MNC’s always enjoying premium valuations in Indian
Stock market ,especially companies operating from niche
(DNI) is a niche company commanding a India
market share of about 75% where it is operating , but
overlooked by the investor fraternity- may be because of the
complex nature of business in which it involved .
This company is a 51.25% Subsidiary of Gruppo De Nora
,the world leader in design,erection and Italy
commissioning of electrochemical plants. DNI’s main business
includes coating of anode and Cathode using in Chlor Alkali
plants and corrosion systems used for preventing corrosion
in SAW pipes ..etc. Along with this ,company is also supplying
electro-chlorination equipments for purifying water for
drinking and Industrial purpose. The erstwhile Mercury Cell
technology used in our country is now gradually converting
into Membrane Cell technology, which is opening huge
chance for company’s product. Even if the new cells need
not require coating in the initial few years of operation it
should be coated periodically thereafter which is a big
opportunity for the company. In last year DNIL introduced
Platinized Titanium Anodes for surface finish application
India.Company’s factory located at Goais equipped with
most modern facilities and it is getting full support of its
parent company. Lying of large network of pipelines in oil
and gas sector,building of new bridges ,different type of
concrete protection requirements ..etc are expected to
bring good business for company’s Cathodic protection
division.On the negative side ,company’s business
have some cyclical nature,and is related with the fortunes
of Chlor Alkali industry which is now started showing revival.
Secondly there was an order against the company by the
Directorate General of Supplies and Disposals, Ministry of
Commerce and Industry which restricts the company from
business with certain government departments for a
period of five years .But, DNI challenged this order and
in last month got an order stating that the time period
reduced to just one year starting from 22.02.2010.
Even if it may slightly affect the
performance in very near future,there is good scope
for its business in private sector and also in export front.
DNI’ financial year ending is in the month of December.
Last financial year witnessed one of the worst performance
in recent past where company posted a turnover of Rs.13.45
Cr and a net loss of Rs.33 Lac(excluding other income).
But ,for the qtr ended June 2010 alone company posted a
sales of Rs.4.74 Cr v/s Rs.2.29 Cr and a net profit of
Rs 1.20 Cr v/s .58 Cr. Half year EPS is Rs.2.14 v/s Rs.1/- .
Company is very liberal in dividend payment which paid 50%
in 2004 ,70% in 2005 ,69% in 2006,58% in 2007,25% in 2008.In
2009, due to loss company skipped the dividend and it is
expected to give higher yield in this year due to better
prospects. Considering the support from the parent
company which is the world leader, revival in the user
industries ,chances of a turnaround performance ..etc
company may turn as a multibagger going forward.
CMP is Rs.79/-(Trading in both NSE and BSE)