Chemfab Alkalis

When the company announced its Q3FY13 numbers, the stock price had hit a new 52-week high but time around, though the stock price zoomed up, there was no such jubilation. For Q4FY13, QoQ, net sales rose 6% at Rs.33 crore but net profit was down 7% at Rs.6.36 crore. The number would have been much lower but for the profit on sale of land at Rs.1.26 crore, part of the other income. The doubling of tax outgo pushed down the net profit. But the company has ended FY13 on an extremely upbeat note with net revenue at Rs.115 crore, up 47% and net profit for the year was at Rs.23 crore, up 3.3 times.

The company has little or no debt. Its biggest expense is on power and fuel costs. Its equity is tiny at Rs.4.59 crore, and its EPS for FY13 was at Rs.26.50 (face value Rs.5) discounting the current price by around 3 times. Reserves stands at Rs.101 crore. Promoters stake at end of FY13 is at 74.99%. No new caustic soda plants are coming up and that is the main reason which drives the price, though it has been weak for some time now. Worldwide the membrane cell technology represents about 20% of production and nearly all new investment are in chloralkali production. Its business is shrouded in complete unpredictability and that explains the low discounting.