Q2/25 Result review.
Disclosure – Invested @ 3-4 year back, holding.
Best way to understand GIS is to go thru this short video
I have seen the links shared in the aditya birla capital thread.
Sharing it again for you.
The company has reported decent number for 2QFY25 with an EBIDTA of Rs 68 crores assisted by better realizations in both caustic soda and MDC prices have assisted realizations.
But the actual increase in prices in both of its key commodities have taken place from mid Sept so the benefits will show in Q3 numbers.
Currently Caustic Soda prices are ruling above Rs 40. The company produces ~750 TPD which means that Q3 EBIDTA should increase by Rs 22 crores on account of caustic soda price change (assuming Rs 3 per MT of net change conservatively).
Gujarat Fluorochemicals in its latest presentation has mentioned that it expects MDC prices to move up further. Will be great if some other member can share some light on these prices as this could result in greater earnings upsides.
The company could be in position to report a Quarterly EBIDTA of ~Rs 90 crore if prices sustain.
This is impressive as currently the caustic market at best is in mid cycle.
2 structural changes are at play.
1) Phased expansion of its Solar capacities that are resulting in savings in power cost. According to their FY24 annual report the company has installed 22.75 MW Solar Power Plant adjacent to the Factory. Plans are in anvil for further increase of the capacity by another 17.25 MW.
2) Addition of another 125 MT Chloromethanes capacity which will facilitate greater inhouse consumption of chlorine and drive further profit growth. Combined capacity in Chloromethanes will move upto 374 MT per day when the new capacity gets commissioned.
At the end of 1H FY25, the company has net debt of Rs 300 crore which gets us an EV of Rs 1500 crores based on CMP. At ~4x EV EBIDTA on an Annual Basis valuations look throw away. Strong cash flows from operations will keep reducing the EV multiple further.
Views welcome.
Disclosure: Invested and Biased
Found this comment in linked from Genesys Promoter.
Cannot agree more, since yday we are witnessing recovery in Small and Micro
Superb analysys. By the time I read this thread, Price went up by 63%
The improving product mix is definitely contributing already. Windmill castings, alloy wheels, hydraulic cylinders and air suspensions all have better margin in double digits. While the revenue growth will look flat until the CV cycle and export turns, the margins are definitely improving and will probably peak at over 9 % once the CV cycle also improves. With debt getting reduced (and re-rated in due course) from the 300 Cr+ Operating cash flow, it will slowly shift into a Rs.6000 Cr business with a 9% EBITDA margin and a 200 to 250 Cr PAT in 2-3 years. Not a bad investment at a 1700 Cr market cap esp when other Auto ancilliary companies with barely any growth and definitely no margin growth are already quoting at 30 to 50 times earnings (range depending on how many times the words “EV” and “Lithium” appears in their concalls)
Disc: invested and added this week
For a company with a size of 900 Cr topline, Zaggle’s 950 Crs Fund raise is a very big amount. It will be a key thing. They have hinted many times about their vision to enter the USA markets. I think they will try through an inorganic acquisition.
Different levels of recovery this week. Nifty < Mids < Smalls < Micros. Sort of emphasizes the point I have been making.
