrip and hence if it manages to report even eps of 4-5 per share, you can easily land up with a two bagger within no time. Presently the plant has been shut down to assimilate new capacitites and the announcement regarding resumption of operations has not been made. Based on this, march quarter results are expected to be poor. Regarding levels to get into this stock, one can do staggered purchase from 15 and below. Regards, Hitesh. ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: prabukarthik
Date Posted: 30/Mar/2010 at 8:08am
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Hi Hitesh Ji,
Thanks for posting about this company. Couple of questions: What is Oxoalcohols? Who are Andhra petro's customers? Any similiar listed player in this segment? Do we have any rationale behind this capacity expansion? Regards, Prabukarthik |
Posted By: hit2710
Date Posted: 30/Mar/2010 at 10:42am
Oxo alcohols are alcohols that are prepared by adding carbon monoxide (CO) and hydrogen (usually combined together as synthesis gas) to an olefin to obtain an aldehyde using the hydroformylation reaction and then hydrogenating the aldehyde to obtain the alcohol Oxo alcohols are used as solvents and are reacted with phthalic anhydride to form phthalates, which find use in commerce as vinyl plasticizers. The company has a market share of 27% in India in oxo alcohols. Expansion has been planned to derive economies of scale to compete with cheaper imports from other countries. Another thing the company is contemplating is the use of natural gas in place of Naptha as a feedstock which could reduce the costs. ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: hit2710
Date Posted: 28/Apr/2010 at 8:30pm
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http://www.bseindia.com/xml-data/corpfiling/announcement/Andhra_Petrochemicals_Ltd_280410_SAST.pdf - insider deal in andhra petro ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: stalin
Date Posted: 29/Apr/2010 at 2:16pm
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Hi Hitesh,
when andhra petro quarterly results will be out, when production will start any guess?
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Posted By: hit2710
Date Posted: 29/Apr/2010 at 2:33pm
There has been no announcement to that regard till date. I expect production to start soon or it might have already started. ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: hit2710
Date Posted: 03/May/2010 at 6:51pm
Announcement on bseindia.com. by the company. With reference to the earlier announcement dated November 10, 2009, Andhra Petrochemicals Ltd has now informed BSE that the Modernisation-cum-Optimisation of the Oxo alcohol Plant has been implemented with an investment of around Rs. 275 crores and the Expanded Plant with a capacity of 73,000 MT per annum has commenced commercial production from May 01, 2010. ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: subu76
Date Posted: 20/Jun/2010 at 3:42am
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Hitesh, any idea where did that 275 cr used up for expansion come from?
They did not seem to have much cash on their balance sheet. Also in the 2009 report they mentioned that they raised 5 cr only for their modenization from various banks.
Sounds like a good bet on a cyclical industry given that they can double production but i sure do want to know the source of this money first.
Also, it would be interesting to figure out the effect of the new deprecation schedule on the earnings.
However, i must say I think you'll make quick money on this one.....
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Posted By: hit2710
Date Posted: 20/Jun/2010 at 10:14am
Hi I did not do too much analysis here for fear of paralysis. Basically here charts suggested good upsides and I tried to find out why it could be so. And I found the reason in its expansion programme. But I did not delve too much into the financial aspect of it. And recently around 15-16, the promoters were buying shares from the markets like crazy and that reaffirmed my belief that something was cooking. About the finances for expansion etc, I dont have too much idea. ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: EquityInv
Date Posted: 20/Jun/2010 at 10:38am
Dhamaka started now! One observation that whenever you comment like this on any stocks, fireworks starts!! Recent examples are Hawkins,TTK and now this one.. Power of HNI/Subu 
B/w how much will you charge to post your comment on few of my picks  ?------------- One of the best rules anybody can learn about investing is to do nothing, absolutely nothing, unless there is something to do – James Rogers |
Posted By: subu76
Date Posted: 21/Jun/2010 at 9:15pm
| I wish you were right. |
Posted By: Shadofax
Date Posted: 12/Apr/2011 at 7:27pm
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Below are a few facts for the company. I dont think anything else is require to analyse this company (in terms of numbers).
- MCAP: 285 crores
- approx 73000 MTA capacity (vs 39000 MTA)
- Approximate NET fixed asset = 320 cr (45 cr + 275 cr)
- Approximate depreciation = 24 cr (6 per quarter)
- Equity: 161 cr
- Debt: approx 175 cr (guessing)
- Plant resumed from 1st May 2010
- Cash - Negligible
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- Concerns cheaper imports
- Positive - economies of scale ... but how big this can be?
- 2008 PAT margins = 11% (crude prices at peak in this financial year)
- Prices of crude have have a 1 month lagged effet on octanol and butano Crude => propylene / Naphtha => Octonal / Butanol
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It doesnt matter that this company is the only company in India to produce Octonal / Butanol ... Bocause one can import. And even their annual report seems to suggest that there is competition in terms of cheaper imports.
Currently the capacities are running at 100% utilisation.
Assuming the sales for FY12 @ 80Rs / Kg and 100% capacity utilisation
Sales = 73000* 1000 (ton to kg) * 80 (rs) = 584 crores
Assuming margin of 11% PAT = 64 crores
MCAP: 285 crores
But even after putting all these numbers ... I dont get how to value these kind of companies.
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Liquadation value = 320 crore (Fixed asset) - 175 crores (debt) = 145 crores.
Sorry for a unstructured post ... dint have time to structure it. I have no interest in the stock except for the evaluation purpose. I want to understand how to value these kind of companies.
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Posted By: subu76
Date Posted: 22/Jul/2012 at 10:04pm
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The stock hasn't really budged from it's past range. Perhaps that goes to show market always factored in the situation after the turnaround. I guess interest payment has compensated for the additional revenues?
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