BUY CMP 117.00 Target Price 135.00 CAMLIN FINE SCIENCES LTD Result Update (PARENT BASIS): Q1 FY15 AUGUST 28 th 2014 ISIN: INE052I01024 Index Details Stock Data Sector Specialty Chemicals BSE Code 532834 Face Value 2.00 52wk. High / Low (Rs.) 117.00/16.30 Volume (2wk. Avg.) 82000 Market Cap (Rs. in mn.) 5546.39 Annual Estimated Results (A*: Actual / E*: Estimated) YEARS FY14A FY15E FY16E Net Sales 3743.93 4223.15 4603.24 EBITDA 609.21 689.63 747.64 Net Profit 189.69 223.36 249.47 EPS 4.02 4.71 5.26 P/E 29.12 24.83 22.23 Shareholding Pattern (%) 1 Year Comparative Graph CAMLIN FINE SCIENCES LTD S&P BSE SENSEX SYNOPSIS Camlin Fine Sciences Ltd. (CFS) is one of the India's leading manufacturers and exporters of Bulk Drugs, Fine Chemicals and Food Grade products. Revenue for the quarter rose by 13.38% to Rs. 883.49 million from Rs. 779.26 million, when compared with the prior year period. Net Profit for the quarter was up by 10.33% at Rs. 54.70 million against Rs. 49.58 million, corresponding quarter of previous year. In Q1 FY15, EBIDTA is Rs. 146.51 million and increased by 4.03% as against Rs. 140.84 million in the corresponding period of the previous year. Earnings per Share for the company were Rs. 1.15 compared to Rs. 1.06 in Q1 FY14. During Q1 FY15, Profit before Tax increased by 7.48% to Rs. 75.32 million from Rs. 70.08 million over the corresponding quarter of the previous year. During the quarter, geographical segment revenues within and outside India at Rs. 194.44 million and Rs. 688.56 million respectively. CFS Europe S.p.A in Italy has successfully enhanced its manufacturing capacity to 1000 metric tons as against 600 metric tons per month. CFS Europe S.p.A, Italy has achieved a growth of 21% in the turnover for the quarter. Net Sales and PAT of the company are expected to grow at a CAGR of 14% and 19% over 2013 to 2016E respectively. PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%) Camlin Fine Sciences Ltd. 117.00 5546.39 4.02 29.12 7.22 35.00 Asahi Songwon Colors Ltd. 170.40 2077.7 12.75 13.28 1.54 35.00 Nitta Gelatin India Ltd. 131.05 1172.4 - - 1.02 0.00 Poddar Pigments Ltd. 128.85 1367.1 13.65 9.44 1.67 22.50
QUARTERLY HIGHLIGHTS (PARENT BASIS) Results updates- Q1 FY15, Months Jun-14 Jun-13 % Change Net Sales 883.49 779.26 13.38 PAT 54.70 49.58 10.33 EPS 1.15 1.06 9.26 EBITDA 146.51 140.84 4.03 Camlin Fine Sciences Ltd, revenue for the quarter rose by 13.38% to Rs. 883.49 million from Rs. 779.26 million, when compared with the prior year period. Net profit increased by 10.33% to Rs. 54.70 million from Rs. 49.58 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 1.15 a share during the quarter, registering 9.26%, increased over previous year period. Profit before interest, depreciation and tax is Rs. 146.51 millions as against Rs. 140.84 millions in the corresponding period of the previous year. Break up of Expenditure Particulars Q1 FY15 Q1 FY14 Consumption of Raw Materials 528.50 488.10 Depreciation 25.40 20.90 Employees Benefit Expenses 34.20 29.50 Other Expenditure 158.90 111.50 Purchase of Traded Goods 7.90 4.70 Latest Updates CFS Europe S.p.A in Italy has successfully enhanced its manufacturing capacity to 1000 metric tons as against 600 metric tons per month. CFS Europe S.p.A, Italy has achieved a growth of 21% in the turnover for the quarter. Camlin Fine Sciences Ltd has fixed Sub-Division of Equity Share from face value of Rs. 2/- each to face value of Re. 1/- each.
COMPANY PROFILE Camlin Fine Sciences Ltd. is one of the India's leading manufacturers and exporters of Bulk Drugs, Fine Chemicals and Food Grade products. Camlin the corporate group was established in 1931 and is a pioneer in art & stationery material in India. Camlin diversified into Pharmaceuticals and Fine Chemicals two decades ago. Today Camlin Fine Sciences is the world's second largest manufacturer and marketer of food grade antioxidants TBHQ and BHA. The facilities are HACCP and ISO 9001:2000 certified. CFS is expanding its global footprint in the emerging markets of Asia, Latin America, Middle east, India and China to further strengthen its existing global network and will be appointing technical sales teams in key locations to build the solutions business under the SOLENTUS umbrella. Food Division The food division of CFS has taken a leadership position globally in the synthetic food antioxidant segment. s. CFS, with its strong presence in the shelf life extension space because of its global leadership in food antioxidants TBHQ and BHA, is rightly positioned to capitalise on this potential business opportunity. Industrial Products Division The industrial products division has successfully commercialised Diphenol downstream products TBC, Guaiacol and Veratrole. The industrial Products division is expanding the network of distribution in key markets and working towards building a strong base in the product segments. Agri Products Division The agri-products division has started commercialisation of the products developed by CFS in india and has obtained success in high cash crops and fruits. The division has appointed dedicated technical sales teams who are assisting farmers and cooperatives to develop better farming practices and CFS products are helping in reducing damage to crops. Subsidiary Companies as on 31 st March 2013 (Annual Report) Dulcette Technologies LLC: A 61% owned joint venture of the Company engaged in market/business development of Company s products in U.S.A. CFCL Mauritius Pvt. Limited: A 100% owned subsidiary of the Company incorporated for acquisition of CFS Europe S.p.A. in Italy. CFS Europe S.p.A.: A step down subsidiary of the Company engaged in manufacture and sale of key raw materials required by the Company.
FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions) Balance Sheet as at March 31, 2013-2016E FY13A FY14A FY15E FY16E EQUITY AND LIABILITIES: Shareholders Funds: Share Capital 93.89 94.41 94.81 94.81 Reserves and Surplus 515.11 670.35 893.71 1143.18 a) Sub Total Net worth 609.00 764.76 988.52 1237.99 Non-Current Liabilities: Long-term borrowings 376.70 285.25 245.31 225.69 Deferred Tax Liabilities [Net] 32.73 39.44 45.75 51.24 b) Sub Total Non-Current Liabilities 409.43 324.69 291.06 276.93 Current Liabilities: Short-term borrowings 611.16 857.63 1046.31 1182.33 Trade Payables 747.97 601.64 511.39 450.03 Other Current Liabilities 135.95 227.18 272.62 316.23 Short Term Provisions 84.33 96.92 106.61 115.14 c) Sub Total Current Liabilities 1579.41 1783.38 1936.94 2063.74 Total (a+b+c) 2597.84 2872.82 3217.45 3578.66 ASSETS: Non-Current Assets: Fixed Assets i. Tangible assets 452.11 417.23 437.83 449.84 ii. Intangible Assets 89.73 61.77 65.48 70.71 iii. Capital work-in-progress 7.60 20.01 22.41 24.65 Sub Total Fixed Assets 549.44 499.01 525.72 545.21 Non-Current Investments 13.33 38.07 47.97 56.61 Long Term Loans and Advances 9.85 13.45 16.14 18.88 d) Sub Total Non-Current Assets 572.62 550.53 589.83 620.69 Current Assets: Inventories 886.77 488.40 468.86 492.30 Trade Receivables 684.82 914.93 1079.61 1252.35 Cash and Bank Balances 103.74 143.66 172.39 194.80 Short Term Loans and Advances 349.89 694.28 819.25 925.75 Other Current Assets 0.00 81.03 87.51 92.76
e) Sub Total Current Assets 2025.22 2322.29 2627.62 2957.97 Total (d+e) 2597.84 2872.82 3217.45 3578.66 Annual Profit & Loss Statement for the period of 2013 to 2016E Value(Rs.in.mn) FY13A FY14A FY15E FY16E Description 12m 12m 12m 12m Net Sales 3135.35 3743.93 4223.15 4603.24 Other Income 28.65 23.27 18.15 20.33 Total Income 3164.00 3767.20 4241.30 4623.57 Expenditure -2677.94-3157.99-3551.67-3875.93 Operating Profit 486.06 609.21 689.63 747.64 Interest -175.21-223.95-235.15-244.55 Gross profit 310.85 385.26 454.48 503.09 Depreciation -85.57-93.20-104.38-116.91 Profit Before Tax 225.28 292.06 350.10 386.18 Tax -77.69-102.37-126.74-136.71 Net Profit 147.59 189.69 223.36 249.47 Equity capital 93.89 94.41 94.81 94.81 Reserves 515.11 670.35 893.71 1143.18 Face value 2.00 2.00 2.00 2.00 EPS 3.14 4.02 4.71 5.26 Quarterly Profit & Loss Statement for the period of 31 st DEC, 2013 to 30 SEP, 2014E Value(Rs.in.mn) 31-Dec-13 31-Mar-14 30-Jun-14 30-Sep-14E Description 3m 3m 3m 3m Net sales 912.28 1106.23 883.49 1042.52 Other income 4.49 6.03 3.45 3.04 Total Income 916.77 1112.26 886.94 1045.55 Expenditure -749.11-956.26-740.43-877.80 Operating profit 167.66 156.00 146.51 167.75 Interest -64.49-62.14-45.82-43.99 Gross profit 103.17 93.86 100.69 123.77 Depreciation -27.86-23.29-25.37-25.88 Profit Before Tax 75.31 70.57 75.32 97.89 Tax -27.35-36.55-20.62-33.28 Net Profit 47.96 34.02 54.70 64.61 Equity capital 94.12 94.41 94.81 94.81 Face value 2.00 2.00 2.00 2.00
EPS 1.02 0.72 1.15 1.36 Ratio Analysis Particulars FY13A FY14A FY15E FY16E EPS (Rs.) 3.14 4.02 4.71 5.26 EBITDA Margin (%) 15.50 16.27 16.33 16.24 PBT Margin (%) 7.19 7.80 8.29 8.39 PAT Margin (%) 4.71 5.07 5.29 5.42 P/E Ratio (x) 37.22 29.12 24.83 22.23 ROE (%) 24.23 24.80 22.60 20.15 ROCE (%) 35.80 36.82 34.82 32.67 Debt Equity Ratio 1.62 1.49 1.31 1.14 EV/EBITDA (x) 11.30 9.07 8.04 7.42 Book Value (Rs.) 12.97 16.20 20.85 26.12 P/BV 9.02 7.22 5.61 4.48 Charts
OUTLOOK AND CONCLUSION At the current market price of Rs. 117.00, the stock P/E ratio is at 24.83 x FY15E and 22.23 x FY16E respectively. Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs. 4.71 and Rs. 5.26 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 14% and 19% over 2013 to 2016E respectively. On the basis of EV/EBITDA, the stock trades at 8.04 x for FY15E and 7.42 x for FY16E. Price to Book Value of the stock is expected to be at 5.61 x and 4.48 x respectively for FY15E and FY16E. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend BUY in this particular scrip with a target price of Rs.135.00 for Medium to Long term investment. INDUSTRY OVERVIEW Industrial products The industrial products division has shown a growth of 55% and has been achieved by focusing on sales of down stream products of Catechol and Hydroquinone. The main focus products are Guaiacol, Veratrole, Tertiary Butyl Catechol, and Hydroquinone Mono Methyl Ether. The Company will focus on deeper market penetration, by improving distribution channels. The Company is creating distribution hubs in key markets like North America, Asia and Latin America. Guaiacol has a huge demand worldwide and this product used as an intermediate for manufacturing Vanillin, an important food flavoring and Guaphenesin, an important pharmaceutical intermediate. The Company is in the advanced stage of enhancing the capacity by 100%. The Sales of Guaiacol has already commenced for the Indian market and its further downstream use for Vanillin will be effected during the second quarter of the next financial year. Tertiary Butyl Catechol (TBC) has also a huge market potential with demand at around 5000 MT/Year worldwide and is an important polymerisation inhibitor for the petrochemical industry. The current manufacturing capacity for this product is already been fully used and the Company is in a position to enhance its capacity for garnering the additional supplies to global customers during the next financial year. Supplies have started to Europe, Latin America, China, Middle East, Japan, Korea and S.E Asia. With approvals from major customers, the business is
expected to double thereby achieving around 16% market share. Warehouse will be set up in USA by 3rd quarter of 2014, which will add new customers to the portfolio. Veratrole another important downstream product developed and commercialized by the Company, with a market demand of around 1000 MT/year. This product is an important intermediate for the pharmaceutical and agrochemical industry. Approvals from major customers in India and international market have been completed. The aim is to capture 70% market share in 2014-15. Hydroquinone Monomethyl Ether or HQMME is a downstream product of Hydroquinone with a market demand of 5000 MT/year. This product is used as a polymerisation inhibitor in the petrochemical industry. Manufacturing of this product is expected to start with a capacity of 1200 MT/year by end of 2nd quarter 2014. Disclaimer: This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable but do not represent that it is accurate or complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it s affiliates shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This document is provide for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Firstcall India Equity Research: Email info@firstcallindia.com C.V.S.L.Kameswari Pharma U. Janaki Rao Capital Goods B. Anil Kumar Auto, IT & FMCG M. Vinayak Rao Diversified C. Bhagya Lakshmi Diversified B. Vasanthi Diversified Firstcall India also provides Firstcall India Equity Advisors Pvt.Ltd focuses on, IPO s, QIP s, F.P.O s,takeover Offers, Offer for Sale and Buy Back Offerings.