Transpek Industries – Flash Equity Research Report

thumbnail
Reading Time: 2 minutes

Transpek Industries – HISTORY/BUSINESS:

  • Established in 1965 at Vadodra and part of Excel Group of Companies which is a leader in core chemistry such as Sulphur, chlorine, Phosphorus and Bromine based Compounds.
  • Transpek has over 5 decades of experience in Sulphur and Chlorine chemistry.
  • Company has around 29 products on its website some have uses in more than one industries.
  • Industry Includes Pharmaceuticals, Agro-intermediate, Polymer, Dyes, Surfactant and Speciality.

Industry – No. of Products, % of Total Products

Pharmaceutical – 21, 72%

Agro-Intermediate – 9, 31%

Polymer – 7, 24%

Dyes – 6, 21%

Surfactants – 4, 14%

Speciality – 3, 10%

  • The pioneer manufacturer of Thionyl chloride(Used in Pharma. Agrochemicals, dyes etc) and Acid Chlorides in India.
  • Backward integrated and on-site production of key intermediates.
  • Most of the products are developed in house.
  • Recognized as Star Export House by GOI.
  • Pharma Sector is the talk of the town and Transpek Industries is just trading at 11.7 PE.

MANAGEMENT AND SHAREHOLDING

  • The promoter is well-reputed Shroff Family which is also a promoter of Excel Industries.
  • Chairman –Ashwin Shroff (Chairman and MD of Excel industries)
  • Was President of Indian Chemical Manufacturers association in 96-98.
  • Awarded as Lifetime Achievement award in the year 2012 by Indian Chemical Council Mumbai.
  • So vast and quality experience.
  • MD- Bimal V Mehta (CA)
  • Vast Experience of more than 30 years.
  • With Transpek for last 11 years started as Executive Director and in last 3 years as MD.
  • Transpek industry holds marginal 1.26% in Excel Industries and UPL ltd holds marginal 0.74% in Transpek Industry (in Promoter category)
  • Promoter Holding stands at 58.86% while FPI holding and Insurance companies holding together is at 4.1% (LIC Holding 2.03%)
Also Read on FinMedium:  Detailed Analysis: BIOCON Limited Research Report - India's Largest Biotech Company

FINANCIALS:

  • Revenue has grown in 3 years by 2 times from 284cr to 595cr from FY16 to FY19.
  • Although revenue has grown by 2 times. PAT grew by 3 times from 21cr to 66cr during the same time frame.

(FY18 to 1HFY20)

  • Debt has been reduced from 203cr in FY18 to 114cr as on 30 September 2019, DE ratio reduced from 0.82 to 0.36 and also Interest coverage ratio as on 31 Dec 2019 stands at 8.6 times which is comfortable.
  • During the time frame as above Fixed asset increased by 90cr in spite paying a debt that shows the company is generating healthy Free Cash Flow.
  • Free cash flow for FY19 and 1HFY20 was 80cr and 30cr which is around 57% and 71% of EBITDA which is very good.
  • Exports account for around 80% of total sales in FY19 while it was around 64% in FY 16 and hence we seen recognized as Star export house by GOI.
  • Company is trading at PE of 11.7 and Market cap/Sales just 1.6 with ROCE and ROE at 26% and 23% respectively.

CONCERNS

  • Heavy exposure from outside India and slowdown globally may affect for the current FY i.e. FY21 and earning may get affected.
  • In Current 9MFY20 YoY Revenue fall down by around 6% although profit rose by 37%. Slowing growth from global economies may be seen and Q4FY20 results are expected to be bad.
  • No of equity share are low i.e. just 55.9 lac shares of that with the public is only 23 lac that means liquidity may be a concern.
Please Share :)
Arman Nahar
C.A. who is a USA CFA L3 candidate | Cleared L1 & L2 | Doing independent equity research since 2016 | Screens stocks for investment | Makes in-depth valuation models | Crafts portfolios.
Back To Top