HSIL – Present tense, future perfect

Shares of HSIL gained as much as 3.36% to Rs 55.30 apiece marking their ninth straight day of gain – longest winning streak since November 2017.

The Sanitary ware maker has witnessed change in fortune due to the ongoing COVID-19 pandemic. There is a growing resentment for imports, especially from China, and greater emphasis being placed on achieving self reliant.

Meanwhile, HSIL has said that its Glass manufacturing plant in Hyderabad and Bhongir continued to operate at lower capacity utilisation due to various factors like low demand from customers, constrained availability of labour, trucks for shipments etc.

The company is also incurring fixed costs relating to its plants and businesses during the lockdown, despite lower level of sales.

Meanwhile, it plots gradually ramp-up production levels and dispatches as lockdown eases. HSIL has adequate financial resources to cover its commitments for the near future.

The pandemic has adversely impacted its performance. Sales and profits have been hit during the lockdown. It has not opted for the moratorium and paid all financial commitments to lenders on time.

On positive side, the company is sitting on sufficient level of finishied goods inventories to cater to current demand from its customers.

HSIL promoters Somany Impresa (formerly Paco Exports), acquired 10.63 lakh (1.47% stake) equity shares of the company from open market on February 10.

As a result, Somany lmpresa’s stake in the company rose to 43.51% and that of promoter group to 51.92%.

Post Demerger of HSIL Limited, Marketing & Distribution of Consumer Products and Retail businesses transferred to SHIL; and Marketing & Distribution Business of Building Products transferred to Brilloca.

While the manufacturing of Building Products and packaging products continues to remains with HSIL Ltd. HSIL Ltd. is involved in Manufacturing of building products such as sanitaryware, faucets, pipes and fittings, etc.; and Manufacturing and supply of packaging products such as glass containers, PET bottles and products and security caps and closures

Company’s product portfolio in the building products division including range of sanitaryware, faucets, plastic pipe and fittings, wellness products and other allied products.

HSIL forayed into the plastic pipes and fittings business in FY19 to complement its existing sanitaryware and faucet businesses. Commercial production at the fully automated plastic pipes and fittings manufacturing plant in Telangana started in August 2018.

Also, HSIL has built a wide ranging portfolio of packaging products for both glass and PET, along with synergic product business of security caps and closures. Company is positioned as one of the significant glass container manufacturers in the country, offering packaging solutions to multiple sectors.

During FY19, company has done a capex of around Rs. 336 crore (including CWIP), which was majorly financed through Long term debt of Rs. 250.13 crore.

HSIL has continuously done capex to increase its capacities for manufacturing of faucet and pipes. Further, it has done Capex in AGI Glass includes repairment and refurbishments of furnace of around Rs. 100 crore in FY19 and regular capex in glass segment pertains to improvement in operational efficiency including backward and forward integration

Net net going ahead HSIL post the demerger of the Marketing & Retail brand business is a pure B2B player which will do well over the long term but ndear term challenges post covid 18 are likely to put pressure in short term profitability although long term prospects continue to be good going ahead.

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