Borosil Glass Works Ltd : Steady Growth Driven By Strong Brand Reach

13th July 2017 By Edelweiss Fundamental Team

Borosil Glass Works Ltd is a 50+ year-old brand, a pioneer in specialty glass and a market leader in the microwavable kitchen glassware segment. The company is present in two segments — Consumer Products Division (CPD) and Scientific and Industrial Products (SIP). Borosil has acquired two businesses in FY16: (a) Hopewell, and (b) Klasspack. Also, restructuring of Borosil’s businesses will result in Gujarat Borosil becoming a 58% subsidiary.

A strong balance sheet and cash surplus will enable Borosil to afford investment in brand building and acquisitions to supplement organic growth. Further, the recent GST implementation will support organised players. Increasing market share, a vibrant product portfolio and wide distribution reach should enable Borosil to clock 32% earnings CAGR, teeing off healthy cash flows and robust return ratios.

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Key Highlights
  • The company is the leader in laboratory glassware and microwavable kitchenware segments in India with ~60% domestic market-share in each.
  • Borosil’s SIP division is expected to grow at 20% CAGR over FY17-20E with entry into a new market of pharma packaging products via acquisition of Klasspack as well as organic revenue growth of ~16%.
  • Borosil’s CPD revenue is expected to clock CAGR of 19% over FY17-20E driven primarily by the acquisition of Hopewell - improvement in utilization, introduction of new products and investment in brands
Pros
  • Borosil has a strong distribution network. In CPD - over 200 distributors/10,000 retailers . In SIP - 5,000 active customers and 170 distributors
  • The SIP business is expected to support growth in CPD business in future
  • Improvement in product mix and backward integration will boost operating margin
Cons
  • Borosil has a strong distribution network. In CPD - over 200 distributors/10,000 retailers . In SIP - 5,000 active customers and 170 distributors
  • The SIP business is expected to support growth in CPD business in future
  • Improvement in product mix and backward integration will boost operating margin

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