DAIKAFFIL CHEMICALS

A debt free company, this small cap company (market cap of Rs.22 crore) is based in Mumbai. It has a manufacturing unit in Tarapur and makes chemicals in technical (no equity) collaboration with Japanese company, Daikaffil.  It is the largest producer of Optical Brighteners for Textiles / Paper / Detergent Industries, Naphthol Grounders for Pigments and Intermediates for Pigment Red 170. Its clientele list includes names like Clariant, KIWA, ERCA spa, DAIKA (Japan). Yet, for all this eloquent credibility, its numbers are so small.

The company ended Q1FY17 with a net profit of Rs.65 lakh, more than doubling up from Rs.30 lakh in previous Q1. This was despite a virtually no improvement in net sales at Rs.6 crore, giving a NPM of 10.83%. The lowering of costs by 17% and tax outgo coming down from Rs.4 lakh to Rs.68,000 helped.

Promoters holding is not too enthusing at 32.28%. Equity capital is at Rs.6 crore and EPS for the quarter is at Rs.1.08 (FV of Rs.10). Interestingly HGE Chemical SA,Luxemburg had earlier held a 12.5% stake in the company, which it no longer holds.