IGI Logo

Summary

We Initiate Coverage on Borosil Ltd (hereafter ‘BOROL’) with a ‘BUY’ rating and price target of INR 463 based on 28(x) FY25 EPS. Company is one of the leading player in kitchenware, Accessories and Appliances segment along with operations into Scientific product manufacturing. It has successfully established the brand ‘Borosil’ over the years and now ready to reap benefits by leveraging it. Its ‘Larah’ brand has 25% market in opalware category and gaining market share. It earmarked capex making 2x capacity for Opalwares amid strong demand. It expects to achieve 18% EBITDA margin for the scientific division.

Company poised to deliver robust performance over FY23E-25E with 27% revenue growth, operating profitability to scale by 150 bps from 17% in FY22, this driving earnings growth of 31% and ROE / ROCE of 18.3%/ 25%.

Investment Rationale

Economy of scale to Pave Way for ROE/ROCE of 15%/25% by FY25E.

Best in Class No. of Offerings with Aggressive Marketing Tactics to Steer Topline

Borosil now has evolved in the complete ecosystem of kitchenware & appliances from just Glass brand earlier. the successful execution is visible in its growth. Its opalware brand ‘Larah’ operating at peak backed by clever and focused marketing methods used by company. Its products seeing robust traction and review on high traffic E-com sites, as it spends ~4.6% to 5.5% of revenue on marketing (exhibit 26). Company is quit nimble in identifying consumer preferences and introducing products inline with it to serve demand, this flexibility has enabled it to became market leader in No of Products verticals offering amongst Private and Publically listed space. (exhibit 27). This to provide diversification and multiple revenue growth drivers for Borosil Ltd.

Capital expenditures of Rs 480 Cr. To continue build on Capacities.

Company has earmarked a total Capex of Rs 480Cr for both CPD( Rs 310 Cr) and SPD ( Rs 170Cr). Its opalware capacity of 42 Tonnes per day (TPD) running at peak revenue, where company to double it to 84 TPD by Q3FY23. The borosilicate press ware facility to came up with 24 TPD capacity with Rs 115 cr outlay and expected to commissioned by Q4FY23. it incorporating a German technology for furnace to handle 40 TPD from existing 24TPD with a quick upgrade. For SPD division it outlays Rs 170 Cr for Klasspack, wherein capacity to increase to 700 vials from 500 vials now.

Change in Tax Rate to Elevate Profit Margins

Bosoril ltd’s existing tax rate slab of ~30% set to change towards 25% from FY23E. The change to save a big chunk of money going towards taxes and translate the same into shareholders equity now. The profitability margins to expand and to aid in healthier ration than earlier. We estimate it to report 11% PAT margin by 25E from the 10.2% in FY22. the expansion in earnings to drive higher EPS for Borosil.

COMPANY PROFILE

Borosil Limited is engaged in the business of manufacturing and trading of Scientific and Industrial Products (SIP) and Consumer Products (CP). SIP consist of laboratory glassware, instruments, disposable plastics, liquid handling systems and explosion proof lighting glassware. CP consist of microwavable and flameproof kitchenware, glass tumblers, tableware and dinnerware, Appliances and Storage products

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://geplcapital.com/term-disclaimer

SEBI Registration number is INH000000081.

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer