RM availability & capex mode worry us…
We visited JBF Industries’ (JBF) Sarigam and Silvassa plants. At the
Sarigam facility, the company manufactures PET chips (both textile and
bottle grade) and manufactures polyester and specialty yarn at the
Silvassa plant. The industry is facing purified terephthalic acid (PTA)
availability issues as all suppliers have taken an unplanned shutdown of
their plant for various reasons. Due to this, the company is forced to
operate its plant at lower utilisation rates of ~70% as against the normal
utilisation rates of 85-90%. The company has consistently had some or
the other issues, which remain an overhang on valuations. While the
company is now in the process of getting rid of the derivative losses
burden, issues relating to raw material availability have popped up. Also,
the high capex mode that the company is currently in will dent return
ratios in the near term. While the long term picture looks favourable, we
remain concerned about the near term worries. Considering the current
up move in the stock, we downgrade the stock from HOLD to SELL.
http://content.icicidirect.com/mailimages/ICICIdirect_JBFIndustries_EventUpdate.pdf
No comments:
Post a Comment