ALPHA IDEAS 20-20

MEET

Kunj Bansal
Partner & CIO
28th JULY 2018 Acepro Advisors Pvt Ltd
Private & Confidential 1
ABOUT ME

Kunj B. Bansal, Partner & Chief Investment Officer

 Senior investment professional with around 25 years of experience in financial markets

 Has seen multiple cycles in the market and managed money across different formats such
as Mutual Funds, Offshore Funds and PMS
 Started his career as a Research Analyst at Unit Trust of India (UTI) which was India’s
biggest mutual fund at that time
 Subsequently, he worked with the biggest and best names in the financial services
industry such as Reliance Mutual Fund, Kotak and Sanlam (a South African group) –
managed money up to Rs50 bn in these assignments
 Was awarded Best Fund Manager award by Business Today magazine early in his career
 He writes for various magazines and newspapers and his valued opinion is sought by
various news/business channels. He has been a Speaker in various seminars & conferences

Private & Confidential 2

DISCLOSURES

 I am not a Registered Investment Advisor

 Disclosure regarding ownership of stock – No
 This is not a stock recommendation and is illustrated for education purposes
 Please do due diligence before making any investment decision or consult a registered
investment advisor

Private & Confidential 3

PRESENTATION
l FLOW

AN IDEAL INVESTMENT CASE

FINANCIALS
SHAREHOLDING PATTERN
ABOUT THE COMPNAY
STOCK DETAILS AND VALUATION
COMPANY INFORMATION
SWOT

MONITORABLES

Private & Confidential 4

AN IDEAL INVESTMENT CASE

Good Business Model

Growing Industry

Good Financials

Promoter Pedigree

Capable Management

Stable Auditors

Private & Confidential 5

FINANCIALS

Net Income (Rs Cr.)

400
376

350
16% CAGR

302
300

268

250 240

207
200
176

150

100

50

0
FY13 FY14 FY15 FY16 FY17 FY18

Private & Confidential 6

FINANCIALS
EBITDA (Rs Cr.)
90

80
77

22% CAGR
70
65

60
55

50

40 39
36

30 29

20

10

0
FY13 FY14 FY15 FY16 FY17 FY18

Private & Confidential 7

FINANCIALS
PAT (Rs Cr.)
40

35
35

30
43% CAGR

25

20 19

15
15

10
9

6
5
5

0
FY13 FY14 FY15 FY16 FY17 FY18

Private & Confidential 8

MARGINS
Gross Profit margin
45%

40%
40% 39%
37%

35%
33%

30%
30%
28%

25%

20%

15%

10%

5%

0%
FY13 FY14 FY15 FY16 FY17 FY18

Private & Confidential 9

MARGINS

EBITDA margin
25.0%

21.6%
20.6% 20.5%
20.0%

17.2%
16.5%
16.1%

15.0%

10.0%

5.0%

0.0%
FY13 FY14 FY15 FY16 FY17 FY18

Private & Confidential 10

MARGINS
PAT margin
10.0%
9.3%

8.0%

6.4%

6.0%
5.5%

4.2%
4.0%
3.4%

2.1%
2.0%

0.0%
FY13 FY14 FY15 FY16 FY17 FY18

Private & Confidential 11

RETURN RATIOS

  FY14 FY15 FY16 FY17 FY18

ROCE 13% 33% 22% 37% 36%

RONW 8% 13% 4% 14% 21%
ROIC 13% 33% 9% 26% 25%

  FY14 FY15 FY16 FY17 FY18

Debt equity Ratio 0.16 0.11 0.07 0.00 0.00

Current Ratio 1.15 1.03 0.94 1.02 0.97

Quick Ratio 0.50 0.63 0.59 0.69 0.64

Private & Confidential 12

CASH FLOWS

In Rs Cr. 2014 2015 2016 2017 2018

Net cash flow from Operating 14.58 7.481 -12.53 19.23 64.67
Net cash flow from Investing -18.63 -19.22 -16.05 -17.70 -48.94
Net cash flow from Financing 3.44 11.66 30.68 -0.94 -18.25
           
Net cash flow -0.61 -0.08 2.09 0.59 -2.51

Private & Confidential 13

SHAREHOLDING PATTERN

Promoter Group Holding – 57.40%

MD’s Holding – 9.95%

Public Holding – 32.65%

Private & Confidential 14

WHICH IS THIS COMPANY..…?

ASTEC LIFESCIENCES LTD.

Private & Confidential 15

SHAREHOLDING PATTERN

Promoter Group Holding – 57.40% Godrej Group

MD’s Holding – 9.95% Ashok V. Hiremath

Public Holding – 32.65% Of which, Institutional holding is 3.14%

Private & Confidential 16

ABOUT THE COMPANY

 Producer of Agrochemical and Pharmaceutical Intermediates

 It was incorporated in the year 1994 by an technocrat entrepreneur and got listed in the year
2006

 Has build enduring relationships with companies all over the world with an unshakeable
reputation for providing quality products in manufacturing plants that meet global standards

 Godrej became the leading investor in 2015

 50% of the sales is export

 Company has 3 multi purpose production facilities ; 2 at Mahad and 1 at Dombivli and 1 R&D
center located at Dombivli

Private & Confidential 17

STOCK DETAILS & VALUATION

CMP as on 25th July’18 (Rs.) 655

No. of shares outstanding (cr.) 1.95

Market Cap (Rs Cr.) 1280.20

P/E ratio (Mar’18 ) 36.51

EV/EBITDA 16.38

Private & Confidential 18

PRICE CHART

800

750

700

639 No Return, 20 months

650

636
600

550
Rs.

500

450
360

400

350

300
Jul 20, 2016 Sep 02, 2016 Oct 21, 2016 Dec 06, 2016 Jan 18, 2017 Mar 06, 2017Apr 21, 2017 Jun 06, 2017 Jul 20, 2017 Sep 05, 2017 Oct 19, 2017 Dec 04, 2017 Jan 17, 2018 Mar 06, 2018Apr 20, 2018 Jun 05, 2018 Jul 18, 2018

Date

Private & Confidential 19

ASHOK V. HIREMATH

 Mr. Ashok Vishwanath Hiremath is the Managing Director of Astec LifeSciences

Limited.
 Masters degree in Engineering from University of Oxford and a Post Graduate
Diploma in Chemical Engineering from University College, University of London.
 Brings with him over 37 years of experience in the Chemical Industry.
 Founded Astec LifeSciences Limited in 1994. He has been actively involved in the
affairs of the Company and has played a key role in the growth of the Company.
 Was awarded the Dombivli Giants Award for Industry in 2008 and the Udyog Rattan
Award by the Institute of Economic Studies in 2010 and several other awards for his
excellence in chemical Industry.

Private & Confidential 20

COMPANY INFORMATION
Board of Directors

Statutory Auditors M/s. Shah & Kathariya, Chartered Accountants

M/s. P. K. Pandya & Co., Practicing Company

Secretarial Auditors
Secretaries

Private & Confidential 21

SWOT ANALYSIS

STRENGHTS WEAKNESS

 Deep technical capabilities of tech / intermediate  Relatively smaller capacity size

chemistries  Dependence on china for import of some raw
 Capable hands-on management materials
 capacity expansion and backward integration to reduce  Long time taken for approval of products from MNC
cost of production and dependence on China clients

OPPORTUNITES THREATS
 global as well as domestic demand for agrochemical is
growing  Revival of China’s capacity
 50% value of the Indian Agrochemical sector is derived  Poor South West Monsoon dampens the rural segment
from the exports and growth in this sector is faster than in the country which may eventually dampen the
the domestic sector demand for agrochemicals
 Global companies are looking for alternate  foreign exchange volatility
manufacturing locations other than China. This presents
a perfect opportunity for India
Private & Confidential 22
MONITORABLES

 Though company has operational cash flow but no net cash flow

 Quarterly results can be lumpy

 Mature valuation

 B2B business
 Product approval from clients

 China factor at play

 Low Institutional holding
 Quarterly results on 1st Aug’18

Private & Confidential 23

 THANK YOU

Private & Confidential 24