Bodal Chemical

👉CMP: 117

👉Market cap – 1430 cr

👉Accmulation zone – 100 To 115

👉Bodal was incorporated in 1989 by Mr. Suresh Patel, a first generation entrepreneur
• Bodal is today one of the globally leading, integrated Dyestuff companies from India
Bodal chemical Operates in three segments viz

1. Basic Chemicals
2. Dye Intermediaries
3. Dyestuff .

Product Usages:

1. Basic chemicals are used to produce Dye Intermediaries
2. Dye intermediaries are used to manufacture Dyestuff
3. Dyestuff is used in various industries such as Paper,Leather,Textiles,and few others.

Bodal has continuously invested to augment its business by having capex done of approx 25Crs in FY 2016 & 48Crs in FY 2017

👉Recently company had laid plans for capex of approx 268Crs.

1. Dyes Capacity Expansion plus Ice Plant and MEEP
   Capacity expansion by 12,000 MTPA. Bodal has strong presence in Acid base black. With the new capacity, Bodal will increase high value dyes such as Acid brown, Acid red, Direct yellow, Direct red, Reactive blue, Reactive orange, Reactive printing dyes, and Red yellow.(High value dyes will aid in margin & topline expansion)
2. Cogeneration Power Plant + Utility section upgrade Upgrade existing major Utility facilities at Unit VII. With a Cogeneration Power Plant, Bodal wishes to achieve substantial saving in energy cost. Project will generate Power of 5MW along with Steam. It will also enable uninterrupted production.(Margin & productivity epansion)
3. Thionyl Chloride Plant (TC)
   TC sits very interestingly between Sulphuric Acid and Vinyl Sulphone. Therefore, TC is a forward+backward integration project. Bodal will build a TC Plant of 36,000 MTPA at Unit VII. SO3 from Sulphuric Acid Plant will be used to make TC.
   TC will be used to make Vinyl Sulphone. About 30% TC will be used in-house. Bodal will benefit from scale, low inventory, quality supply and no logistics cost. Balance 70% TC will be sold to pharma, agro and chemical industries in the vicinity. Presently, there are only three major TC producers(70% of Thionyl chloride sold to customers can fetch revenues in range of 126 cr-150 Crs.
4. Vinyl Sulphone Plant at SPS Processors
   New Vinyl Sulphone Plant of 6,000 MTPA. By producing both H Acid and Vinyl Sulphone, SPS will utilize effluents of the two Plants into each other’s production respectively. This will generate additional revenue and reduce cost of managing effluent. (Margin expansion & Incremental revenues, if all the Vinyl sulphone is sold it has capacity to generate 240 Crs in revenues.)

👉We are positive on bodal For Price Target of 150/180/200

👉We would Value @ PE of 13 at FY20 EPS of 13 and arrive at a price of 169 for next 18 Months.

Happy Investing.!