NAVIN FLOURINE

This Gujarat based Arvind Mafatlal group company is one of the largest players in carbon credits. It posted a set of very muted numbers for Q2FY13 and it did not get better in Q3FY14. YoY, though this is seasonally the time when refrigerants business usually witnesses sluggish demand; but even after accounting for that, topline, slid 22% at Rs.124 crore. Of this, Rs.11.27 crore came in from sale of carbon credits, much lower than Rs.23 crore earned in Q2, down 50% QoQ and down 79% on YoY. Consequently, net profit for the quarter was at Rs.12.45 crore, down 34% QoQ and down 63% on YoY. 19 crore, down 68% (YoY). NPM has come down from 21.18% to 9.97% on YoY.

Looking ahead, revenue from carbon credits is expected to only come down further. As price has come down from Eur 3.7/CER to EUR 1.2/CER in Q2 and now in Q3, it went down to EUR 0.5/CER and going ahead it could only come down further as we could see a rush to sell some United Nations emission credits before they become almost worthless in 2013 and these prices are expected to hit record lows. Thus in Q4FY13, prices will remain weak which in turn will affect overall margins. One can expect lower topline and bottomline in second half unless the company manages to ramp up volumes to such an extent that it offsets the lower prices.