The highly esteemed value investor Anil Kumar Goel, from Chennai, has made a substantial investment in Ganesh Benzoplast, a small-capitalization company engaged in the production of liquid storage tanks and chemicals.

Goel, who was previously known for placing large bets on sugar stocks, currently owns 3% of Ganesh Benzoplast, a major underperformer in the stock market. However, these are the equities on which value investors like Goel bet heavily, and only for the long run.

On January 29, during a board meeting, Ganesh Benzoplast approved INR32.4 crore in a preferential share issue to non-promoter investor Goel. It issued 2 million equity shares with a face value of INR1 and a premium of INR162/share. That day, the stock price increased by 5.5%, while the benchmark Nifty 50 rose by only 2%.

Ganesh Benzoplast’s stock price rose about 700% from its COVID low of ₹ 23.35. The business has a market capitalization of ₹1,300 crore and has returned only 15% over the last year, lagging a roaring bull market that saw the small-cap index rise by nearly 62%.

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Does the Ganesh Benzoplast stock have the opportunity to outperform in the future? Well, let’s find out.

Corporate Overview Of Ganesh Benzoplast

Based in Mumbai, India, Ganesh Benzoplast is a prominent independent operator of liquid storage tank facilities, specializing in the storage and management of various liquid chemicals and oil products. It has storage terminals at Jawaharlal Nehru Port Trust (Navi Mumbai), Cochin Port Trust (Cochin), and Mormugao Port Trust (Goa).

GBL also manufactures specialty chemicals, food preservatives, and oil additives, with two units located at MIDC Tarapur in Maharashtra. Mr. Ramesh Pilani, Ganesh Benzoplast’s founder, promoter, and CFO, has over 40 years of expertise in the chemical production, trade, and liquid storage industry.  

Mr Rishi Pilani, GBL’s MD and CEO, is a second-generation entrepreneur who holds a chemical engineering degree and has previously worked for General Electric Company in the United States.

Ganesh Benzoplast has long-standing relationships with marquee clients such as Cargill, BPCL, Jubilant Life Sciences, Reliance Industries, and Akry Organics. Further, the company recently onboarded big names including Aarti Industries, Pidilite Industries, Deepak Nitrite, Asian Paints, Gujarat Ambuja Exports, and Deepak Fertilisers and Petrochemicals Corporation.

Business Segments Of Ganesh Benzoplast

Ganesh Benzoplast operates in two segments i.e. – Liquid Logistics and Chemical Manufacturing. The Liquid Logistics Division has tank farms at three major busy ports in India. This segment also includes Liquid Storage Tanks (LST), Rail Logistics and Engineering, Procurement and Construction (EPC).

Under the Chemical Division, Ganesh Benzoplast is engaged in manufacturing and exporting a wide range of food preservatives, lubricant additives, and specialty chemicals.

Liquid Logistics Of Ganesh Benzoplast

Liquid Storage Tanks (LST)

Ganesh Benzoplast’s LST segment is its second-largest revenue-generating sector and the leading independent Liquid Storage Tank (LST) provider, accounting for 49.7 percent of total sales in FY23. 

It specializes in the storage and processing of liquid chemicals and oil products and operates storage terminals in JNPT (Navi Mumbai), Cochin, and Goa.

Rail Logistic:

Within the LST Business division, Ganesh Benzoplast also manages rail logistics through its subsidiary Company Infrastructure Logistic Systems Limited (Formerly known as Stolt Rail Logistic Systems Limited), which is the Company’s material subsidiary involved with the rail logistic business and provides transport services from port-based storage centers to the client’s plant.

Engineering Procurement and Construction (EPC): 

Within the LST division, Ganesh Benzoplast provides EPC services to its clients through its fully-owned subsidiary company GBL Infra Engg. Services Pvt Ltd (GBL IES). 

Under EPC, the company delivers superior solutions in technical advice, design and engineering, procurement, construction, and execution of projects from idea to commissioning for the industrial use and other service markets.

Chemical Division

The Chemical Division manufactures and exports a wide range of products, including food preservatives, specialised chemicals, lubricant additives, gear oil additives, hydraulic oil additives, and Greece additives. This segment was the most revenue generating sector contributing 50.3 percent to the total sales.

Ganesh Benzoplast is the only manufacturer of pure benzoic acid and its derivatives, such as Sodium Benzoate, a well-known food preservative, and Benzoplast, a specialty plasticizer that outperforms conventional plasticizers.

The company has manufacturing facilities at MIDC in Tarapur with a capacity of 24,000 MTPA. Unit 1 produces oil additives, while Unit 2 produces specialized chemicals and food preservatives.

Financials Of Ganesh Benzoplast

FY2023FY2022FY2021FY2020
Revenue (in ₹crore)421357270247
Net Profit (in ₹crore)55332234
ROE15.43%11.65%9.44%23.12%
ROCE18.03%15.31%22.14%26.42%

In the fiscal year 2023, Ganesh Benzoplast saw an increase in revenue, surging by 18% to reach ₹421 crore as opposed to ₹357 crore in FY2022. Analyzing a span of four years, encompassing FY2020 to FY2023, Ganesh Benzoplast displayed a  Compound Annual Growth Rate (CAGR) of 19.45% in revenue. 

Simultaneously, there was a noteworthy upturn in net profit, experiencing a 66% increase from ₹33 crore in FY2022 to ₹55 crore in FY2023. Over the cumulative four-year period from FY2020 to FY2023, the net profit showcased a 17% CAGR.

In FY23, Ganesh Benzoplast maintained favorable financial metrics with a Return on Equity (ROE) of 15.43% and a Return on Capital Employed (ROCE) of 18.03%.

Future Outlook Of Ganesh Benzoplast

The Next Growth Trigger: LPG Terminal

GBP plans to establish an LPG terminal at JNPT. The management has secured the requisite statutory approvals to develop LPG storage tanks at the JNPT facility. It intends to actively pursue the same in the next years.

It owns land at JNPT and intends to build a 48,000t LPG plant at a cost of ₹450-500 crore (payback period of three to four years). This factory is scheduled to begin operations in the third quarter of FY26.

The management’s goal is to increase margins by changing the product mix and accelerating cargo evacuation. It aims to be competitive in the LPG industry by offering consumers better pricing, faster turnaround times, and the ability to handle full VLGCs.

Unlocking Shareholder’s Value

GBP is considering separating the two businesses (LST and chemical), which can be led through well-defined leaderships and focus on each vertical independently. This allows the corporation to plan and strategize for various businesses while also developing game plans for long-term success.

However, an ongoing court case with Morgan Securities has temporarily stalled the demerger of Ganesh Benzoplast’s chemical sector. The matter is currently pending before the Delhi High Court, with a verdict due shortly.

To clarify the operations and value of its underlying businesses, GBP has transferred its entire chemical business to a separate fully owned subsidiary (GBL Chemical). This allows investors to evaluate the fundamental worth of each business separately. 

Conclusion

Ganesh Benzoplast seems well-positioned for growth with its planned LPG terminal and potential demerger to unlock shareholder value. The company has demonstrated strong financial performance with rising revenues and profits. However, the success of its future plans remains to be seen.

What are your thoughts on Ganesh Benzoplast’s prospects? Do you think Ganesh Benzoplast can continue outperforming and deliver strong returns for investors like Anil Kumar Goel?

Written by Nalin Suriya S 

By utilising the stock screenerstock heatmapportfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks, also get updated with stock market news, and make a well-informed investment.


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