{"id":1140,"date":"2020-07-20T18:34:00","date_gmt":"2020-07-20T18:34:00","guid":{"rendered":"http:\/\/oscillationss.blogspot.com\/?p=1140"},"modified":"2020-07-20T18:34:00","modified_gmt":"2020-07-20T18:34:00","slug":"clariant-chemicals-india-ltd-updates","status":"publish","type":"post","link":"https:\/\/oscillations.in\/?p=1140","title":{"rendered":"Clariant Chemicals (India) Ltd: Updates"},"content":{"rendered":"
\n<\/p>\n
\nDear All, Clariant chemicals has
\njust performed as per our expectations and given great returns so far keeping
\nin view in the tough market situation. <\/span>Congratulations
\nto all those who had picked it when it was lying low in a corner. Clariant was
\nadvised around 270 in Nov-2019 (click here)<\/a> and (here)<\/a> for earlier posts on it. It has touched 600 recently so a good 120%
\nreturn.<\/span> I added more of this one at 230 in Mar-2020 when market was hit badly
\ndue to Covid crisis. In Nov-19 when we entered, it was a special condition
\nstock as it was expected to sell its Masterbatches and Pigments business to
\nfocus more on high margin specialty chemicals business. I was expecting it to
\nsell the same at anywhere around 1500 cr to 2000 cr valuation while it was
\navailable at just 600 cr market cap. So the valuation discount was massive.<\/div>\n
\n<\/div>\n
\nSo as of now, it has sold off its
\nMasterbatches business for 426 cr which is around 17 times its previous year
\nEBITDA just as per our expectations. The turnover of Masterbatches business was
\n284 cr so it has got the valuations of 1.5 times of turnover. And as expected
\nit has announced special dividends of Rs. 140\/- per share distributing almost
\nentire sale proceeds.<\/div>\n
\n<\/div>\n
\nNow, Clariant is expected to sell
\nits pigments business also by the end of 2020. Its Pigment business in India is
\nmuch bigger than Masterbatches and so we can hope for another big dividend this
\nyear. Its Pigments business clocks turnover of somewhere around 700 cr and it
\nis generating good profits which after acquisition by any related sector
\ncompany will generate even better profits so i think it should get much higher
\nvalue…its pigments business EBITDA is around 60-70 cr and at 15 times of it
\nor 1.5 times of turnover makes it 1000 cr and also there is some land costing
\n25 cr in the books so i think with this the figure should grow bigger. But
\nstill after the sale of pigments, there is specialty chemicals business with
\ntopline of some 70-100 cr this year. So conservatively, I had valued Rs. 1500
\ncr as par value for Clariant.<\/div>\n
\n<\/div>\n
\nSo
\nfew days back when it hit 600 it was trading around 1400 cr valuation. There
\nwas dividend tax issue involved so I sold all my holdings at 580 because I booked
\nsome short term capital losses which would take care of the short term capital gain
\nfrom the sale of Clariant. Actually I found it a bit overheated at 1400 cr
\nvaluation because due to covid there may be some overhang on the sale of
\nPigments business and its final valuations because pigments is relatively lower
\nmargin business. So as I was getting valuation near to my par valuation much ahead
\nof the real transaction so I decided to sell this one.<\/span><\/div>\n
\n
<\/span><\/div>\n
\nNow, after the sale of Pigments
\nbusiness it will be left with small specialty chemicals business which is going
\nto be the focus of Clariant globally. Turnover of this business is very small
\nat 60-70 cr so I think delisting appears a much likely option for the
\nmanagement though I would like them to continue and grow this business through
\nlisted arm but chances are very less. So my buying this one again would depend
\nupon their delisting decision…if not then I may invest more in BASF or Tata
\nchemicals.<\/div>\n
\n<\/div>\n
\nAs on Mar-2020 Clariant has some
\n106 cr cash in books as compared to 40 cr last year as it has reduced inventory
\nand debtors. That\u2019s why apart from Rs. 140\/- as special dividend they have also
\ndeclared Rs. 11 as final dividend for FY-2019-20. I don\u2019t know how much of this cash of 106 cr pertains to specialty chemicals business but specialty chemicals is a high
\nmargin business. Further, they still have valuable land in their books costing
\nsome 25 cr and in case large unused land is not the part of sale of
\npigments\/masterbatches business then this may add further juice to the
\ndelisting offer price. But what could be the delisting price (in case it is
\noffered) require some more data crunching about land valuation etc. So I\u2019ll post
\nfurther updates in the course of time.<\/div>\n
\n<\/div>\n
\nBut let me share something on
\nthis. When there was no deal happened, at that time Clariant was trading at
\nvery low valuations. But the stock market valuations are more about \u201cprice\u201d
\nthan \u201cvalue\u201d. And price is influenced more by temporary forces and there may be
\ninstances where temporary forces may put tremendous negative pressure on the stock
\nprice but even in those cases value remains intact. The need is just to keep
\nthe faith in the management and let the tough time pass. Just remember- Price
\nis transitory but Value is the fundamental. So at 1400 cr valuation for
\nClariant we are seeing price covering the distances towards true value of
\nits business. So there may be times when a worthy stock is hit badly by
\ntemporary forces (whether of stock market or industry forces) then we just need
\nto keep the faith in the capability of management to sail through the tough
\ntimes with their strategic planning and execution. Just like in case of Tata
\npower where I have invested quite a bit when it was at 29 in Mar-2020 and is still think it is a good buy even now at 49. I think,
\nmanagement is doing a fantastic job in solving the issues one by one and Tata
\npower may be the turnaround story of this year.<\/div>\n
\n<\/div>\n
\n(Views
\nare personal and should not be taken as a recommendation for buying or selling
\na stock. Stock markets are inherently risky so kindly do your Due Diligence
\nbefore investing. I am not a certified SEBI Analyst and holding the shares
\ndiscussed in this Post. reach me at oscillationss@yahoo.in).<\/span><\/div>\n

<\/div>\n","protected":false},"excerpt":{"rendered":"

Dear All, Clariant chemicals has just performed as per our expectations and given great returns so far keeping in view in the tough market situation. Congratulations to all those who had picked it when it was lying low in a corner. Clariant was advised around 270 in Nov-2019 (click here) and (here) for earlier posts on it. It has touched 600 recently so a good 120% return. I added more of this one at 230 in Mar-2020 when market was hit badly due to Covid crisis. In Nov-19 when we entered, it was a special condition stock as it was…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1140","post","type-post","status-publish","format-standard","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/oscillations.in\/index.php?rest_route=\/wp\/v2\/posts\/1140","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/oscillations.in\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/oscillations.in\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/oscillations.in\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/oscillations.in\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1140"}],"version-history":[{"count":0,"href":"https:\/\/oscillations.in\/index.php?rest_route=\/wp\/v2\/posts\/1140\/revisions"}],"wp:attachment":[{"href":"https:\/\/oscillations.in\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1140"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/oscillations.in\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1140"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/oscillations.in\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1140"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}