20 MICRONS

Buoyed by expertise & govt policy

20 Microns, headquartered at Vadodara in Gujarat, is among the country’s leading industrial mineral producers with an experience of over three decades. The company offers innovative products in the field of functional fillers, extenders and speciality chemicals, and caters to industries like paint and coatings, plastics, textiles, rubber, paper, ceramics, adhesives and sealants.

The company has five subsidiaries and one joint venture, with nine strong manufacturing units. Five captive mines are its biggest strength to source raw materials. One of its premier subsidiaries, 20 Microns Nano Ltd, specialises in the production of functional additives by chemically modifying minerals. Interestingly, these modified minerals serve as cost-effective alternatives to imported materials. It also has the benefit of its own state-of-the-art R&D centre in Vadodara, comprising 50 team members, of whom 20 are scientists.

During first half of the current FY24, the company has earned Rs 390 crore in revenue from operations vis-à-vis Rs 374 crore in the corresponding period of the previous year, whereas EBITDA has gone up by 16.82% due to an improved margin from 12.90% to 14.43%. PAT at Rs 31 crore against Rs 25 crore reflected an improvement of 22.67%, and aided with a reduction in finance cost by 10.55% from Rs 92.16 crore to Rs 82.44 crore, resulted in better PAT margins.

The equity capital is Rs 17.64 crore, wherein the promoter group holds a 44.95% stake and the remaining 55.05% is amongst 19,763 public shareholders. The consolidated book value per share is Rs 83.20, and the company has paid a dividend of 15% for FY23. The long- and short-term borrowings are pegged at Rs 15.88 crore and Rs 85.50 crore as of September-end. Prospects for the company moving ahead are highly promising. Just consider:

BIGGIE CLIENTS

• The paints industry has contributed 51.5% to the H1 revenue, followed by 22.5% from the plastics industry and the balance 26% from rubber, paper, PVC and others. Its major clients include Asian Paints, Berger Paints, Finolex, Supreme, Plastibends and JK Tyres, to name a few. The management has attributed the good H1 show to a surge in demand for the company’s products from user industries, as well as to reduced power, fuel and freight costs.
• The company’s value-added products, along with its newly developed construction chemicals and mineral fertilisers, have garnered significant interest and are poised to make a positive impact on its bottomline in the coming quarters. On the industry front, the company has witnessed a clear increase in demand for its highmargin and economically efficient offerings. In order to grab this opportunity, the company has started focusing more on products which not only serve as import substitutes but also result in cost-effectiveness. An improvement in operational efficiency, development of innovative products and bolstering capacities are three important areas that the company is determined to leverage so as to grow faster within the industrial mineral sector
• The business outlook for the second half of FY24 too has been concluded on a positive note by the management. They expect revenue growth by 15-18% for the full year over FY23 and also expect the EBITDA margin for FY24 to remain in a similar range as witnessed in 1H, with a likely improvement of 50-100 bps.

MARKET INTEREST

• The stock price has seen a 52-week high of Rs 162 very recently, which otherwise was hovering at around Rs 100- 110 for a long period. The company’s market capitalisation is at Rs 474 crore. The new and different opportunities, its core domain expertise, own captive mines and R&D centre, a favourable government policy on minerals and mining, and the management’s capabilities indicate that 20 Microns is on a sound wicket and the stock is worth buying, though it might look a little expensive. In light of the current geo-political developments, it would be prudent, to accumulate the stock in small quantities at appropriate times for decent returns.

PERFORMANCE INDICATORS (Rs. in crore)

SJVN

Growth boost from hydro-renewable energy

SJVN is a 35-year-old NSE-BSE listed joint venture company between the government of India and the government of Himachal Pradesh. Primarily engaged in hydro power generation, it is now spreading its wings with an ambitious target of reaching 5,000 MW by 2023-24, 25,000 MW by 2023 and 50,000 MW by 2040, mainly by widening its renewable energy portfolio in a big way. The company doing quite well on the financial front and prospects ahead are quite encouraging. Just consider:

• The company continues to expand, grow and diversify its project portfolio exponentially pan-India and abroad. In FY23, SJVN created several records and achieved significant milestones. Surpassing the total design energy of 8,705 million units, it generated 9,335 million units of energy, which is the third highest generation ever achieved by the company.
• Almost in the last one year, 24 projects aggregating 23,909 MW have been added to its portfolio. Including its associate companies, the project portfolio stands at an all-time high with 79 projects and 55,814 MW, in addition to three transmission lines totalling 340 km spread across 13 states and two countries of the Indian subcontinent.
• Currently, two hydro plants of 1,912 MW, five renewable plants of 179.5 MW and one transmission line of 86 km are operational. Meanwhile, five hydro projects of 1,618 MW, one thermal project of 1,320 MW, eight renewable projects of 1,500 MW and two transmission lines of 254 km are under construction. During the current FY24, the company is targeting projects of 1,455 MW and a transmission line of 37 km for commissioning

STATES’ DEMAND

The government of Arunachal Pradesh has recently allotted five hydro projects to SJVN totalling 5,097 MW. Likewise, it has signed an MoU with the government of Goa for develop ment of renewable energy, hydro power projects, PSPs and ocean floating solar projects in that state. The company has kept an annual revenue target of more than Rs 10,000 crore over the next three fiscals. SJVN, along with its associate companies, has entered into a series of MoUs with various government and non-government agencies for allotment of projects, which include ten hydro projects of 2,507 MW, five renewable projects of 21,000 MW and ten pumped storage projects of 13,190 MW

The company’s huge plans for new capacity additions will obviously need sizeable capex going forward. Hence, it has signed key MoUs in the current fiscal, including a major MoU with REC Ltd, for financing the projects of SJVN, its subsidiaries and joint ventures to the extent of Rs 50,000 crore. In FY23, the company incurred a record capex of Rs 8,240 crore visà-vis a mammoth target of Rs 8,000 crore. The current year’s capex target is being kept at Rs 10,000 crore. Its capital work-in-progress has been Rs 15,674 crore as on the year ended March 2023, against Rs 8,369 crore in the previous year.

REVENUE RECORD

• The company clocked the highest ever income from operations of Rs 2,935.41 crore during FY23, which is an increase of Rs 513.45 crore over the earnings of the previous fiscal. Profit after tax increased by Rs 385.93 crore to Rs 1,363.45 crore against Rs 977.52 crore in the previous year, and it paid a dividend of 17.77%.
• SJVN’s equity capital is Rs 3,930 crore and the consolidated book value per a Rs 10 face value share is Rs 35.27. Its working capital cycle also has improved due to the improvement in trade receivables from 45 days to 35 days. The consolidated debt is at Rs 13,993 crore, comprising Rs 13,248 crore long-term and Rs 745 crore short- term. Currently, the company’s share is being quoted at Rs 69.44 with a yearly high-low of Rs 84 and Rs 30 respectively, supported by a market capitalisation of Rs 27,288 crore and promoters’ holding of 81.85%. Most importantly, SJVN’s selection as the fourth renewable energy implementing agency by the government of India, in addition to SECI, NTPC and NHPC, certainly improves its fortunes as that would bring robust growth in project volumes, revenues and profits.

PERFORMANCE INDICATORS (Rs. in crore)