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Monday, October 15, 2012

Gulshan Polyols Ltd:Buy/sell/growth prospect and recommendation,news and results,target and analysis,view and outlook,multibagger

 Scripscan:Gulshan Polyols Ltd


Story:Muzaffar Nagar based Gulshan Polyols Ltd has emerged as the largest manufactuer in India of 70% Sorbitol and Calcium Carbonate.  Its production faciliities are spread over 6 locations in 5 states covering land area of more than 150 acres. Company has installed capacity of 1.05 lac tonnes of Calcium Carbonate and 60000 tonnes of Sorbitol.  In order to reduce energy costs, GPL also has 10MW of cogen power.

SORBITOL 70%: GPL has fully integrated facility for producing Sorbitol ( Corn to Starch to Dextrose to Sorbitol) with 3MW cogen power. Sorbitol is mainly used as Sugar substitute and bonding agent. Main user industries are:

Paints industry.

CALCIUM CARBONATE:  Company producin various varieties including PCC, GCC, ACC and WGCC. Installed capacity is 1.05 lac tonnes with 7MW cogen power plant to meet energy requirements. GPL is also 1st company in India to install on-site PCC plant at a paper factory.  Main user industry for Calcium Carbonate are:

PVC& Cables

GPL's customer list includes who's who of corporate India:

FMCG:  Colgate, Dabur, ITC, Unilever, Wipro
FOOD;   Brittania, Candico, Yahoo Foods
Paints:  Berger, Asian Paints, Kansai, Pidilite
PAPER;   ITC, TNPL, BILT, ABC Papers, Century Pulp
PHARMA:  IPCA, Cadilla, Torrent, AstraZeneca, Novartis, Pfizer, Merck etc

With strong demand from diversified user industry and top brands being its clients, GPL which has emerged as highly cost-efficient producer of Sorbitol and Calcium Carbonate has been reported consistently good results;

                                  2011-12         2010-11

Sales                           273              275
Depreciation                   13.28            14.42
Pat                                 17.91            16.30
Equity                               4.22              4.22
Reserves                        122.31           108.39
Eps Rs                             20.07            19.29
Cash Eps Rs                     36.92            36.36
Book Value Rs                  150/

For FY12, GPL reported Sales of 273 crores and Pat of 17.91 crores translating into Eps of Rs 20.07.  Scrip is available at 3.60xFY12 Eps.

GPL has set up a new plant for producing Calcium Carbonate in Rajasthan with capacity of 50,000 tonnes. Full impact of same will be felt from H2 of current year.


                                 2012-13E          Q1/FY13

Sales                         310                       67.78

Pat                              19.50                    5.65

Eps Rs                         23.10                    6.69

GPL is an atttractive portfolio choice for genuine investors. Firstly, company is largest producer in its segment in India. Secondly, despite so many negatives of Indian economy in last 2 years, company has been reporting decent nos which shows that management is efficient and cost-effective. Thirdly, its products are used by a variety of industry and hence, demand for its products is unlikely to face recession. Rather, demand for its products continues to grow. Finally, company is supplying its products to giants of Indian industry.  Considering these various factors, GPL can provide multibagger appreciation in next 2-3 years:

1. Scrip is trading at 3.60xFY12 Eps
2. Scrip is available at 1.95xFY12 Cash Eps
3. PE Ratio for FY13E Eps is just 3.10
High Book Value may also prompt management to declare Bonus shares next year. 
Investment in GPL at current price can yield more than 100% appreciation in next 9-15 months. Scrip, in fact, should be held in one's portfolio for Long Term for continued good appreciation.

Source:Hemant Gupta

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