Dhunseri Tea & Industries Ltd. (DTIL) .... A Potential MultiBagger

The Company 
 

Dhunseri Tea & Industries Ltd. (DTIL) is 5 decades old Dhunseri Group Company. Over the last five decades, the Company has been a progressive, quality-focused Indian tea producer. The tea company has won the trust of its traders and consumers, in regard to the superior quality of tea it supplies.

Over the years DTIL has expanded its reach from eight estates in 2003-04 to ten estates in 2012-13 in Assam. This makes the Company one of the ten largest tea producers in India. The Company’s tea packaging and blending units are located in Dhunseri Tea Estate (Assam) and at Jaipur (Rajasthan). The Company as of now produces approximately 1% of the overall tea produced in India. The Company holds the highest market share in the premium segment of packet tea in Rajasthan.The Company is also revamping these facilities so as to double the total tea sales.

The tea produced by the Company is of superior quality Assam CTC and Orthodox teas (marketed in India through auctions and sold in packets) under LAL GHORA and KALA GHORA brands for more than 25 years. The Company has also launched another brand in the premium segment namely, BAHIPOOKRI in Rajasthan which is in 1 kg packets. The Company intends to launch a new brand-CHHOTE LAL- to cater to the lower segment of Rajasthan.

Subsidiaries

During 2012-13, the Dhunseri Group acquired two companies in Malawi owning two tea estates for a consolidated $ 22 million through its subsidiary in Singapore namely, Dhunseri Petrochem & Tea Pte Ltd.; this marked the extension of a five-decade Indian tea company to international plantations. The two companies acquired were Makandi Tea & Coffee Estates Limited and Kawalazi Estate Company Limited. With this acquisition, Dhunseri Petrochem &Tea Ltd. has joined club of tea companies who have already made their foray in the overseas tea plantation business.

With this Dhunseri group’s Tea production capacity has reached to 22 million kgs per annum.

The aforesaid two subsidiaries based in Malawi, Africa in totality produce 94.50 lakh kgs of tea and 3.2 lakh kgs of Macadamia.

The Malawi gardens produce tea of a middling quality by tea bag manufacturers, which is a fast growing segment of the global tea segment. Besides, the Malawi acquisition has widened the Company’s offerings across the premium and middling segments, created a consistent international presence with a widening geographic footprint.

De-merger

Demerger from Dhunseri Petrochem Limited (formerly known as Dhunseri Petrochem & Tea Limited) and Dhunseri Tea & Industries Limited (formerly known as Dhunseri Services Limited). DTIL is recently listed on BSE and NSE.

Key Points on Fundamental of DTIL

• Investor friendly company continuously  paid dividend for last 13 years.
• Low equity base - 70,04,951 share of Rs 10 FV
• High  EPS
• Company is having Very Low Debt 
• Well established in retail business with addition of new products will give further boost in EPS.
• Major acquisition and expansion is already completed so no major CAPEX in near future.
• Currently trading at P/E less as compared to industry P/E 20.8
•  Company's Book Value is under process  of calculation after de-merger by Earnst and Young. The estimated BV is around 600 !!!
• The Macadamia seed production will be promising future business as world's demand of Macadamia has increased and there are very few players in Asia and Africa in this segment ( Link HERE )

Sum-up

The Tea Production has always been a lucrative business. Dhunseri, having strong fundamental and global  presence  in this sector has potential to become multibagger in couple of years. The CMP is 240/- and I will not be suprised if it will be trading in four digits.

Phillips Carbon Black - The worst is over .....Accumulate Now

The Company

There's a bit of black in everything you see. In the newspapers you read, in that polyester suit you wore for the meeting today, in the car you drive, in the PET bottle you pour water from, in the handset you use, in the pen you write with, in the electric wiring of your building and your networking cables... and even in the printed sheets that might be lying on your table as you read this.

There's a bit of black in everything you see. This black is the business of Phillips Carbon Black Ltd. PCBL is Contry's largest carbon black maufacturer.

Pioneers in carbon black in the country, Phillips Carbon Black Limited (PCBL) is the eighth largest carbon black manufacturer in the world. Part of the illustrious RP-Sanjiv Goenka Group of Companies, PCBL is known for its technical collaborations with foreign entities and state-of-the-art manufacturing facilities. Apart from manufacturing carbon black, the company also manufactures various grades of specialty black.

The company has been continuously reinventing itself in order to make the best in class products. Despite being in a commodity business, PCBL’s after sales service and strong technical support ensures a fiercely loyal base of customers from around the world.

A few of  PCBL’s prized customers are CEAT, MRF, Apollo, Birla Tyres, Balkrishna, Goodyear, Sumitomo Tires, Bridgestone, Kumho Tires, among others.

The company has redefined its business by establishing captive power plants at each factory from the off-gas or waste product from the carbon black manufacturing process. Thus, creating a sustainable green movement.

Going forward, the Company intends to backward integrate into manufacturing coal tar pitch, creosote oil and naphthalene.  This move would enable the Company to reduce its dependency on external sources for the raw material required to manufacture carbon black, positively affecting its valuations.

Performance

Due to economic slow down the company could not perform well in last couple  of years but now the conditions are in favour of the company. The crude price is reduced by 50%  in last year. Crude is the basic raw material of carbon black. Though the price  of crude has been reduced drastically, the price of carbon black has not been reduced significantally and that will reflect in the result of 2nd and 3rd quarter of FY16.

Even in  FY16 Q1 PCBL reported EBITDA of Rs. 48.18 crore, a 15% jump over Rs. 41.81 crore achieved in a previous quarter. Sales Volume is increased by 10% from 76000 tonnes to 84000 tonnes compare to previous quarter. The PBT is Rs. 5.35 crore against the loss of Rs. 4.43 crore. FY16 Q1 reflects an improved operationa efficiency and better market penetration.

The under current seems that the promotors are accumulating stock. It  is clear cut value buy at CMP (Rs. 132) with potential to give extra ordinary return in 1-2 years time span.

Disclaimer : Holding Shares of PCBL and no other vested interest.

LINK : PCBL press release