Saturday, April 26, 2014
What is common in Sunshield Chemicals and Multibase India .The easiest answer is – both these companies are operating in same sector ,broadly we can call as ‘Chemicals’. But more than that the ultimate parent company of both these companies are world leaders in their respective fields.If the ultimate parent of Sunshield Chemicals ,ie. Solvay is a leader ,the ultimate parent of Multibase is a giant. Multibase India owned by Dow- Corning which is a joint venture between world’s second largest chemical company Dow Chemicals and Corning Inc.Within the specialty space ,Dow corning is specialising in silicon based technology and the global leader in Silicon based specialty chemicals. Company offering more than 7,000 products worldwide.
The company we are discussing here – Multibase India – is a 75 % subsidiary of Dow Corning .Company’s manufacturing and R&D facilities are located at Daman.Multibase producing various silicon based products finding applications in Automotive, Personal Care, Personal hygiene, Stationery,Telecommunications and Engineering Polymers.Its thrust area is Automotive segment where company is concentrating mainly in safety products – specifically in Air bags.In India more than 75% people using passenger cars/vehicle without air bag .Currently air bags are common only in high end vehicles and the potential is very vast due to this reason.Since competition is very tough and car makers are keen to offer more and more facilities in vehicle to lure potential buyers , chances for introduction of air bags in mid segment cars are very high and buyers are also preferring this due to safety reason which is most important.In future ,we can’t even rule out the chance for mandatory air bag provisioning in passenger cars which will change the entire picture of demand scenario of company’s major product. Multibase together with its global affiliates is the global market leader for injected airbag covers has over 15 years of track records in terms of reliability and durability with material approvals at all major US, European and Asian OEM’s.Multiflex® TPO and TPE-S materials produced by the company meets all safety for driver, passenger, knee, side and curtain airbag covers.In addition to this product ,company also producing various products for fluid transportation ,sealing applications,Dash Board finishing products..etc. Other than automotive segment company’s products are finding applications in Personal care and cosmetics,Portable Electronics equipments,Houseware items,Electrical Protection systems ..etc.
At present the size of operations of this company is not very large ,but I believe ,the potential is very big .In last FY ,company reported a Sales of Rs.45 Cr and a net profit of Rs.4.5 Cr. The net profit figure reported more than 100 % jump over just previous year. In the latest December quarter,Multibase reported a sales of Rs.13.18 Cr v/s Rs.9.24 Cr and a net profit of Rs.1.44 Cr v/s Rs.0.87 Cr over same period last year.
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Dow Corning Corporation ( through Multibase S A) holding 75 % stake (which is the maximum permissible % of promoter holding for a listed company in India) in this company.Another company named Dow-Corning India Pvt Ltd is also operating here which started operation before the takeover of this company by Multibase SA.But to avoid overlapping in products ,both these companies are concentrating in products with different grades.Chances for an integration between both these companies can’t rule out in future .But if it happens most probably only after a de-listing offer for the share holders of listed entity.( Since it is only a probability or speculation ,no need to take this part for valuation purpose) .
Earlier I recommended this stock around Rs.35 .But still I feel,this is an under researched stock by investor fraternity and many of the participants are not even aware that it is an affiliate of a world leading MNC which owns superior technology and global marketing network.I hope ,the changing consumer preference will boost the demand of company’s products going forward .Recommending this small company for investors with enough patience again @ CMP Rs.55. Stock listed only in BSE.
Link to Company's Global Website HERE
Link to Company website HERE
Link to latest Annual Report HERE
Link to earlier Recommendation HERE
Disc: It is safe to assume that I have vested interest in Multibase.