Clariant Chemicals (India) Ltd (CCIL) Clariant Chemicals (India) Ltd. (CCIL), a 63.4% subsidiary of
Clariant AG Switzerland, is a leading manufacturer of specialty chemicals in India catering to various sectors including automobiles, paints, personal care, food & beverage and among others. It has four manufacturing plants across the country. We expect significant export opportunity for CCIL from its parent as some plants in EU and South Korea are not likely to be operative. CCIL is a debt-free cash rich company, with cash on books at Rs.181 crore as on June 2013 (~14% of its current market cap). The company had restructured its business in 2011 and sold land & infrastructure worth Rs.240 crore of which it distributed a third as special dividend to shareholders. It had paid a total dividend of Rs.60 per share for CY2011 (including a special dividend of Rs.30). For CY2012, CCIL paid a total dividend of Rs.27.5/share translating to a yield of 5.7% at the current market price; CCIL’s board in March 2013 approved the sale of 3 out of the total 9 business units - Textile Chemicals, Paper Specialties and Emulsions to SK Capital (US based PE Investor) for a consideration of Rs.209 crore. The divestment of the company's business includes a textile chemical plant situated at Roha. The total cash after considering the divestment (post tax) would increase to about Rs.389 crore (Rs.145 per share) or 30% of its current market cap; Further, the company has recently decided to sell its land at Kolshet, Thane and move its plant to a new location. Based on media reports, the company has around 88 acre of land in Thane and is looking to raise about Rs.1,500-Rs.1,600 core. Even if we consider realisation of Rs.1,200 core for the land, post tax the cash would increase by about Rs.840 crore (Rs.311 per share). Considering its history with regards to being investors friendly, we believe there is likely case for a special dividend by the company in future as the total cash post the sale of 3 business units and land at Thane would increase to Rs.1,229 crore (Rs.456 per share); For Q2CY2013 on CCIL’s net profit declined by 21.6% YoY to Rs. 24 crore. While Revenue grew by 14% YoY to Rs. 327 crore, EBITDA declined by 17% YoY to Rs. 38 crore with margin contracting by 420 bps to 11.5%. This was mainly due to raw material and employee cost, which as a percentage of sales increased by 194bps YoY and 305 bps YoY to 63.3% and 10% respectively. For H1CY2013, while the revenue grew by 15% YoY to Rs.612 crore, the company’s net profit declined by 13% YoY to Rs.49 crore. Operating profit declined by 3.7% YoY with margin contracting 233 bps to 12.1%. CCIL reported EPS of Rs.9 and Rs.18.3 for Q2CY2013 and H1CY2013 respectively. CCIL has declared an interim dividend of Rs. 10 per share; CCIL’s core business (after the sale of 3 units) would continue to growth with focus on high margin businesses. We expect CCIL to report an EPS of Rs.25.40 in CY2013. We value the core business at Rs.254, 10x its CY2013E EPS, which we believe is conservative given the MNC parentage. Further the company would have cash per share of Rs.456 per share (Rs.145 existing + Rs.311 from land sale), giving a total fair value of Rs.710 per share over a one year period and recommend Buy. -- -- For Anything related with Stock market be Online at http://www.niftyviews.com/ Get free updates on your mobile phone. Sms "Join TSR " and send to 09223492234 FOR TRIAL STOCK/NIFTY/OPTION CALLS You received this message because you are subscribed to Google Group "STOCKRESEARCHER" group. To post to this group, send an email to [email protected] To unsubscribe email [email protected] for more info visit http://groups.google.com/group/STOCKRESEARCHER?hl=en-GB . This is Not a Spam Mail. Disclaimer :- "The opinions expressed by the members on this board are based on their individual experience and perceptions and to share information with other members with the best of intentions to help fellow members in investment decisions as equity investment is a risky venture." --- You received this message because you are subscribed to the Google Groups "TEAM STOCKRESEARCHERS" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. For more options, visit https://groups.google.com/groups/opt_out.
