Sign up for More Articles:

Ecomonic Times covered our Investing Journey:

Analysis: Technocraft Industries (India) and Gulshan Polyols Limited

Modified on January 2, 2019

This article provides fundamental analysis of Technocraft Industries (India) Ltd and Gulshan Polyols Ltd


Technocraft Industries (India) Ltd

Q: Hi Vijay…excellent blog! Any thoughts on Technocraft Industries (India) Ltd? Debt free Co with good profitability and return ratios? Around 8x p/e.


Author’s Response

Thanks for writing to me!


Financial Analysis of Technocraft Industries (India) Ltd:

Technocraft Industries (India) Ltd equity analysis research report

Technocraft Industries (India) Ltd has been growing its sales at a moderate pace of about 15%, which seems to have improved to 20-25% recently. However, its fluctuating profitability margins (both OPM & NPM) indicate that it finds difficulty in passing over the impact of raw material costs to its customers.


Operating Efficiency Analysis of Technocraft Industries (India) Ltd:

Operating efficiency parameters of Technocraft Industries (India) Ltd seem to have improved as indicated by fixed asset turnover ratio and inventory turnover ratio.

Technocraft Industries (India) Ltd is not able to convert profits into free cash flow from operations as has been reflected by comparison of cumulative CFO & PAT of last 10 years. Cumulative CFO for FY2005-14 is INR 275 cr. against cumulative PAT of INR 352 cr. for the same period. If we notice the data for past 3 years since when Technocraft Industries (India) Ltd has been showing enhanced growth, this difference between PAT and CFO gets very prominent.

For last 3 years (FY2011-14), cumulative CFO is INR 102 cr. against cumulative PAT of INR 165 cr. This has led to Technocraft Industries (India) Ltd relying on debt to fund its cash requirements. Since FY2011 the debt of Technocraft Industries (India) Ltd has increased from INR 84 cr. to INR 110 cr.

Overall, it seems Technocraft Industries (India) Ltd has started on an enhanced growth path since last 3-4 years with efficient utilization of inventory and assets. However, fluctuating profitability margins reflect that the company is not able to quickly pass on the impact of raw material costs to its customers, which can be a cause of concern in tough environment.


Margin of Safety in the market price of Technocraft Industries (India) Ltd:

Technocraft Industries (India) Ltd is available at a P/E ratio of 9.3, which provides some margin of safety as described by Benjamin Graham in his book The Intelligent Investor.

Read: 3 Simple Ways to assess the Margin of Safety in a Stock

These are my views about Technocraft Industries (India) Ltd. However, you should do your own analysis before taking any investment related decision about any company.

You may use the following steps to analyse the company: “How to do Detailed Analysis of a Company

Hope it helps!



Gulshan Polyols Ltd

Q 1: Hi Dr. Vijay. Thanks for answering my earlier question fast. I have a question on Gulshan Polyols Ltd. I am holding it for some months and would like to retain it for couple of years. I have researched Gulshan Polyols Ltd And found it to be good. Following are the results of ratios, which I think, are good:

  • PEG Ratio – 0.84
  • Debt Equity Ratio – 0.46
  • Price to Sales – 0.60
  • Price to Book Value – 1.22
  • Market Capitalization – INR 233.37 cr.
  • Dividend Yield – 1.06
  • Earnings Yield – 11.58%
  • PE – 7.94
  • Current Ratio – 2.71
  • Interest coverage – 14.91
  • Net cash flow – 0
  • ROE avg 5 yrs – 16.00%
  • ROE last yr – 17.00%
  • PAT/CFO (2005-14) – 134/169
  • PE * PB – 9.69
  • Promoter’s shareholding – 68.77%

I would appreciate if you can tell me if my choice is correct or not.

Q 2:

Dear Sir, Please provide your opinion on the following company, Gulshan Polyols Ltd. (GPL). I have tried to analyse the company performance in line with the framework provided by you on this website.

  • Set up in 2000 by Dr C K Jain, GPL is engaged in the manufacturing of Calcium Carbonate (CC) and Sorbitol & Liquid Glucose (LG). The company is a diversified company and very well known name in the domestic and international markets for manufacturing of the Calcium Carbonate and Sorbitol and its by-products.
  • Sorbitol is a water soluble polyhydric alcohol used in the manufacture of toothpaste, tonics, liquid pharmaceutical formulations, cosmetic products, vitamin syrups, cough syrups, and tablet compounding, as well as in oral care, cosmetics, pharma, food products, and paints industries.
  • Calcium carbonate is used as an input material in various industrial sectors, such as PVC products, rubber, plastic, polymer, paint, cable, leather, and paper.
  • GPL has an impressive clientele comprising of Colgate, Palmolive, Hindustan Unilever Ltd, Asian Paints.
  • Global presence in 35 countries, across three continents.
  • Corn and rice are the major raw materials for manufacturing sugar starch; as such, a major risk is volatility of in prices of these raw materials.
  • Mr. C.K. Jain, the Chairman and MD, is a doctorate degree holder in Chemistry.
  • The company is rated CARE A+ (upgraded in Dec-14) which indicates high safety.


Financial Performance of Gulshan Polyols Ltd:

  • The company is a superbly consistent performer as reflected in the 10 years CAGR PAT growth of 37.68% and 3 years CAGR PAT growth of 32.03%
  • The fixed asset turnover has improved over the years indicating operating efficiency
  • Despite strong growth, the operating margins have been consistent over the years at 13-15%, indicating pricing power.
  • With low interest outgo, the net margins are also consistent.
  • The cumulative cash flow from operations is higher than c. PAT over the last five years.
  • Conservatively financed with gearing of only 0.46 times as of Mar-14
  • Despite the strong fundamentals, the market has not recognised the healthy growth of this company since the PE Multiple is 12, indicating high margin of safety given the high PAT growth.
  • Healthy ROE of 14-16% over the years.
  • Small market capitalization of Rs. 345 crore with low investments by DIIs/ FIIs.
  • Current Investments + Cash on books is ~INR 45 crore. Thus, company has zero debt (adjusted for cash balance/ investments.)


I feel there is significant opportunity for re-rating give the strong growth profile. Even without any re-rating, this is the ideal steady compounder given the y-o-y profitability growth.


Author’s Response

Thanks for writing to me!


Financial Analysis of Gulshan Polyols Ltd:

Gulshan Polyols Ltd equity analysis research report

Gulshan Polyols Ltd has been growing at a fast pace during FY2005-11 whereas since FY2011 its growth rate has slowed down a bit from earlier 20-25% to current 9-10%. However, Gulshan Polyols Ltd has been able to maintain its profitability margins over the years as operating profit margins are stable at about 14-15%.

Net profit margins (NPM) seem to have improved over recent years from 6% to 8-9%. The major factor leading to the improvement in NPM is decrease in interest expense from INR 5.5 cr. in FY2009 to INR 3.6 cr. in FY2014. However, it should not be assumed that actual interest outgo of the company has decreased during the period.

Gulshan Polyols Ltd has been doing capital expenditure to increase its production capacity and the financial data reflects that it has been raising debt to fund its capex. Debt has more than doubled from INR 32 cr. to INR 79 cr. in FY2014. INR 79 cr. of debt at conservative 10% rate of interest would lead to interest cost of INR 7.9 cr. per year. However, part of the interest cost on this debt is being capitalized; means is not being deducted from income to arrive at net profit. An investor needs to monitor whether Gulshan Polyols Ltd is able complete its capacity expansion plans properly and effectively use the new capacity to generate higher sales revenue.

Gulshan Polyols Ltd has been witnessing declining tax rates. An investor should analyse the tax rebates, if any, available to Gulshan Polyols Ltd before taking any investment decision about it.


Operating Efficiency Analysis of Gulshan Polyols Ltd:

Operating efficiency parameters like fixed asset turnover ratio, receivables days and inventory turnover ratio reflect declining trend. This indicates that company’s operations are becoming capital intensive as it is growing on its expansion path. An investor should closely monitor the movement of operating efficiency parameters of Gulshan Polyols Ltd in future for any further deterioration. If such deterioration is witnessed, then the investor should analyse the reasons for such deterioration in detail and convince herself before taking any investment decision.

Overall, it seems Gulshan Polyols Ltd was growing at a good pace until last 3-4 years, when its growth has started slowing down. Gulshan Polyols Ltd has been doing further capital expenditure to maintain its revenue growth. However, the capacity expansion has been debt funded, which has more than doubled its debt over last financial year. Growing scale of operations seems to have taken a toll on the operating efficiency Gulshan Polyols Ltd. An investor needs to closely monitor the operating efficiency going ahead.


Margin of Safety in the market price of Gulshan Polyols Ltd:

Gulshan Polyols Ltd is available at a P/E ratio of about 10, which offers low margin of safety as described by Benjamin Graham in his book The Intelligent Investor.

Read: 3 Simple Ways to assess the Margin of Safety in a Stock

These are my views about Gulshan Polyols Ltd. However, you should do your own analysis before taking any investment related decision about Gulshan Polyols Ltd.

You may use the following steps to analyse the company: “How to do Detailed Analysis of a Company

(Data of Gulshan Polyols Ltd on does not include cash flow statement for FY2014. The same has not been factored in the above analysis.)

Hope it helps!





  • The above discussion is only for educational purpose to help the readers improve their stock analysis skills. It is not a buy/sell/hold recommendation for the discussed stocks.
  • I am registered with SEBI as an Investment Adviser under SEBI (Investment Advisers) Regulations, 2013.
  • Currently, I do not own stocks of the companies mentioned above in my portfolio.

Get a FREE e-book and join 37,500 subscribers

Free Investing Ebook Case Studies Peaceful Investing
  • Get the e-book: "Case Studies: Applying Peaceful Investing Approach"
  • Learn fundamental analysis by reading 20 case studies in this e-book
  • Get email notifications of our future articles
  • If you do not find our email containing the e-book, in the inbox within next 5 seconds, then please search in spam/social/ promotions folders

Follow My Portfolio with Latest Buy/Sell Transaction Updates

  • Historical annualized return (CAGR) of the portfolio 34.16% against CAGR of Sensex of 11.35%
  • We identified companies, which were later invested by Sanjay Bakshi, Mohnish Pabrai, PE funds, Mutual Funds
  • See details of stocks in our portfolio
  • Get updates of buy/sell transactions in our portfolio by email

"Peaceful Investing": My Stock Investing Approach

“Peaceful Investing” approach is the result of my more than a decade of experience in equity markets. This approach helped me invest even when I had a full-time corporate job and could not spare a lot of time for stock analysis. During my investing journey, I have faced all the common challenges of the investors, the biggest one being “scarcity of time”. “Peaceful Investing” approach keeps in mind that an investor will have limited amount of time to spare for stock investing. 

The objective of “Peaceful Investing” approach is the selection of such stocks, where once an investor has put in her money, then she may sleep peacefully. Therefore, if later on, the stock prices rise, then the investor is happy as she is now wealthier. On the contrary, if the stock prices fall, even then the investor is happy as she can now buy more quantity of the selected fundamentally good stocks.

Watch Balance Sheet Analysis through a Free Sample Video:

Play Video

Please share your comments here: