JBF Ind, Allahabad Bank, Reliance Capital, Mahindra Satyam, United Spirits, jindal poly films, :: Business Line

 

JBF Industries: RM availability & capex mode worry us: ICICI Securities, report

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.

JBF Industries Ltd - Detailed Independent Equity Research report :Crisil

JBF Industries Ltd Moving a step ahead by going backward Fundamental Grade        3/5 (Good fundamentals) Valuation Grade         5/5 (CMP has strong upside) Industry         Chemicals                                                                                                    Date: July 10, 2012

Polyester chip manufacturer JBF Industries Ltd (JBF) is backward integrating to produce PTA (purified terephthalic acid) to ensure a steady supply of raw material for its chips plant. Post integration, it will benefit from lower raw material and freight costs along with lesser working capital requirement. This will make it cost competitive and improve its operating margin. We maintain our fundamental grade of 3/5, indicating that its fundamentals are goodrelative to other listed securities in India.

Buy JBF Industries; Target : Rs 154 ::ICICI Securities

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P e r f o r m a n c e   i m p r o v e s   s e q u e n t i a l l y …
JBF Industries Ltd’s (JBF) Q2FY12 numbers were in line with our
estimates. Consolidated net sales increased by 31.3% YoY to | 1,852.0
crore, marginally higher than our  estimate of | 1,782.9 crore. While
volumes remained flattish (2.8% YoY growth in domestic and 1.7% YoY
de-growth in international volumes), domestic realisation growth aided
topline growth. Average domestic realisation increased by 25-30% YoY
while international realisations increased by 40.4% YoY. The EBITDA
margin at 11.4% was higher than our expectation by 90 bps. Despite a
better-than-expected operational performance and lower-than-expected
interest cost, PAT came in marginally lower than our estimates due to
higher-than-expected forex losses. Forex losses increased over five fold
from  |  12.2  crore  in  Q2FY11  to  |  63.0 crore in Q2FY12 (increased from |
45.4 crore in Q1FY12 as well). Consequently, PAT de-grew by 25.5% YoY
to | 76.0 crore (I-direct estimate: | 80.7 crore). For H1FY12, sales
increased 21.9% YoY to | 3,442.6 crore but EBITDA and PAT de-grew
3.6% and 18.2% YoY to | 372.5 and | 128.3 crore, respectively.
ƒ Capacity addition on track
During Q2FY12, JBF has increased  its chips capacity at RAK from
4,20,000 MT to 4,32,000 MT. Also, the work on setting up the
purified terephthalic acid (PTA) plant at Mangalore SEZ is on track.
The land for the same has been allotted. Further, the debottlenecking of the Indian chips capacity will enhance the capacity
from 6,08,800 MT to 6,26,000 MT.  JBF is also planning some
addition in the films capacity (RAK), which will take the total film
capacity to 1,02,000 MT by December 2011 (currently – 66,240 MT).
V a l u a t i o n
JBF is currently trading at 2.5x and 1.8x FY12E and FY13E EPS,
respectively. We believe it will not be possible for the company to repeat
the exceptional performance of FY11 and the same is reflected in the
share price. However, the current  valuations are compelling and we
reiterate our BUY rating on the stock with a target price of | 154 (based
on an average of 3.0x FY13E EPS of | 63.5 and 0.4x FY13E book value of
| 295.6).

Buy JBF Industries; Target : rs 154 ::ICICI Securities,

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D u l l   q u a r t e r   a f t e r   a   b um p e r   F Y 1 1…
JBF Industries Ltd’s (JBF) Q1FY12 numbers were ahead of our estimates
on the revenue and EBITDA front; however, on the PAT front they were in
line with our estimates. Consolidated net sales increased 12.5% YoY to
| 1,590.6 crore as against our estimate of | 1,293.4 crore. Domestic and
international volumes were in line  with our estimates (we modelled ~
12% blended volume de-growth); blended realisations increased ~35%
YoY (higher than our estimate). Key raw material prices (PTA, MEG) too
increased ~35% YoY. As a result, JBF was able to maintain its EBITDA
margin at 10.1% in Q1FY12 versus 11.0% in Q1FY11 and 14.4% in
Q4FY11. Due to higher forex and derivative losses of | 45.4 crore (| 13.0
crore in Q1FY11), JBF witnessed a YoY PAT de-growth of 4.8% to | 52.3
crore (I-direct estimate: | 49.4 crore). We have trimmed our FY12E and
FY13E estimates considering factors like plant shutdowns due to raw
material availability issues and slowdown in demand due to softening
cotton prices (which reduces substitution demand). Also due to inventory
pile up we expect some pressure on the operating margin and have
reduced our EBITDA margin expectations from 14.6% to 12.2% and
13.6% to 12.6% for FY12E and FY13E respectively.  
ƒ Capacity expansion on track
JBF’s expansion plans seem to be on track. During Q1FY12, the
domestic chips capacity has increased by 58,000 tonnes per annum
(TPA) to 6,08,800 TPA. Also the domestic POY (polyester oriented
yarn) capacity has also increased from 1,72,000 TPA in FY11 to
2,45,000 TPA.
V a l u a t i o n
FY11 was an exceptionally good year for JBF backed by strong
realisations across all products, more so in the BOPET films segment.
However Q1FY12 does not seem to reflect the same story and hence we
have reduced our EBITDA margin and EPS estimates for FY12E and
FY13E. Bearing  in mind a weak outlook,    lowered estimates,   pressure on
the balance sheet and increasing interest burden due to the capex plans,
we have further downgraded our target price from | 185 to | 154 (based
on an average of 3.0x FY13E EPS and 0.4x FY13E book value). We have a
BUY rating on the stock.

Strong Buy: JBF Industries: BOPET films deliver a stellar performance…ICICI Sec

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JBF Industries: BOPET films deliver a stellar performance… 
JBF Industries’ (JBF) Q3FY11 results were well ahead of the street and our
estimates on the back of a superior performance in the BOPET films
segment. Standalone net sales increased 41% YoY to | 845 crore lower
than our estimated | 1054.2 crore on the back of a lower volume and
value growth in the textile grade chips segment. It reported a standalone
EBITDA margin of 13.4% (up 131 bps and 195 bps QoQ and YoY,
respectively). PAT growth was relatively muted at 16.9% YoY to | 29.8
crore lower than our estimated | 55.2 crore due to a forex loss of | 34.3
crore. A 62.9% and 16.8% increase in BOPET films and pet chips
realisation respectively, led to a YoY growth of 44.0% and 192.1% in
consolidated net sales and EBITDA respectively. Consolidated PAT grew
by over six times to | 185.6 crore.

JBF Industries -Diwali Mahurat Pick by Anand Rathi

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JBF Industries

Company is gradually moving up in value chain from Polyester Chips maker
to Yarn & Film maker

With Polyester film prices improving significantly in last 6 months, we expect
company’s Dubai subsidiary – JBF RAK to report excellent results

For backward integration & to secure raw materials at cheaper cost, its
subsidiary JBF RAK, Dubai is planning to set up a 1.2 mill MTs capacity of key
input – PTA. This will be under JV with Oman oil [10% stake], who will
provide Paraxylene [input for PTA]. JBF RAK may be listed on Singapore
exchange also

Due to improved fundamentals for Polyester Films and Yarns, improving
realisation(Rs.235 per Kg), stabilized row material cost & re- rating of the
overall sector, we are bullish on the stock

JBF Ind, Capacity scale up to unlock value :: Elara,

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JBF Industries: Capacity scale up to unlock value


Overseas outfit to rake in growth momentum
We believe that Ras-Al-Khaima (RAK), JBF’s overseas unit, which
contributed ~50% to its FY10 bottom-line, will be the key earnings
driver going forward. By FY11-end, RAK’s Polyethylene Terephthalate
(PET) chips capacity will be 468kt, in addition to the domestic PET
capacity of 144kt, putting JBF in the top ten global PET manufacturers.
RAK’s current Biaxially-oriented Polyethylene Terephthalate (BOPET)
films capacity is 66kt, which JBF plans to increase by 45% in FY12. This
capacity ramp-up of higher margin products in RAK is expected to
expand the blended group EBITDA margins by ~200bps by FY12
Secondly, the 50% rise in BOPET film realizations in the last six months
will be a direct flow through to the bottom-line (~USD40mn annually)
as the raw materials pricing has remained reasonably unchanged. The
supply constraints in the BOPET film industry are likely to persist thus
providing a strong pricing environment in the next12-18 months.
Overall capacity adds, cost efficiency to drive earnings growth
JBF’s current total capacity of 1.2MMT will be ramped up to ~1.4MMT,
driven by expansion in high margin product – PET chips and films. JBF
continues to enjoy its geographical cost advantages such as low
transportation and logistics costs and access to customer markets for
its domestic plants as well as its RAK plant in UAE. Additionally, the
company’s dominant position in the domestic market is likely to ensure
better pricing and higher operating rates for JBF. All these factors are
expected to drive significant earnings growth on a consolidated basis.
Global industry outlook: Pricing environment to be stable
Analyzing the demand-supply equation for JBF’s key raw materials,
Purified Terephthalic Acid (PTA) and Monoethylene Glycol (MEG), we
believe that the inputs prices are likely to be stable without any
substantial volatility in the medium term. Similarly, the demand-supply
equation for PET chips also seems be stable, asserting our expectations
of firm pricing and sustainable spreads for PET chips.
Valuation
Compared to JBF’s Asian peers, JBF comes across as a value pick
with the lowest valuations and highest return ratios in the region.
On an EV/EBITDA basis, the regional average is 9.3x, while JBF
trades at 3.2x. Similarly, on a P/E basis, JBF is trading at 4.4x, a huge
discount to regional peer average of 11.5x. On a P/B basis, the stock
trades at 1.1x, while the regional average is 1.7x, making JBF a
compelling case especially considering that its higher-than-peers
return ratios and dividend yield of ~3.1%. We value JBF with a
combination/average of two approaches: 1) Applying a
conservative 4.0x EV/EBITDA to Standalone as well as RAK 2)
Replacement cost method. By using an average we derive at our TP
of INR250/sh, implying an upside of 30% from current levels.

Report on JBF Ind by Anand Rathi

JBF Ind

CMP 170/-

Trend Update & Recommendation

With Polyster film prices improving significantly in last 6 months, we expect company’s Dubai subsidiary – JBF RAK to report excellent results. Based on the suberb growth in PAT for JBF RAK and improving scene for Polyster Yarn also; we are revising our earnings estimate and price target for company. We expect consolidated EPS to cross Rs 70/- for FY’11 and raise the price target to Rs 250/- in next 12 months.

·         Company is leading Polyester chips & amongst top three players in Polyster Yarns also. Its subsidiary JBF RAK in Dubai, has 72,000 MTs capacity to produce PET[Polyster] films.

·         Company is gradually moving up in value chain from Polyester Chips maker to Yarn & Film maker. This is boosting the margins further. Now Polyester Chips forms just 32% of the sales, while rest 68% comes from value added products like Yarn & Films.

·         Now to integrate backward, to secure raw materials at cheaper cost, its subsidiary JBF RAK, Dubai is planning to set up a 1.2 mill MTs capacity of key input – PTA. This will be under JV with Oman oil [10% stake], who will provide Paraxylene [input for PTA].

·         Funding of this project will be managed by JBF RAK by internal generation, QIP issue and Term loans. JBF RAK may be listed on Singapore exchange also.

·         Looking to improving fundamentals for Polyster Films and Yarns, we expect the performance of company should improve significantly in current year. We expect consolidated earnings of over Rs 70/- for FY’11 and raise the target to Rs 250/- . BUY.