Started in 1992, Gandhar Oil Refinery (India) Limited is one of the most well diversified players in the speciality oils and lubricants sector with wide range of offerings catering to varied industries. Its range of speciality oils and lubricants include liquid paraffin, industrial oil and greases, transformer oils, automotive lubricants, petroleum jelly and rubber processing oils which they sell under our flagship brand “Divyol”. Company's business is categorized into two key segments, (a)petroleum products segment includes manufacturing of speciality oils and lubricants products; and (b) non-coking coal and logistics support services segment includes procurement of non-coking coal from outside India for its domestic customers and supplying them through its logistics support services. For its speciality oils and lubricants products, company imports raw materials i.e. base oil primarily from South Korea and Middle East, additives are procured locally from selected multi-national corporations and waxes are procured locally and also imported from China and Thailand. Company manufactures speciality oils and lubricants products using compositions, including those developed by its in-house research and development team. Company's domestic and international customers are spread across multiple industries, including pharmaceutical, FMCG, chemicals, steel,rubber and tyre, automotive and power. Some of the customers are CEAT Limited, GRP Limited and Transformers & Rectifiers (India) Limited in India, etc. GORL has two manufacturing facilities situated at Silvassa in Dadra and Nagar Haveli and Taloja in Maharashtra with an annual production capacity of 128,000 KL and 104,000 KL, respectively, as on July 31, 2017. Further, its research and development centre at Silvassa facility has been recognized as in-house R&D unit by the Department of Scientific and Industrial Research, Ministry of Science and Technology. In addition, GORL is in the process of developing at both of its manufacturing facilities, (a) additional storage capacity of 12,550 KL for base oils through additional storage tanks; (b) additional production capacity of 152,000 KL for speciality oils and lubricants, and (c) additional warehousing capacity of 3,800 KL spread across an area of 41,300 square feet, for its speciality oils and lubricants products. Company has a strong distribution network involving over 150 distributors, three branch offices and 17 depots (consisting of three Company operated depots and 14 C&F agent operated depots) as of July 31, 2017. Company sells its speciality oils and lubricants products under its flagship brand 'Divyol' through:Retail packs: Ranging from 175ML to 25L packs that are sold in plastic packets, HDPE containers and pails for its retail customers. Wholesale packs: Ranging from 26L to 235L that are sold in HDPE containers and tin containers for its wholesalers and institutional customers. Institutional sales: For bulk supply of products in the tankers to institutional customers, subject to their requirements. For company's non-coking coal and logistics support services segment, company imports non-coking coal, which is used for power and heat generation, from countries like Indonesia and South Africa and supply them to various domestic customers in power, steel, pharmaceutical, paper, cement, textile, oil, chemicals, sugar and tyre industries. Company's overseas subsidiaries Gandhar Oil & Energy DMCC is also involved in trading of non-coking coal, petroleum products, polymer and gypsum. GORL also undertakes, on select basis, consignment agency and del credere agency businesses. On performance front, RNLAML has posted turnover/net profits of Rs. 712.67 cr. / Rs. 198.96 cr. (FY13), Rs. 784.03 cr. / Rs. 302.30 cr. (FY14), Rs. 930.11 cr. / Rs. 349.59 cr. (FY15), Rs. 1271.07 cr. / Rs. 390.12 cr. (FY16) and Rs. 1400.44 cr. / Rs. 405.57 cr. (FY17). For three months ended on 30.06.17 of the current fiscal, it has reported net profit of Rs. 83.44 cr. on a turnover of Rs. 378.15 cr. Thus company has posted healthy growth over last couple of years on consistent basis. RNLAML has posted an average EPS of Rs. 6.68 and average RoNW of 22% for last three fiscals. Issue is priced at a P/BV of 8.97. It has no listed peers to compare with as per DRHP. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 43.92. As there is no peers to compare, so its difficult to say what will be proper valuations.. As per financials, company's growth is good, RoNW is 22% for last three fiscals and issue is priced at P/E of around 44. Mutual Funds and Asset Management sector is growing at good pace and expected to continue same growth for next couple of years and being one of the largest player of sector with wide network across the country, company expected to show same growth for next couple of years. So we give SUBSCRIBE rating to this IPO.
✍️ Post a Comment