Why Borosil Renewables Share Price is Rising

Welcome to today's edition of stocks made easy.

Regular readers of this column turn to us for ideas and investment insights.

In case you missed it:

• Is This Rakesh Jhunjhunwala's Favourite Stock?
• Why Skipper Share Price is Rising
• If You'd Invested Rs 10,000 in PG Electroplast 10 Years Ago

In today's edition, we'll look at Borosil Renewables.

Among the top solar stocks, Borosil Renewables, a leading manufacturer of solar glass and value-added solar products, has been a standout performer.

Not long ago, the company was facing a serious challenge in the form of its ex-factory selling price of solar glass crashing as much as 20%. This had led to a steep erosion in margins.

But in the past few days, the sentiment has turned around as there has been a major development.

The stock price has rallied 25% during the same time and it's up over 5% in intraday trade today as I write this.

Let's look at why the stock price is rising all of a sudden and whether this rally has more legs...

Why Borosil Renewable Share is Rising

Anti-Dumping Duty on Solar Imports

The recent rally in Borosil Renewables shares comes after the Ministry of Finance announced a provisional anti-dumping duty on imports of textured tempered coated and uncoated glass from China and Vietnam.

This move is aimed at curbing unfair trade practices and protecting domestic manufacturers such as Borosil Renewables from the impact of cheaper imports.

The duty will be in effect for six months, starting 4 December 2024, and will apply to all glass products that are used in the solar industry.

Borosil Renewables is seen as the biggest beneficiary as it's the first and only solar glass manufacturer in India. The glass manufactured is used in photovoltaic panels.

Currently, the company enjoys a 40% market share in the domestic market (catering to over 400 customers) and exports its products to the USA, Turkey, and Europe.

India relies heavily on imports for its solar glass, with China and Malaysia being the primary sources.

This presents a unique situation for Borosil Renewables, the sole domestic manufacturer.

China's Loss = India's Gain

Time and again, China's government subsidies have been criticized. These subsidies offer Chinese companies an unfair trade advantage. No wonder US has announced a tariff war on many Chinese goods.

Now, it is perfectly possible for India to rush and fill in the potential gap created due to such trade wars.

It is also possible that China, amid over production and oversupply, finds a way to dump these products in India and other economies at even more aggressive prices. This will hurt Indian manufacturers and exporters.

In fact, the management of Borosil Renewables had already voiced these concerns a couple of months ago.

The domestic selling prices for solar glass have been impacted despite the rise in input cost.

The reason? Anti-dumping duties were discontinued in August 2022, leading to dumping of cheaper goods by China, Vietnam and Malaysia.

With the anti-dumping duties back in place, Indian solar players can now level the playing field.

What Next?

Due to aforementioned problems and margin erosion, Borosil Renewables had reported a loss in FY24 as against a profit in FY23.

Financial Snapshot

Rs m, standalone	FY20	FY21	FY22	FY23	FY24
Net Sales	2,712	5,023	6,442	6,882	9,859
Growth (%)	25%	85%	28%	7%	43%
Operating Profit	400	2,027	2,650	1,766	1,189
OPM (%)	15%	40%	41%	26%	12%
Net Profit	5	896	1,658	885	-165
Net Margin (%)	0%	18%	26%	13%	-2%
ROE (%)	0.1	19.2	23.8	10.7	-1.9
ROCE (%)	2.0	28.9	27.2	11.6	0.4
Dividend (Rs)	0.0	0.0	0.0	0.0	0.0
Debt to Equity (x)	0.3	0.1	0.2	0.4	0.4

Source: Equitymaster

The impact was much harder because Borosil Renewables had taken debt for capacity expansion last year. High depreciation expenses and interest expenses have further deepened the losses.

The company's German operations are also facing a tough time as the demand has dropped to only 40% of its total production capacity... all due to competition from cheaper imports.

Nevertheless, the company is in the process of exploring power sourcing through a hybrid wind-solar plant.

To improve its financial health, Borosil Renewables is planning to reduce its overall debt burden by prepaying some of its high-interest loans.

In June this year, the company conduced a QIP and also announced a rights issue of shares.

The rights issue has got an in-principle approval for an amount of Rs 4.5 bn.

In the second quarter of FY25, Borosil Renewables reported total sales of Rs 2.7 bn, up from Rs 2.4 bn reported in the previous quarter.

Meanwhile, it also turned around and posted a profit of Rs 126 million, recovering from a loss of Rs 36.4 million in the previous quarter.

On top of that, the Indian solar industry is experiencing positive momentum. Solar installations have grown significantly, with 15 gigawatts installed last year. It is significantly higher from 12.8 gigawatts the previous year.

The government has mandated the use of only ALMM-certified modules in new projects. This regulation boosts domestic module manufacturing and, consequently, the demand for solar glass.

Moreover, the government's target to install rooftop solar systems on 10 million houses under the Pradhan Mantri Suryodaya Yojana is expected to boost demand.

Borosil Renewables is strategically positioned to capitalise on this demand. The company has already set up a batch house for 2,000 tonnes.

All being said, investors must keep a close eye on their operational performance, ability to scale, and execution.

Investors should also consider corporate governance as one of the criteria for due diligence before considering an investment.

How Borosil Renewables Share Price has Performed Recently

In the past 5 days, Borosil Renewables share price is up 22%.

In a month, it has gained 17%.

Borosil Renewables has a 52-week high of Rs 667 touched on 1 February 2024 and a 52-week low of Rs 403 touched on 25 October 2024.

In the past 1 year, shares of the company have rallied 28%.

Here's a table comparing Borosil Renewables with its peers -

Comparative Analysis

Company	Borosil Renewables	Asahi India Glass	Haldyn Glass	Piramal Glass	Sejal Glass
ROE (%)	-5.6	14.7	13.1	-16.2	46.9
ROCE (%)	-1.7	15.1	15.9	2.5	17.1
Latest EPS (Rs)	-6.6	12.8	4.3	-37.3	5.1
TTM PE (x)	0.0	56.6	38.6	0.0	109.8
TTM Price to book (x)	7.9	7.1	4.3	3.1	30.9
Dividend yield (%)	0.0	0.3	0.4	0.0	0.0
Industry PE	64.8
Industry PB	6.6

Source: Equitymaster

For a detailed overview, check out Borosil Renewables' financial factsheet.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...