Camlin Fine Science Limited --- Looks interesting but some way to go

(Rajeev M. Parashar) #65

Even if Fairfax is interested in CFS, they would wait for the completion of Capex at Dahej & the subsequent business performance.

I can’t see Apcotex promoters selling their stake, even if Fairfax was interested.

Disclosure: Invested in CFS. Interested in Apcotex, waiting for it to correct further.

(hrfacebuk) #66

On a different note ideally a buyer would like to buy before expansion actually starts churning performance and comes on steam. Buyer would prefer buying when numbers are subdued and before the expansion comes on steam rather than other way round. Logic is once expansion comes on steam then one would need to buy at a higher price and therefore one would have the projections in place and would prefer buying before.

(Rajeev M. Parashar) #67

Yeah, point taken, but looking at the depressed earnings, their marketing efforts to find new clients are yet to bear fruits.

(hiral) #68

(Rajeev M. Parashar) #69

@hrfacebuk Take a bow! :wink:

(hiral) #70

(hrfacebuk) #71

That’s a bit spooky :open_mouth: and management has already clarified that it is mere speculation. But to be honest wouldn’t have been surprised even if that might have been the case. Would have been surprised by the timing/co-incidence as I also wrote but not by the event perse.
On a lighter note, have seen in the past, research reports copy pasting from Valuepickr discussions, hope newschannel didn’t do something similar. Maybe I should edit my post amidst prevailing speculation and try to remember if I made any good predictions about myself on the same day :wink:

(TusharSB) #72

Camlin Fine Sciences said it entered into share purchase agreement to acquire 51% stake in China’s Ningbo Wanglong Flavors & Fragrances Company (NWFFCL). The cost of proposed acquisition will be disclosed after the completion of the transaction, it added. The acquisition is subject to Reserve Bank of India’s (RBI) approval and will get completed on or before 30 June 2017.

NWFFCL was incorporated in November 2015 and is a part of proposed JV with Wanglong Group Company. Ningbo is engaged in R&D and manufacture of flavors and fragrances products (Vanillin); import and export of goods and Tech.

NWFFCL is a medium-sized company engaged in R&D and production of flavors and fragrances (food additives), as well as an agency of import and export of goods and technologies. It sells its products directly to food manufacturers, distributors and industrial customers globally and utilizes proprietary processes and technology.


An expected development as the ongoing negotiation was communicated to analysts earlier. They intend to speed up and reduce capex spending in Dahej. Consistently falling Yuan makes a case for sourcing base in China. Total capex spending at Dahej could come down to 170-180 cr from 250cr. Let’s wait for the detailed update on the same. The problem is that all investments and costs are being front loaded which would keep earnings subdued for the next several quarters. Analysts have shifted from earning based multiple to sales based multiple trying to justify valuation.

(TusharSB) #74

This proves the company is on the right path, but news of it getting acquired … keeps coming and which make me think if small investors like me will make money in this.


This is heading towards a jackpot type of returns. If everything falls in line it will be a significant player in blends, fragrance and food additive market. The promoter is doing too many things and that makes me little concerned. Big investments planned when their earnings have been very weak recently. Any big specialty Chem company will find this biz very tempting and that’s why consistent rumours on being acquired.

Disc: Sold at 105-110 levels and would consider at lower levels. I am sure it will give many opportunities down the line.

(Golden Star) #76

Camlin Fine Sciences (SELL)
Where is the Sales Growth?, Waiting for Sales engine to fire up.
Market Cap : 936.50 Crs | CMP : 90.60 | Total Equity : 10.37

With Major Capex already under way and sales engine not picking up, the company seems to be headed for troubled times ahead. The Company desperately needs to fire up its sales engine to achieve 150 Cr plus every quarter to take full benefit of margin expansion.

About Camlin Fine Sciences
Camlin Fine Sciences is a global player operating in shelf-life solutions & intermediates for food, feed and pet food. The Company has strong presence in food grade antioxidants (TBHQ + BHA), controlling almost 45% market Share. The company is also venturing into Blends through its brands Xtendra & Nasure. As per company, the Global Market for Antioxidants is ~US$3.2 Billion.

Main Products & Revenue Segments
As per latest Company presentation (May 2016), The Company derives 56% of its revenue from Antioxidants ( TBHQ + BHA), 22% from Performance Chemicals (Guaiocal, TBC, MEHQ), 18% from Diphenols ( HQ & Catechol) & 1% from Aroma Chemicals (Vanillin / Ethyl Vanillin).

Main Product Applications
Shelf - Life Solutions : Shelf Life Extension Products with presence in antioxidants & intermediates for food, feed, pet food and animal nutrition.
Performance Chemicals : Wide array of applications, fast growing segment for CFS using new product introduction, scale & technology.
Aurma Chemicals : Synthetic replacement for natural Vanilla & offers multiple advantages like lower cost, improved availability & consistency.

Current Capacity & Margin Trend
Currently the company manufactures key raw materials HQ & Catechol at Italy with a capacity of 5,000 MT for HQ & 6000 MT for Catechol. With integrated Raw Material Supply they were able to increase their margins from 12.24% in 2012 to 18.94% in 2016. However in the last 3 Qtrs we have seen a drop in margins from 14.73 % to 8.03%. This means that the key trigger is demand for HQ & Catechol, without the Growth in Sales company’s capacity in Dahej needs to be Questioned.

Last 3 Years the Company posted 517 Crs (2014), 567.73 Crs (2015) & 498.08 Crs (2016) in Sales. The Current 3 Qtr figure is 391 Crs (2017), indicating that the company requires at least 179 Crs in Q4 to match up to Last Year’s Sales Figure, which looks less likely. Sharp increase in the cost of raw materials consumed this quarter eroded operating margins.

Valuations & Rationale for Sell Rating
At today’s close of 90.60 the company is trading at a Market Cap of ~930 Crs. In terms of EV/EBIDTA the stock is trading at 14.2x TTM, and 86x TTM PE. Even if the stock does 20 Crs EBIDTA for the next four quarters stock will be trading at 13.58x times which appears to be a bit expensive. There for would recommend a Sell on the Stock.

Questions for Management / Industry Players / Members that can help change view
-What is Market Potential for Blends ?
-What are the competitive dynamics for Blend manufacturers v/s normal antioxidant manufactures ?
-What is the recent trend ? Are people preferring Natural Antioxidants to Synthetic Ones?
-How is the Market & Price Scenario for TBHQ + BHA ?
-Who are the main players for Guaiocal ? How is the Price Trend ? Is there major threat from Chinese Manufacturers ?
-What is Future of Ex-Catechol Route compared to Ex-ONCB Route for manufacturing Vanillin?
-Which other players manufacturer the same and how difficult is it to acquire the said technology?
-What is the Status for Patent applied for Ex-Catechol Route ?
-Key Chemicals to track - Prices of HQ, Catechol & Vanillin ?
-Margins may be protected with Volatile HQ and Catechol Prices, but what about Demand for HQ and Catechol ?
-What is the company doing to fire its Sales Engines ?

Discl : Not Invested, just trying to understand whats behind the stock. Would appreciate if someone could help me answer these questions.


One of the reasons for muted sales growth is loss of a big client (~15% of sales) since it moved up the value chain and started competing with its clients.

DIsc: exited sometime back.

(Golden Star) #78

Makes it even more tough to get the sales engine back. Any one with an experience of interacting with the management? Trying to get in touch with them but so far no luck.

(v31) #79

read this in the paper earlier today

(Rajeev M. Parashar) #80

The Company has responded to the Closure Notice.

Please note that one of the Company’s manufacturing unit situated at Plot D- 2/3,
MIDC, Tarapur, District Palghar has been directed by the Regional
Officer Maharashtra Pollution Control Board (MPCB) vide letter no.
MPCB/ROT/CD/617 dated 25th April, 2017 to close down the manufacturing
activities of the aforesaid unit for violation of consent conditions
(consent granted u/s. 26 of Water (P&CP Act), 1974 and u/s. 21 of
Air (P&CP Act), 1981). The Company has adequately replied to the
aforesaid letter by refuting the allegations made and our reply has
been submitted to MPCB on 26th April, 2017. The Company is taking
intense efforts to resolve the issue at the earliest. Please note
that the stoppage of manufacturing unit shall not affect the sales as
the Company has adequate stock of materials to take care of its current
and future sales orders. Further, the movement of stock from the
aforesaid unit has not been impacted by the said direction. You are
requested to please disseminate this information to all the stakeholders
at the earliest.

(kauban) #81

The Q4 results are quite shocking and sort of following the trend of dropping sales/margins/profitability from the previous 3-4 quarters. While it is understandable that with the acquisitions in Mexico/China and still being bedded down, what is really disappointing is the decline in performance of the standalone business. Gross margins have fallen, and I think volumes are not increasing enough to cover Fixed Costs.

while everyone has been eagerly waiting for Dahej to come online in FY18-FY19 and the vanillin business to start kicking in, the base business of antioxidants/performance chemicals seems to have

Anyone with any insights of what is ailing CFS?

One of the things I found searching the internet, was that during last year, esp Q3/Q4, the price of their basic RM (Phenol) tightened to multi year highs on account of supply/demand dynamics. A no of Phenol plants in Asia shut down for maintenance turnarounds leading to drop in supply and jump in price of Phenol. I don’t think CFS has been able to pass thru the costs. But given their market share in antioxidants and the general belief that this is not commodity chemicals, I would have expected that this price rise for the last 6 months would have been passed over. What else could explain this price dynamic?

Also another structural change happening world-wide is the switch/preference of large food companies (who are the customers for CFS) towards ‘natural/plant based’ anti-oxidants from synthetic ones like TBHQ/BHA etc., which CFS mainstay. Is this beginning to show in the numbers? Does anyone have any information/insights on this aspect of the market?

Declaration: Invested for last 1.5 years from slightly higher levels

(khs) #82

Q1 FY18 Results:

(khashyap) #83

Over the last couple of weeks, there has been a sudden 10% percent rise, not able to understand why. Am I missing out anything?
@aveekmitra are you still tracking this? Do you have any opinion?

(maheshkumar) #84

Good days ahead

Entered at 80 Rs

10% of pf

highly undervalued company in speciality chemical
Possible turnaround

Disappointing results since last few quarters

Not sure what will happen tomorrow in results

But over next 2-3 years it can be a multibagger

the revenue share of blends and vanillin to jump to over 50% in FY19 from 5% in FY16, which should lead to earnings CAGR of 24% over FY16‐19.