Stock in Action – BEPL

Tanushree Jaiswal Tanushree Jaiswal

Last Updated: 19th June 2024 - 02:52 pm

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BEPL Share Movement for Day 

 

Why Bhansali Engineering Polymers Share Price is Buzzing?

Bhansali Engineering Polymers (NSE: BEPL) has captured attention of investors, with its stock price surging by 21% over last three months. This significant rise prompts deeper examination of company's fundamentals & performance indicators to understand underlying factors driving this market interest.

Regarding Bhansali Engineering Polymers Limited Business

BEPL, Mumbai-based company, was founded in 1986 & produces ABS & styrene-acrylonitrile (SAN) resins. company's two plants are situated on Abu Road in Rajasthan & Satnoor in Madhy Pradesh. Abu Road plant can produce 100,000 tons of ABS resin annually (TPA) in addition to SAN resins. Designed for backward integration, Satnoor unit can produce 15,000 TP of high rubber graft (HRG).

Should I Invest in Bhansali Engineering Polymers Stock & Why?

Bhansali Engineering Polymers Limited (BEPL) presents intriguing investment opportunity, particularly for those interested in dividends & growth potential. Here are key reasons to consider.

BEPL Financial Performance & Stability

- Operating Revenue & Profitability
BEPL reported operating revenue of ₹ 1,228.4 crore on trailing 12-month basis, though it experienced slight annual revenue de-growth of (-)2%. Despite this, company maintains robust pre-tax margin of 14% & return on equity (ROE) of 12%.

- Debt-Free Status
BEPL's debt-free status & strong balance sheet enable it to report stable earnings growth across business cycles, reflecting financial prudence & stability.

BEPL Dividend Analysis

- Upcoming Dividend
Investors looking to benefit from BEPL’s dividend need to act quickly as stock is about to trade ex-dividend. ex-dividend date is June 21st, with dividend payment of ₹1.00 per share to be made on July 2nd.

- Dividend Yield & Payout
Over last year, BEPL distributed ₹4.00 per share, offering trailing yield of 3.9% at current stock price of ₹102.92. company paid out 55% of its earnings as dividends, standard payout level. However, it paid out 155% of its free cash flow as dividends, raising concerns about sustainability if cash flows do not improve.

- Dividend Growth
BEPL has shown strong commitment to rewarding shareholders, with impressive average annual dividend growth rate of 51% over past decade.

Earnings Growth & ROE

- Earnings Growth
BEPL has demonstrated robust earnings growth, with earnings per share increasing by 31% annually over past five years. This growth is positive indicator for potential future dividends & share price appreciation.

bepl
 

- Return on Equity (ROE)
With ROE of 19%, BEPL is effectively converting shareholder investments into profits, outperforming industry average of 10%. This efficient profit generation has supported company’s respectable net income growth of 16% over past five years.

Return on Equity

Return on Equity Percentage
10 Years 27%
5 Years 29%
3 Years 23%
Last Year 18%

Investment Strategy & Market Perception

- PEG Ratio & Valuation
Inspired by Peter Lynch’s growth-at-a-reasonable-price approach, BEPL’s valuation through PEG ratio (Price/Earnings to Growth) suggests that stock may be trading at below-average prices compared to its growth potential, attracting value-oriented investors.

- Technical Analysis
Technically, stock is trading below its 50-day moving average (DMA) & close to its 200-DMA, indicating potential buying opportunities for technical traders.

BEPL Risks & Considerations

- Dividend Coverage Concerns
high payout of free cash flow as dividends is concern. If BEPL continues to pay more than it generates in cash, it may need to borrow or dip into reserves, potentially jeopardizing future dividend payments.

- Revenue De-Growth
Slight annual revenue de-growth of (-)2% warrants attention. Investors should monitor whether company can reverse this trend & achieve consistent revenue growth.

BEPL Strengths

1. Almost debt free.
2. Providing good dividend yield of 3.51%.
3. BEPL Has good return on equity (ROE) track record: 3 Years ROE 23.4%
4. Has been maintaining healthy dividend payout of 92.4%

BEPL weakness

Company has delivered poor sales growth of -0.05% over past five years.
bepl

Conclusion 

Bhansali Engineering Polymers Limited shows promising investment case with strong earnings growth, robust balance sheet, & commitment to rewarding shareholders through dividends. However, potential investors should weigh these strengths against risks related to cash flow coverage of dividends & recent revenue trends. Overall, while dividend yield & growth are attractive, caution is advised regarding sustainability of high dividend payouts relative to cash flow. 

Investors interested in combination of growth & dividend income might find BEPL appealing, but they should remain vigilant about company’s financial health & market conditions.
 

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Disclaimer: Investment/Trading in securities Market is subject to market risk, past performance is not a guarantee of future performance. The risk of loss in trading and investment in Securities markets including Equites and Derivatives can be substantial.

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