Saturday, June 21, 2014
Excel Industries is a group company of Excel Cropcare Ltd . Selecting this stocks at this point of time mainly on three reasons- improving business prospects of its existing specialty chemical segment,foray into Pharma Intermediates and the vast potential of its non core Enviro-Biotech Division. Company own three production facilities one each at Roha ,Lote Parshuram( Ratnagiri Dt Maharastra) and Ahmedabad.
Under the specialty chemicals division ,company manufacturing Phosphorous Derivatives,Agro Chemical Intermediaries, Mining Chemicals..etc. Under the pharma intermediates division ,till now company was mainly in Veterinary API’s but recently set up a new facility for human API’s at its existing Lote site .Products from this new facility is high margin products and expected to drive company’s NPM from current level once the commercial production reaches full swing. The most exciting part is its Enviro Biotech Division .
Enviro Biotech Division - A High Potential Business
This division may be termed as ‘an idea before its time ‘ .But I believe ,its time is just coming and the potential is very vast.Under the Enviro Biotechh division ,EIL is manufacturing Centralised waste management plants and Organic Waste Converters .Excel is one of the two top waste treatment plant manufactures in India .Actually managing waste is the biggest challenge of any city administration.Many Indian cities are far behind in cleanliness and effective treatment of wastes compared with foreign cities .This creating lot of health related issues on one side and act as a reason for preventing development of various sectors including tourism ..etc on the other side. We all are aware about the importance and seriousness of this issue and hence I am not writing too much on this.
EIL manufacturing different types of organic waste converters suitable to treat different volume. Size and model of machine is varied based on the volume to be treated .These machines are suitable for Housing societies, markets, Food processing companies, Slaughter houses,Hospitals,Malls..etc.Using this converter, organic wastes like kitchen waste, garden waste, food processing waste etc are converted into compost. With the help of strong R&D ,company introduced its most modern fully automated waste converter ‘Bioneer’ in Indian market.This machine is capable to convert waste into compost in just 24 hours. Company already recorded more than 1000 successful installations of its WC’s at various locations.Bioneer is suitable to handle 100 Kg to 400 kg waste per day.If these machines are targeted individual of group customers ,the larger version of this system is the Centralized Waste treatments plants suitable for treating Municipal Solid Wastes upto 500 tons per day.More than 10 such plants already installed in India and Excel supplied one such plant to Solid Waste Recycling Ltd a company formed to handle waste recycling in Mauritius.Compost manufactured in this facility is distributed by Mauritius Co-operative Agricultural Federation (MCAF) and Roger Fayd’herbe Ltd, all over the Mauritius .In India , Excel’s prestigious CWM Plant established in Ahmadabad and working on a PPP model .( Details HERE and HERE ) This is considered as one of the most successful waste treatment arrangement established anywhere in India .Bio fertilizer manufactured from this facility is marketed under ‘CELRICH’ brand through its group company Excel Cropcare Ltd.
Link to Enviro Biotech Division HERE
For the financial year 2013-14 ,company reported a top line of Rs.417 Cr , net profit of Rs.18 Cr and an EPS of Rs.16.50. Company also declared a dividend of 75 % on FV Rs.5 shares.
Even though I emphasized on the non core – Waste Converter business – above ,please don’t misread Excel as a Waste Converter company. Its core business is chemical related itself .Only close to 5 % of total income came from WC Machine business in last FY but it reported a growth of about 50 % compared with previous year. Waste Converter business is at nascent stage and this concept itself is just gaining momentum in India .New government’s initiatives especially Prime Minister’s personal interest in clean city concept is expected to give a new lease of life for this industry . Government already announced its intention to develop 100 smart cities and waste management will be a crucial and inevitable part of this cities . Being a company successfully handling such a system in PM’s own state ( Centralised waste treatment plant at Ahmedabad) he will be well aware about its possibilities and it will give an extra bias to Excel. Arranging waste treatment facilities at own cost may be a compulsory pre condition for permission for building flats,housing colonies ..etc in all cities in future. This will be an eventuality and there is no other options .Such a situation will create better opportunities for Excel’s non core business and the potential is immense.
If we look into its core chemical business,the chemical cycle is started to looking up and prices are improving. Company is a prominent player in Mining chemicals and any steps to avoid the uncertainty in mining sector by the new government will naturally increase the demand for Excel’s products.In pharma related space,company recently set up a new API facility and gain from this unit will also start to flow in near future . Company is an established player in agrochemical and water treatment chemical business and potential of the same is also robust. Company possessing a strong R&D wing for both divisions . As per available information, company’s R&D division for waste related business is actively working on ' Energy from Plastic waste' and 'Fuel from Plastic waste' concepts and gained substantial improvement .
Management quality of Company is top most and they are very investor friendly . Since company's chemical business is established and very strong there is no question of uncertainty even if the WC business needs time to pick up.In nut shell – Excel Industries is a company with good core business ,high potential non core business led by highly professional and ethical management . This stock having many ingredients to become a multi bagger in future .Stock listed in NSE and BSE ( Scrip Code -500650 ) and trading around Rs.127
Link to Company Website HERE
Disc: It is safe to assume that I have vested interest in Excel Ind.