Bhageria industries is engaged in business of manufacturing dyes and intermediates for various industries and sectors such as Pharma industry, Agriculture and also manufactures specialty chemicals, pigments, dyestuff.
Company generates 40% of its revenue from Hacid, which is a naphthalene based dye intermediary, Sulphonate Ester (16.59) which is a Vinyl Sulphone, Vinyl Sulphone (12.55%), Traded Goods(11.98%) Gamma Acid(8.5%) and others (6.17%).
Note: Bhageria Industries shares went under a stocks split in 26th October 2016. The face value of shares was changed from Rs.10 per share to Rs. 5 per share. All the per share data displayed from March 2017, have been adjusted to pre split levels for the purpose of ease of comparison.
The past financial performance and fundamental analysis of Bhageria Industries is as follows:
Company has posted good growth in its sales numbers especially in the recent past, From sales of Rs. 129 crores in 2013, Bhageria Industries posted sales of Rs. 344 crores in 2017. A growth of 21.6% CAGR.
Companys Net profits have also seen significant upmove, especially in the past 5 years, from sales of Rs. 1.2 crores in 2013, Bhageria Industries ?net profits went up to Rs. 43.53 crores in 2017. A huge jump of more than 100% CAGR. This has happened because company has recently turned around its business by introducing many new products in its portfolio.
Basic EPS is a measure of how much profit a company is making on per share basis. In other words, it’s a measure of how much money each share of the company will receive if all the profits earned during the year is distributed to its shareholders.
Bhageria Industries posted encouraging EPS figures in the past 5 years. From and EPS of Rs. 1.59 per share in 2013, to Rs. 27 per share, a CAGR growth of 76.19% per year.
Revenue from operations is a measure of how much revenue a company is generating from its core business. Revenue from operations does not include income from non operating activities such as sales of assets, sale of subsidiaries, income from investments made etc. Revenue from operations/share measures how much revenue a company is generating from its core business on per share basis.
Bhageria has posted good revenue per share numbers. Company had seen some decline in its earnings in 2018, but has recovered from it in 2017. The Revenue From Operations/Share of Bhageria Industries in 2013 was Rs. 162 per share, which went up to Rs. 432 per share in 2017, a CAGR growth of 21.67%.
Net Profit Margin:
Net Profit margin is the key ratio which is used to compare profitability of two or more companies working in the same sector. Net profit margin is a measure of how much percentage of total sales remains with the company as profit after all the expenses are paid.
Few years back, Bhageria Industries had a very low Net Profit Margin of less than 1%. The company has significantly improved its Net Profit MArgins in the past 5 years, from less than 1% in 2013 to 12.63% in 2017.
ROCE or Return on Capital Employed, is a measure of how efficiently the capital of a company is being used to generate profit. ROCE is expressed in percentage terms. A company with ROCE of 20% means out of every 100 rupees employed as capital, company is able to make a return of rupees 20.
Bhageria Industries had seen a significant growth in ROCE in the past 5 years, from 5.3% in 2013, Bhageria Industries ROCE has gone up to 30.77% in 2017. A CAGR growth of 42% per year.
Debt to Equity:
Debt to equity ratio tells us how much of the total financing of the company comes from creditors (those who lend money at an interest) and investors (those who invest in the shares of a company). Higher debt to equity ratios is an indication that majority of company is financed by loans and other debt (such as debentures and bonds)
In the past 5 years, Bhageria Industries has also accumulated some debt on its books. Although, being in a industrial products based business, that has lot of tangible assets, it’s not very surprising or uncommon for companies to acquire debt. However, the debt should minimized because if company starts facing losses or other business issues that hampers its earnings, debt can make things worse. Investors willing to invest in Bhageria Industries, must keep watch on the debt levels of the company.
Bhageria Industries has accumulated debt on its books in the past 5 years, from 0.39 in 2013, the Debt to Equity Ratio of the company is at 1.3 in 2017.
Dividend per share is the amount of dividends a shareholder receives on per share basis. Dividend per share includes all the interim dividends paid during the financial year as well as the final dividend paid at the end of the financial year. Dividend per share is calculated by dividing total dividends paid during the year from total number of shares outstanding.
Bhageria Industries has been a good dividend payer delivering consistently rising dividend per share for the past 5 years. From dividend per share of Rs. 0.8 per share in 2013, company has paid dividend of Rs. 10 per share in 2017
Company is entering in food processing business which is a high profit margin industry, company will manufacture special chemicals used in food processing and other businesses.
Bhageria Industries is in the business of chemical processing which requires huge power consumption. To reduce its dependence on power grid, which is unreliable and expensive, company is setting up its own solar power plant which will reduce its operating costs, improving its profit margins.
SWOT analysis of Bhageria Industries:
Company has a diversified portfolio of products to offer which is used in various applications in different sectors. Such diversification helps company in de-risking its business as it is not dependent on a single sector or industry for its revenue.
Though Bhageria Industries is doing good in its business, company is dependent in the demand from the industries for its business. Slowdown in any of these industries will impact the sales and revenue of the company. Bhageria Industries has no market of its own and is totally dependent on the demand of companies in these sectors, making it vulnerable.
Company is looking at expansion opportunities outside India, which will provide better revenue realization and help company in expanding its business on a global scale. Currently exports from 25% of the companys revenue, any further opportunity in the international market will be beneficial for the company.
Bhageria Industries uses many chemicals as their raw material for its manufacturing. Any volatile change in the price of the raw material will severely impact the input costs and thus, the profit margin of the company.
Should I Invest In Bhageria Industries At Current Levels?
To find the right levels of investing in Bhageria Industries, it is important to analyze both technical and fundamental aspect of valuation of the company.
The stock has seen a 52 week high of Rs. 406 per share on 7th Feb 2017, and has seen a 52 week low of Rs. 228 on 28 August 2017. The stock has seen huge volatility in the recent past mainly due to steep changes in companys quarterly net profit numbers. The reason for high volatility is due to changes input costs, which has a huge impact on the profit margins of the company.
If we look at the P/E ratio of Bhageria Industries and compare it with the industry average, Bhageria has still got some upside potential. While Average P/E of the Industry is at 21.45, Bhageria Industries is trading at a P/E of 15.11, much lower than the industry P/E
Note: The business of Bhageria Industries is sensitive to the price of raw material, any volatility in the price of the raw material will influence the profit margins of the company. Because of this, the stock may see huge volatility in price. Investors looking to invest in Bhageria industries must have high risk appetite and willingness to stay invested even in such environment. The company has strong fundamentals, and is consistently making profits for the past many years. If one is willing to invest for the long term, Bhageria Industries is a good investment option but beware of high volatility in the stock price.