Sunday, August 3, 2008

Clariant Chemicals


Despite rising input costs, Clariant Chemicals managed to record a 44 per cent increase in net profits to Rs 41.7 crore for the six months ended June 2008 (year ending is December). Net sales were up 7 per cent at Rs 466 crore.

The company has been able to increase its profits as a result of its ability to increase product prices, prune costs and benefit from a leaner organisation.

In dyes and specialty chemicals, which account for 55 per cent of its sales, the company is focussing on technical textiles, a fast growing segment expected to register an annual growth of 14 per cent till 2015.

While the company's sales of textile chemicals last year was impacted due to rupee appreciation as its customers (textile exporters) realisations came down. Margins in the second largest segment (40 per cent of sales) - intermediates and colours - though more than doubled to 14.1 per cent in the first half.

Going forward, the company is planning to focus on promoting the wider usage of safer pigments (lead/chrome replacement) and the usage of fluro chemicals and coating based products in the technical textiles segment.

With rupee showing some signs of weakening in 2008, the same should also prove beneficial for Clariant. At Rs 230 and considering annualised CY08 earnings of Rs 17.14, the stock is attractively priced at 13.5 times.

No comments: