prices can rise 10% from here too.
EBITDA margin can’t be same as last year.
thats very low guidance.
Posts in category Value Pickr
Godawari Power – Any Trackers? (23-05-2024)
I G Petrochemicals Ltd (23-05-2024)
Bad results… i think this will be the steady state profits per quarter… valuations are quite high.
Godawari Power – Any Trackers? (23-05-2024)
Q4 EBITDA margin was 22%. Prices are up from that base line.
Sponge Iron has still not recovered.
Its prudent to be conservative and build your investment case, isnt it?
KDDL (Ethos Watches) – Scalable business model at an inflection point? (23-05-2024)
For the last few days promoters are selling their stake in Ethos, in KDDL concall they said their goal was to reward their shareholders through dividend and they do plan to keep at least majority shareholding in ethos, since there was no cash requirement as such in KDDL does it mean that they feel Ethos is kind of overvalued currently?
Godawari Power – Any Trackers? (23-05-2024)
Oh come on.
The EBITDA margin for FY 24 was 24%.
Prices of all products they sell is 10% up.
Now, calculate EBITDA margin again.
Cost will not increase much.
It is very simple maths. This company always tells low numbers.
BCL Industries – Ethanol Pick (Capacity 3.5x in Next 2 Yrs) (23-05-2024)
After named in MAHADEV batting APP scam/ DMCC etc., I dig deeper to find history of pramoter and found this FIR for their KISSAN FAT Limited, Rajinder Mittal(DIN-00033082) pramoter of BCL. Though NPA case settled but what I find is Report of Forensic Auditor. Forensic Auditor observed that the borrower company had diverted the funds to sister concern viz. M/s. BCL (Bhatinda Chemical Limited) and M/s. Ganpati Townships Limited. The firm had prepared two sets of audited Financial Statement for the year ended 2014 i.e. one copy for bank and other for ROC/ Income Tax/ Statutory authorities.
BCL FRAUD_compressed.pdf (5.1 MB)
Godawari Power – Any Trackers? (23-05-2024)
Q4 Concall highlights
Products | FY’24 Production | Fy’25 Guidance | % Change |
---|---|---|---|
Iron Ore | 2.3 | 3 | 30% |
Pellets | 2.6 | 2.44 | -6% |
Sponge Iron | 0.59 | 0.594 | 1% |
Billets | 0.475 | 0.5 | 5% |
Ferro Alloys | 0.08 | 0.08 | 0% |
Rolled Products | 0.2 | 0.325 | 63% |
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Shareholder Payout
Buy Back worth 200crs
Dividend of 125crs -
Total Capex in FY’25 700crs & FY’26 1000crs:
Power 63crs (this will help reduce the power cost)
Beneficiation 176crs (this will save transportation cost for the company)
Pellets 568crs (should be done by Q1’26)
Steel Plant 6000crs (this should start after getting Environmental clearance (EC) will happen over 3 years time) -
Product prices have gone up 10% since Holi on an average. Pellet Prices have gone up from 10.5k/t to 11.3k/t for industrial grade pellets & higher grade is selling at 12.5k/t. Company presently has a 50:50 product split.
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Post the capex in mines & pellets the product mix will change in favour of high grade pellets (75:25). Company expects mining output to increase from Q4’25. Higher grade pellets are at a prem of Rs 1000-1500/T to Industrial grade pellets.
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Cost price advantage due to older royalty is Rs 3400/tonne.
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Demand for pellets will remain strong due to DRI capacity coming on stream in a few months time.
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Ferro Prices have gone up and are likely to sustain at higher levels due to disruption in Australia’s South32’s mining operation. It will take 18 months for the supply to flow back to the market.
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Currently only one mine is operational and all the capex will is happening at that mine. The company has stopped production at the second mine due to inferior output. Company is planning to set up a beneficiation plant at the second mine site. They have already started the EC process. The production from the second mine should start in FY’28.
My Two bits:
- For GPIL iron prices are the most important factor that we should track. FY’26 will be a great year for the company as it will be able to double its pellet plant.
- Biggest advantage that this company has is the mines under the old scheme. This leads to a cost advantage of ~Rs 3000/T and if the price of Iron Ore goes up the advantage will only increase.
- Company should post a EBITDA margin>25% (company has guided for 24-25%).
- Revenue for FY’25: 6000-6200crs & EBITDA ~1600crs.
- FY’26 should be a breakout year for the company.
- Capex can be easily funded through internal accruals.
- Company is looking to move up the value chain by setting up a HRC plant (Steel Plant) of 2MT.
- Mines auctioned under the new royalty regime will also start coming on stream in a couple of years time.
- Company is likely to keep rewarding its shareholders through BuyBacks & Dividends in the future despite higher capex.
Disc: Invested