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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

Investment Rationale

* 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.

* Economy of scale to Pave Way for ROE/ROCE of 15%/25% by FY25E: The company has a operating leverage between 1.5-2.5(x). As its sales improved from Rs 365 Cr in FY19 to Rs 839 Cr in FY22, the operating leverage has boosted its ROE/ROCE from 8%/14% in to 11%/18% I FY22. further the estimated revenue CAGR of 27% during FY23E-25E and induction of debt (which in turn to raise equity multiplier) aids boost in ROE and ROCE of Borosil. Hence the incremental performance of the company is set to strengthen its returns profile.

* Capital expenditures of Rs 480 Cr. to continue on Expansion: 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.

* Outlook and Valuations: We estimate a 27% CAGR in Topline over FY22-25E, which implies a forward PE (x) of 20.9 for FY 25E earnings. We value it with a earnings multiple of 25.5x to FY25 earnings estimate which results per share value of Rs 464. We recommend BUY on BOROLTD at CMP of Rs. 360 with Target price of Rs. 464 (29%).

Observation

* BOROSIL, post the correction from December 2021 now have got into Higher High, Higher Low formation.

* The Prices have now retested the Neckline of the inverse Head & Shoulder pattern, the stock had witnessed a breakout in the mid Week of September 2022. This already had indicated beginning of the trend to the upside.

* The Neckline of the above pattern is in sync with the 50% Fibonacci retracement level from 20th June 2022 (239 level) to 17th October 2022 (463.25)

* Going ahead we expect the prices to go higher till the level of 500

* The stoploss for the setup will be 325.

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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

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://web.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