1. 🧠 At a Glance
HAL is a part of the Bagla Group, known for making carton sealing tapes, BOPP films, and other sticky industrial stuff. With its own adhesive plant, paper core facilities, and multiple slitting & spooling lines, it sells import-substitute tapes across India and exports globally.
Financially, it’s decent:
- TTM PAT ₹15 Cr, Sales ₹285 Cr
- ROE 18.4%, ROCE 16%
- Stock P/E 11.2x
But the recent asset sales, fire claims, and subsidiary moves in Indonesia have added layers of mystery (and maybe margin).
2. 🎬 Introduction with Hook
They say money sticks to money — but Hindustan Adhesives Ltd is hoping that adhesives stick to margins.
While most investors were busy tracking plastic giants like Supreme or Astral, HAL quietly:
- Grew margins to 16% OPM in Mar 2025
- Recovered from a fire loss
- Went shopping in Indonesia
- Still didn’t pay a single dividend
Now trading at ₹338, it’s down 30% from its ₹488 peak, but up 3x from pre-COVID levels. So what gives?
3. 🧵 Business Model – WTF Do They Even Do?
Core business = Industrial packaging tapes
🧵 Products:
- BOPP tapes (Acrylic + Hot-melt)
- Filament tapes, Tamper-proof tapes
- Carry handle tapes, Tear tapes, Core manufacturing
🏭 Facilities:
- In-house adhesive manufacturing
- Paper cores, cartons, printing, slitting, spooling
- New plant in Howrah (Sep 2024) commenced commercial production
🌍 Global Play:
- Acquired PT Bagla Group Indonesia (99.99%)
- Exports account for a decent share, as per past ARs
So yes, not just a trader — they’re a full-stack tape maker with backward integration.
4. 📊 Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY25 |
|---|---|
| Revenue | ₹285 Cr |
| Net Profit | ₹15 Cr |
| OPM | 12% |
| ROE | 18.4% |
| ROCE | 16.0% |
| EPS | ₹30.08 |
| P/E | 11.2x |
| Market Cap | ₹173 Cr |
| Book Value | ₹178 |
| Price / Book | 1.9x |
✅ Profitability is strong
✅ Margins improving: Q4 OPM was 16%
⚠️ Sales growth is stagnant — down 6% YoY
⚠️ Fire insurance claim of ₹2.12 Cr sitting as a receivable
5. 💸 Valuation – Is It Cheap, Meh, or Crack?
Let’s apply the ol’ Edu DCF-For-Dummies™ logic:
- EPS: ₹30.08
- Let’s assume sustainable EPS = ₹25 (factoring one-offs)
- Apply conservative P/E of 12–14 for this industry
🧮 Fair Value = ₹25 x 12–14 = ₹300 – ₹350/share
✅ CMP ₹338 is within FV range
But here’s the twist — growth is lacking, and earnings depend heavily on raw material pricing + forex + capacity utilization
6. 🍿 What’s Cooking – News, Triggers, Drama
🧨 FY25 Drama Recap:
- 🔥 Fire Loss: ₹2.12 Cr insurance claim recognized in books — yet to be received (qualified auditor opinion)
- 🏭 New plant at Howrah went commercial in Sep 2024
- 🇮🇩 Acquired PT Bagla Indonesia to expand into ASEAN
- 💰 Sold Uttarakhand unit assets for ₹2.5 Cr to group entity (Bagla Polifilms)
⚠️ Red Flag? Inter-group asset transfers are always worth tracking.
7. 🧾 Balance Sheet – How Much Debt, How Many Dreams?
| Metric | FY25 |
|---|---|
| Equity Capital | ₹5 Cr |
| Reserves | ₹86 Cr |
| Borrowings | ₹109 Cr |
| Fixed Assets | ₹71 Cr |
| CWIP | ₹59 Cr |
| Total Assets | ₹259 Cr |
🧨 Debt-to-equity = ~1.2x
🧠 But it’s mostly for capex in CWIP — especially for Bagla Technopack and Howrah unit
Still, not debt-free, so interest cost does pinch ~₹6 Cr annually
8. 💵 Cash Flow – Sab Number Game Hai
| Year | CFO | CFI | CFF | Net Cash |
|---|---|---|---|---|
| FY25 | ₹18 Cr | ₹-49 Cr | ₹35 Cr | ₹4 Cr |
| FY24 | ₹13 Cr | ₹-9 Cr | ₹-2 Cr | ₹1 Cr |
📌 Capex-heavy in FY25 due to expansion + acquisitions
📌 Healthy cash flow from ops, but no dividend payout
📌 ROCE stable around 16–20%
9. 📐 Ratios – Sexy or Stressy?
| Ratio | Value |
|---|---|
| ROE | 18.4% |
| ROCE | 16.0% |
| Debt/Equity | ~1.2x |
| Inventory Days | 148 ❗ |
| Cash Cycle | 96 days |
| Promoter Holding | 68.58% |
| Dividend Yield | 0% 🙃 |
✅ Strong return ratios
❗ But working capital cycle worsened
🚫 Still no dividend despite profit — likely to conserve cash for expansion
10. 🧾 P&L Breakdown – Show Me the Money
| Year | Sales | PAT | EPS | OPM |
|---|---|---|---|---|
| FY23 | ₹321 Cr | ₹5 Cr | ₹9.5 | 6% |
| FY24 | ₹303 Cr | ₹16 Cr | ₹32.07 | 11% |
| FY25 | ₹285 Cr | ₹15 Cr | ₹30.08 | 12% |
📉 Sales falling for 3 straight years
📈 Profit rising — thanks to improved cost control, margin, product mix
11. 🥊 Peer Comparison – Who Else in the Game?
| Company | CMP | P/E | ROE | OPM | MCap |
|---|---|---|---|---|---|
| Supreme Inds | ₹4,196 | 57.7x | 17.1% | 13.7% | ₹53,000 Cr |
| Astral | ₹1,486 | 76.9x | 15.2% | 16.2% | ₹39,900 Cr |
| Time Techno | ₹434 | 25.4x | 14.2% | 14.4% | ₹9,861 Cr |
| Hind. Adhesive | ₹338 | 11.2x | 18.4% | 12.0% | ₹173 Cr |
📌 Valuation is cheapest in the list
📌 ROE better than Astral or Supreme
BUT… the others are large brands. HAL is still in the SME-to-midcap transition zone
12. 🧪 Miscellaneous – Shareholding, Promoters
- 👨👩👧👦 Promoter Holding: 68.58% (stable)
- 👥 Public: 31.4%
- 🧮 Total shareholders: ~7,600
- 🏭 Multiple group entities (Bagla Polifilms, Technopack, Tecvision)
- 🚩 Fire insurance claim + asset sale to group company = needs close tracking
13. ⚖️ EduInvesting Verdict™
“This stock won’t double in a day — but it might tape together a 2X over 2 years.”
📈 Positives:
- Strong margin improvement
- Cheap valuation vs peers
- Global expansion, new plants, backward integration
- ROE and ROCE >15%
📉 Negatives:
- Sales de-growth
- Debt still elevated
- Fire loss + qualified audit = caution
- Zero dividends despite multi-year profits
⚖️ Verdict:
Not a screaming buy. Not a bubble either.
HAL is one of those niche players with just enough stickiness — in products and numbers — to warrant a serious watch.
💰 Edu Fair Value Range = ₹300 – ₹370/share
(CMP ₹338 = fairly valued to mildly undervalued)
✍️ Written by Prashant | 📅 08 July 2025
Tags: Hindustan Adhesives, Bagla Group, BOPP tapes, industrial packaging, specialty tapes, fire loss claim, Indonesia acquisition, EduInvesting stock analysis
