Clariant Chemicals : mispriced or falling knives?

I have been interested in clariant chemicals since past few months and have been steadily increasing exposure ; now at around 5 % of my small portfolio.

screener flags most as a positive. with negative being overall growth at 7%.

)- Stock is providing a good dividend yield of 10.47%.

)- Company is virtually debt free.

)- Company has a good return on equity (ROE) track record: 3 Years ROE 47.88%

)- Company has reduced debt.

)- Company has been maintaining a healthy dividend payout of 58.44%

There is also a nice write up on Safal Niveshak blog on why this has been a historical wealth creator . The company has been seen as investor friendly till now.

However recently the parent company has sold off few of clariant india’s assets. However the price to be paid to Indian subsidiary is not yet disclosed. I read this to be around 3000 crore as per some analyst reports.

The stock has been falling steadily since the announcemnt. I would seek the wisdom of seniors if i should go all out and mop up this at mouth watering valuation & good historical yeild or is there something very obvious which iam missing here. Thanks in advance.

the 3000 crore is for the full business world wide inculding india of the three business. The worldwide contribution to total sales of this 3 divisions are 7-8 %. But do not know about india

Hi mvalue,

Recently we have put up a blog post on this subject.

In a nutshell, we are wary and would want to wait for further details on the deal and impact on India business to be released.

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thanks for your insight. Appreciate your views and hoping for the best…

As per my reading Clariant is not serious about doing good investments in Dyes & Pigments fields now in India. China threat as well as low margin for MNC can be the reason.

Sold out plants at Thane and same money used for distribution of dividends.

Acquisitions of Plastichemix does not look as big money spinner in Master Batch Game.

Sudersan Chemicals looks sound company to me in field of Dyes & Pigments.

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This company is looking interesting now considering the 1000+ crore they are sitting on, buy back at around Rs.950 and decent business they still have. Any latest opinion on it?

its very much interesting now. they sold division wich contribute 30% of turnover and contributing just 4.6 cr in profit for 426 cr.

In first sight, it looks very interesting move
Valuations of Clariant become very attractive
Need to have deeper thoughts

On 16th Dec MCP/Sales was around 0.7-.8 times. After paying tax and dividend distribution tax investors should get around 60-65%, around 255-275 Cr (= 1x to sale of sold business), correct?
25-30% upside gain on sold business.

Rest of the business will have ~40Cr net profit, with 15 PE(?), MCAP will be 600Cr max, at current MCAP of 850Cr, it is all looks priced? unless if they have some real estate/assets left with them.

We can only value business as if they are going to sale it eventually, unless they show willingness/plan to grow business.

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Something cook in this company…

  • 51 % stack of Clariant India Ltd. take over by Luxembourg Investment.
  • MD Mr. Adnan Ahmad - Vice-Chairman & Managing resignation
  • Pigment Business Sale by Clariant AG
    Any one understand this situation kindly share consequences of this activity
    @hitesh2710 @harsh.beria93 @Aniesh7

I don’t track this. Checked long back but financials are weak. So skipped
Lot of other quality chemical companies available , sticking with those ones