Tide Water hits a life time high

Tide Water Oil is buzzing loud and clear today. The stock has hit the 20% upper circuit at Rs.20798 and this is the new life time high. Volumes have jumped up from a two-week average of 390 shares to 5479 shares traded today alone.

The stock hit the roof after the company announced yesterday that it has called for a Board meeting on the 15th January, where, apart from publishing Q3FY16 results, the Board will also consider declaration of bonus issue and share split to/for the shareholders at such rate/ratio to be decided therein.

Tide Water Oil Co, is a part of the multi divisional Andrew Yule group, which holds 26.22% stake. It manufactures and sells lubricants and greases for automotive and industrial applications in India under the brand name of Veedol. It has a technical collaboration with Nippon Oil Corporation and superior quality lubricants under the brand name Eneos are manufactured and marketed in India by Tide Water Oil. Last week the stock had hit a new high at Rs.20,287 as price of crude continued to dip.

In terms of financial performance, for Q2FY16, net sales were flat at Rs.227 crore but a 6% drop in total costs, led by a 20% decline in raw material costs, mainly crude oil helped boost the EBITDA by 61% (YoY) at Rs.29 crore. Margins spiked up from 7.86% to 12.77%. Net profit for the quarter was at Rs.20 crore, which YoY compared to Rs.96 crore looks low. But in previous Q2, it was an exceptional income of Rs.108 crore which helped, which was profit on transfer of business on slump sale to JV promoter with JX Nippon Oil. But for this one-time income, the company would have ended the quarter in the red. Thus, purely on operational efficiency, current Q2 performance was much better.

The company’s equity is very small at Rs.85 lakh which explains the huge stock price. Only some 5.44 crore shares are in the public domain. Its reserve stands at Rs.516 crore making it an ideal bonus candidate. It is debt free and is sitting on cash balance of Rs.175 crore. Once again in current Q2, it declared a 1500% or Rs.150 per share special interim dividend (face value Rs.10).