Haldyn Glass

1.) DOMESTIC CONTAINER GLASS INDUSTRY :

Market Size = Rs.6500Cr.

Volumes ~ 9350 TPD (post addition of 1775 TPD capacity YTD)

2.) Around 10% of the industry production is exported.

3.) Around 2/3rds of the industry production is consumed by Liquor Industry followed by F&B and Pharma. Liquor segment contributes around 85% of Haldyn's revenues. 

4.) Listed Peers : Capacity

Hindustan National Glass - 4300 TPD (largest domestic glass manufacturer)

Piramal Glass Ltd. - 545 TPD (PGL is only focused on C&P segment & pharma and is absent in the liquor packaging segment)

HSIL - 1600 TPD (second largest player in India & claims to have 22% market share. Has 2 Andhra based plants.)

Haldyn Glass Ltd. - 320 TPD (based in Gujarat)   

5.) Power & Fuel Expense / Sales :

HNG - 33.5% (as HNG uses more Electricity & less gas)

PGL - 18.2% (not comparable as realizations are higher in C&P segment)

HSIL - 20.6% (not comparable as ceramics division contributes to around half of the revenues)

HGL - 12.5% (as HGL gets cheap gas from GAIL and ONGC) 

6.) Cost of LPG per unit :

HNG - Rs.23-30/- per scm 

PNG - Rs.16.68/- per scm

HGL - Rs.11.15/- per scm

7.) Total Capacity addition in CY12 = 1825 TPD (24% of existing capacity at the start of CY12)

HSIL has added 475 TPD capacity in AP & HNG has set up two 650 TPD plants in Nasik & AP. The Nasik plant is supposed to cater to the West Indian market.

HGL is also expanding capacity by 50 TPD by year end.

8.) CYCLICAL NATURE OF CONTAINER GLASS INDUSTRY  : 

Due to huge capacity coming onstream, the realizations & margins of HGL might suffer.

HGL's EBITDA Margins increased from 24.5% in FY12 to 30% in Q1FY13.

Only PGL enjoys these kinds of margins due to presence in the C&P segment where realizations & margins are high.

HSIL & HNG both had OPM of around 16% in FY12.

HGL is posting an OPM of over 20% since FY05.

Demand should also grow by 10% p.a. so the demand might bail out the glass packaging industry from excess capacity. 

9.) At current realizations, if HGL maintains 25% OPM than the co. can make an EBITDA of Rs.50Cr. in FY14.

10.) CMP = Rs.19/-

MCap. = Rs.102Cr.

EV = Rs.110Cr.

11.) The best case scenario for HGL will be if "Power & Fuel" costs shoot up for the industry but remain constant for HGL under APM.

12..) Portfolio Weightage - 1%