Aditya Birla chemicals(ABCIL)
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=2491
Printed Date: 21/Apr/2025 at 1:19am
Topic: Aditya Birla chemicals(ABCIL)
Posted By: hit2710
Subject: Aditya Birla chemicals(ABCIL)
Date Posted: 29/Oct/2009 at 9:58am
For Aditya Birla chemicals(ABCIL) as you say, PAT + Dep for last three years was For 07 49 crores For 08 66 crores For 09 64 crores If you average all three, it comes to around 60 and current market cap is around 183 crores. So the ratio we talk about comes to about 3. How would that qualify as an investment? Dividend is not up to the mark at 1.5 Rs per share. ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Replies:
Posted By: Vivek Sukhani
Date Posted: 30/Oct/2009 at 2:54pm
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Bihar Caustic has always been cheap and has remained that ways. For that matter, you may take any alco/chloro chemical company like a Kanoria Chem or a Jayshree Chem. Dividend yield however is much higher for a Kanoria chem or a Jayshree chem.
The thing is, these companies are way too dependent upon aluminium producers. ------------- Jai Guru!!! |
Posted By: rapidriser
Date Posted: 30/Oct/2009 at 6:50pm
The chlor-alkali business has some major disadvantages -
1. Both chlorine and caustic soda are absolute commodities, and as with all commodities, the timing of entry and exit is critical.
2. Chlorine and Hydrochloric Acid are extremely hazardous chemicals, which can not be stored for more than a few days. So even if demand for caustic soda is high but if there is no outlet for sale of chlorine /Hydrochloric Acid, then the manufacturer has to close down his plant until he finds a safe outlet for chlorine.
3. The largest input cost is electric power. Many producers have put up captive generation plants, but shortage of power persists mainly in summer months when there is shortage of water.
Overall, this is one sector where even patient long term investors have been forced to give up hopes after years of disappointment.
------------- When all else is lost, the future still remains. - Christian Nestell Bovée |
Posted By: basant
Date Posted: 30/Oct/2009 at 6:56pm
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I think that when the price of one goes up the price of other falls! ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: hit2710
Date Posted: 30/Oct/2009 at 7:54pm
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I was looking at their balance sheet and their results for the past few years.
Since last three years they have reduced their debt from 111 crores to 45 crores in FY 09. March05 06 07 08 09 SALES 107 111 143 174 204 NP 26 26 33 49 46 Equity capital has been 23.39 crores. EPS for FY 09 was 19. For HY 10, net profit is 28.84 crores giving half yearly eps of around 12.3. Looking at these earnings, I feel company is doing right things to improve earnings. All the concerns expressed about the company's business exist, but that seems to be built into the price. Reduction in interest burden itself will improve earnings. And with expected eps of 25, the stock is available at pe of around 3. Once the debt is totally cleared off, I expect the dividend to be hiked. ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: Vivek Sukhani
Date Posted: 30/Oct/2009 at 8:31pm
if it were not for the management, this stock should have definitely been accumulated by me. ------------- Jai Guru!!! |
Posted By: amol.karale
Date Posted: 30/Oct/2009 at 2:36am
This is sustainable business. Growth is not that gr8 but a good stock to get into. One will not be at loosing position if he decide to accumulate the stock at this level. Company's chemicals find application across a wide range of industries like food,
textiles, electrical and electronics, composites, leather, plastics and
automobiles. No dilution of equities in last 4-5 years. But Management seems to be habitual of taking debt every year. However, in FY09 they managed to bring the debt level down to 80 Crores.
------------- Amol |
Posted By: hkumar
Date Posted: 04/Nov/2009 at 7:29pm
| Historically the stock is market performer. In last 3 years gave a return of 53% where as NSE is 52%. During the peak time in 2007 it went to only Rs. 107....may be due to the industry nature. |
Posted By: Prakash.Hegde
Date Posted: 02/Jan/2010 at 1:32pm
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I think it is a steady compound-er. With both RoE & RoCE >20% for last 5 years, and assuming that the trend continues, it should quote at least at Book value, which is Rs. 103 as on March 2009. So fair value should be >103. ------------- -Prakash |
Posted By: hit2710
Date Posted: 02/Jan/2010 at 5:37pm
It is a steady stock which is as mentioned earlier a market performer. But when we look for outperformers, this one according to me does not qualify to be held for too long. It is a cheap stock and might continue to remain so. ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: PKB2000
Date Posted: 14/Jan/2010 at 11:43am
Book value is above 100, current PE is 4.16, Share price over the years indicates that the stock has the potential to get a valuation of 5.5 to 6.6 (on average). The year 2009 has been found to be a good year for the chemicals manufacturers. Many fund houses / organisations have bought stake in different chemical- companies. Progressively there are inclination towards giving better value to steady performer. It has scope to increase in stock prices also fom here.
I have bought this stock! ------------- I am always doing that which I cannot do, in order that I may learn how to do it. ~Pablo Picasso |
Posted By: PKB2000
Date Posted: 20/Jan/2010 at 8:55am
Moral: Cheap stocks may be available in cheaper and cheaper price with time! ------------- I am always doing that which I cannot do, in order that I may learn how to do it. ~Pablo Picasso |
Posted By: Vivek Sukhani
Date Posted: 21/Jan/2010 at 5:09pm
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The results are simply horrible. In periods when companies are falling over one another to report bigger and bigger numbers, this company has produced a shocker. ------------- Jai Guru!!! |
Posted By: PKB2000
Date Posted: 21/Jan/2010 at 5:22pm
------------- I am always doing that which I cannot do, in order that I may learn how to do it. ~Pablo Picasso |
Posted By: Vivek Sukhani
Date Posted: 21/Jan/2010 at 5:27pm
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Chlor Alkali business is not doing well.....and thats because aluminium has not yet started to do good. And its funny, that Hindalco has rum up almost 5 times its lows. ------------- Jai Guru!!! |
Posted By: PKB2000
Date Posted: 21/Jan/2010 at 5:29pm
------------- I am always doing that which I cannot do, in order that I may learn how to do it. ~Pablo Picasso |
Posted By: nav_1996
Date Posted: 21/Jan/2010 at 6:11pm
| They are more like captive supllier to group company Hindalco and also lend their profits to another group company Birla Global Fin (AB Nuvo). So don't expect fire-works from this stock as company works for group comoanies and not minority share holders. |
Posted By: Market Maniac
Date Posted: 17/Jun/2010 at 3:24am
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Kumar Managlam is a (removed) It is hard to understand how can the son of such a great man like Aditya Birla be so incompetent ------------- |
Posted By: basant
Date Posted: 17/Jun/2010 at 9:41am
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Please resist from using abusive language. Otherwise we wil have to restrict your rights to put in further posts. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: sbkv
Date Posted: 03/May/2011 at 3:07pm
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Post acquisition of Kanoria Chemicals ABCIL has become the largest producer of Caustic soda in the country & they are going to double even this enlarged capacity to 4 lakh+ tons in 2 years.Interest costs are gonna shoot up as are debt:equity ratio but they should be able to manage provided no major down turn in prices which looks unlikely with all commodities in bull run This one looks like a safe bet with limited downside from current leves Feedback from boarders on ABCIL post acquistion & long term outlook for Caustic soda/chlor alkali prices will be appreciated |
Posted By: amol.karale
Date Posted: 11/Aug/2011 at 8:05am
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The acquisition of Kanorial chemical division for 830 Cr looks very expensive to me. It is 4 times Mak cap of Kanoria Chemicals & 3.5 times ABCIL. Aditya Birla Chemicals all time high profit was 62 Cr. It may take more than 10 years to re-pay this huge debt so it is definitely going to hurt business because of increasing interest cost.  ------------- Amol |