Anmol India – The Next Coal India?

Reading Time: 8 minutes

Overview

Anmol India Limited is a leading coal supplier of India and a listed entity on the BSE SME Platform. Established in 1998, Anmol India is a renowned name in the Coal import and supply industry.

anmol india

It is one of the very few renowned coal importing and trading companies.

Journey of Anmol India

Back in 1998 when the company was started, the founding management had a vision of making available the under-utilized Coal resources of Eastern India to the Brick Kiln Industry of Northern India.

It was the outcome of Mr. Vijay Kumar Goyal who saw the brick kiln Dust in Punjab from close quarters and saw an opportunity.

Basically, Anmol India is a coal trading company whose object is to fulfill the fuel demand of goods manufacturing sectors of the country.

Mr. Vijay Kumar has followed one formula for success to learn and grow steadily by forming fruitful alliances. Over the years the company has shown exponential growth.

Once a domestic coal trade, the company today is known for its bulky import of coal from Overseas and steel grade coal procured from Coal India Limited.

The company specializes in, but not limited to, supplying High GCV coal, USA coal, Indonesian coal, Saudi Pet Coke, and USA Pet Coke.

All our products are quality tested by an independent body. Doing a multi-billion business every year, Anmol’s sales operations cover almost half of India.

Industry Analysis

  • Global coal trade reached its highest volume ever in 2019 at 1 445 Mt, a 0.8% increase from the previous year.
  • Trade accounted for 19% of global coal consumption in 2019.
  • Trade-in thermal coal (which includes lignite and some anthracite in this section) increased 1.1% while metallurgical (met) coal trade volumes were stable.
  • Thermal coal accounted for 76% of the global coal trade and met coal for the rest. The vast majority of coal traded in 2019, 92% (1 331 Mt), was seaborne trade.
  • Indonesia remained the world’s largest exporter of coal (by weight) with total exports of 455 Mt in 2019. Australia ranked second, at 395 Mt, although it remains at the top of the league table ranked by energy and economic values.
  • China was the largest importer of coal in 2019 at 308 Mt, followed by India at 249 Mt.

Source: iea.org

Strengths

  • Experienced and resourceful promoters: Anmol India is promoted by Mr. Vijay Kumar, Mr. Tilak Raj and Mr. Chakshu Goyal. Mr. Vijay Kumar has been doing business for more than 28 years.
  • Mr. Tilak Raj, also, has experience of around 20 years. The third director, Mr. Chakshu Goyal (son of Mr. Vijay Kumar) who is B.tech and has done MBA from ISB Hyderabad joined the company in the year 2018 and has been instrumental in making Anmol India a brand.
  • Long track record of operations and Good Clientele: Anmol India has been in the coal trading business since 1998.
  • The promoters of the company have a long industry experience. Anmol India has a clientele like Ultratech Cement, JSW Steel, etc. Anmol India has a strong base in Gujarat, Punjab, Haryana, Himachal Pradesh, Uttar Pradesh, Uttarakhand, Chandigarh etc.
  • Excellent Growth in operations: The revenue of Anmol India has increased from 190 Crores in FY16 to 550 Crores in FY20.
Also Read on FinMedium:  TATA Elxsi Stock Analysis

Weaknesses

  • Customer and supplier concentration risk: The Company got ~32% of its revenue from the top five customers while the top customer contributed ~10% in FY20.
  • While procuring the coal, the top five suppliers formed ~74% with the top supplier constituting ~33% of the procurement costs in FY20.
  • Low margin business of trading: Anmol India is mainly doing the business of trading of coal, therefore, the margins are low in the business. Plus entry barriers are low giving the trading nature of the business.

Management

Guwahati headquartered company is bestowed with efficient, hardworking and committed management, with very strong academic background, sound vision and vast experience of the business.

The company has moved ahead of leaps and bounds. It has regional offices or branches in Kapurthala and Ludhiana (Punjab), along with Gandhi Dham (Gujarat).

  • Mr. Vijay Kumar is the Chief Financial Officer and Managing Director of the company. He is the founder and promoter of the company. Having experience of almost three decades in the industry, Kumar is unparalleled business acumen.
  • Just a matriculation pass, he guides the company in growth strategies with his unmatched knowledge.

Mr Vijay Kumar has followed one formula for success: to learn and grow steadily by forming fruitful alliances.

From 1985 to 1998 he followed this mantra, gaining experience and market share by forming alliances with people who were already in this trade.

Another promoter of the company is Mr. Chakshu Goyal, who also chairs as the Executive Director at the age of less than 30.

He has done his MBA from prestigious B-school i.e. Indian School of Business, Hyderabad and is a Graduate in B.Tech. He has brought various structural changes to the company since his joining on board.

Also Read on FinMedium:  What does the recent broad-market rally in markets tell us? – Alphaniti

Industries Served

Once a domestic coal trader, the company today is known for its bulky imports of coal from overseas and steel-grade coal procured from Coal India.

Brick Klin Industry, Steel Rolling Mills, Textile Industry, Coke Manufacturing Industry, Pharmaceutical Industry, Paper Mills, and Dyes Industry etc.

Company has a sales network covering States like Gujarat, Punjab, Himachal Pradesh, Uttar Pradesh, Uttarakhand, Haryana and the Union Territory of Chandigarh.

They have diversified their product portfolio.  The company also serves coal traders.

New-age Strategy

Company’s Mobile application “Anmol Coal” is one of its kinds in the Coal industry and makes their prices easily accessible and transparent.

It increases company visibility, useful for price discovery and placing inquiries. It has brought in more than 2000 inquiries in the last one year.

The huge user base allows Anmol India to disseminate information on a wider scale and collect user information (with user consent) for marketing purposes.

The company is rapidly expanding its business to the southern states of the company, with ample intent.

Scales and Retail

Due to its vast reputation, the company is able to procure huge quantities of stock overseas at low margin money. Big quantity means big economies of scale which means more discounts for the customers.

Apart from traders and bulk users, about 25-30% of the sales are to small scale and retail consumers. As retail customers are relatively less price-sensitive, they hold the fort during bearish periods.

Stock Performance

The company was listed in February 2019 on the BSE SME platform. The price was fixed at Rs 33 per share, with a face value of Rs 10. With a lot of 4,000 equity shares, the minimum investment was Rs.1,32,000 in the company during its primary float.

As of April 5, 2021, the company has delivered a decent return of 133 per cent, surging to Rs 77. Investors have reaped a profit of Rs 1.76 lakh on the minimum threshold of 4,000 shares. The scrip has surged up to 90% in the last one month.

Stock Performance of Anmol India

Financial Performance

Sales Growth

The company which has sales of just Rs 150 crores in FY 2014-15, today i.e. In FY19 and FY20, it is garnering sales of close to Rs 550 crore, with compounded growth of 28% in the last five years.

EBITDA Growth

The company which has EBITDA of just Rs 2 crores in FY 2014-15, today i.e. In FY19 and FY20, it is garnering sales of close to Rs 4 crores, with compounded growth of 15% in the last five years.

Also Read on FinMedium:  INFO EDGE (INDIA) LIMITED – Leveraged Growth

PAT Growth

Net profit of the company has been around Rs 3 crore, 4 crore and 5 crore in FY18, FY19 and FY20 respectively.

The compounded annual profit growth has been 61% during the period under review.  It has generated an EPS of Rs 10.79, Rs 3.4, and Rs 4.35, respectively.

D/E

D/E is 1.27x. The debt is mainly a short term which is required to run the day-to-day operation of the business.

The company has a comfortable Interest Coverage Ratio and Current Ratio. Which indicates the company’s balance sheet is strong.

ROCE

Return on Capital Employed (ROCE) and Return of Equity (ROE) has constantly remained in higher teens in the terms of percentage points, (in the range of 16-20%).

As of September 2020, promoters hold 54.80% stake in the company, whereas the remaining 45.20% is with public shareholders. And P/E = 10x ( highly undervalued)

Peers Comparison

The company can be easily compared with Adani Enterprise, on a standalone basis, Adani Enterprise 63% of the income comes from the trading of coal, and the rest 37% comes from power trading.

Adani Enterprise as a consolidated entity has revenue of ~40k Crores and from trading of Coal the revenue is ~10k Crores.

The current market capitalization of Adani Enterprise as a consolidated entity is ~1 Lakh Crores. If we do the SOTP valuation, the Adani Enterprise as a standalone entity could be valued around ~25k Crores.

Adani Enterprise Valuation

Mcap/Sales = 25000/10000 = 2.5x

Anmol India Valuation

Whereas, Anmol India is currently having a Mcap of just ~50 Crores and with annual revenue of ~550 Crores, the Mcap/Sales = 0.09x.

(Website: Anmolcoal.com)

Also Read: Chambal Fertilizers – A Challenger to Coromandel International

About Author:

Mr. Umesh Paliwal, is a NISM-XV CERTIFIED, Research Analyst, and takes care of all the research work on the platform of UnlistedZone and InvestorZone.

He does analysis on IPOs, Buyback, and NCDs on the InvestorZone and business research on Private equity.

His educational qualification is Electronics engineer from prestigious Army College AIT Pune and doing his PGDM in Finance from NMIMS Institute.

Disclaimer- This article is only for the purpose of education and not to be construed as investment advice. Please consult your financial advisor before making any investment decision.

Cover Image: Times Now

Every Wednesday and Saturday, we send Info-Graphic and FinMedium Weekly Digest newsletters to our 25000+ Subscribers.

Join Them Now!


Guest Post

Guest Post

This post has been written by Guest and published on FinMedium with due consent.
Please Share Now :)