Bannerman Energy Sees Path to Profitability, Analysts Predict Breakeven in 3 Years

Bannerman Energy Ltd (ASX:BMN) is predicted to breakeven in 2028, with a final loss expected in 2027. The company is forecasted to achieve a profit of AU$133m in 2028, with an average annual growth rate of 68%. Bannerman Energy has no debt on its balance sheet, reducing repayment concerns and making it a less risky investment.

Gautam Adani's conglomerate is set to enter the petrochemical sector with a 1 million tonne per year PVC plant in Mundra, Gujarat. This ambitious project aims to reduce India's import dependency and challenge Reliance Industries' dominance in the sector. The plant, slated for commissioning by fiscal 2028, will utilize acetylene and carbide-based production processes.

PVC, or Polyvinyl Chloride, is a synthetic plastic polymer widely used in various applications, from pipes and fittings to window and door frames, cable insulation, and more. India's annual PVC demand is approximately 4 million tonnes, with domestic production capacity standing around 1.59 million tonnes, half of which is with Reliance. The demand for PVC is projected to grow at a CAGR of 8-10% driven by sectors such as agriculture, infrastructure, housing, and pharmaceuticals.

Adani Group's flagship Adani Enterprises Ltd is setting up a petrochemical cluster in Mundra, including a PVC manufacturing plant with a capacity of 1 million tonnes per annum. The project is expected to include capabilities for manufacturing PVC, chlor-alkali, calcium carbide, and acetylene units. The Adani group is confident of sourcing feedstock due to its expertise in trading in domestic and international markets and its access to large land parcels and port facilities in Mundra.

The Adani project is poised to reduce the supply gap and import dependency in India's PVC market. It will pit the Adani Group against Reliance, which is currently India's largest PVC producer with an estimated capacity of around 750,000 tonnes per annum. Reliance has PVC plants at Hazira, Dahej, and Vadodara in Gujarat and is looking to double its capacity by 2027.

Initially halted in March 2023 due to financial uncertainties and allegations from US short-seller Hindenburg Research, work on the project was resumed last year. The Adani Group has since refocused its resources, raising over USD 5 billion in equity and additional debt, and fully repaid share-backed financing. The project is financed by an SBI-led consortium.

The Adani Group's portfolio has a proven track record in successfully commissioning and managing large-scale infrastructure and industrial projects. It has an abundance of science and engineering graduates and a well-trained workforce proficient in various skills.

References:

[1] https://economictimes.indiatimes.com/industry/indl-goods/svs/paper-/-wood-/-glass/-plastic/-marbles/adani-to-rival-reliance-with-pvc-plant-by-2028/articleshow/122276290.cms