Chemfab Alkalis
Chemfab Alkalis opened the day for trading today higher at Rs.74.20 and remains strongly in the green, almost 4% up. The Q3FY14 seem OK, with net profit coming in at Rs.5 crore, up from Rs.4 crore in Q2 though lower than Rs.7 crore in previous Q3. Net sales has been robust at Rs.30 crore but higher raw material cost and power and fuel charges played spoilt sport. During the quarter electricity charges stood at Rs.14 crore, which is almost 50% of the net revenue earned. A forex gain of Rs.1 crore helped.
The company has a small debt. Its biggest expense is on power and fuel costs. Its equity is tiny at Rs.4.59 crore, and its EPS for 9MFY13 was at Rs.16.32 (face value Rs.5) discounting the current price less than 5 times. No new caustic soda plants are coming up and that is the main reason which drives the price, though it has been weak for some time now. Worldwide the membrane cell technology represents about 20% of production and nearly all new investment are in chloralkali production. Its business is shrouded in complete unpredictability and that explains the low discounting. The company is modernizing its plant and this is expected to be completed in current Q4. Its reserves as at 31st Dec 2013 stood at Rs.101 crore.