The stock price has increased by 256.44% in last one year, while the benchmark index S&P BSE Sensex has increased by 44.70%.
The stock gained after after credit rating agency, India Ratings & Research or Ind-Ra (Fitch Group), upgraded the long-term issuer rating the company.
“The upgrade reflects CFSL’s consistent improvement in operating performance from FY18 to FY21, as well as a significant improvement in its credit profile. Furthermore, the start of commercial production of diphenols at the Dahej (Gujarat) unit in FY21 reduced the company’s single location risk for raw material while improving its cost structure and margins, enhancing its overall business profile “In a statement, Ind-Ra said in statement.
According to the rating agency, CFSL’s overall operations have stabilised, and it has gained a foothold in the blends business in North, Central, and South America, while the business in India and other parts of the world is performing well.
CFSL’s margins have been increasing in recent years, owing to the company’s efforts to scale up its operations on a global scale, with a focus on the value-added products portfolio. The management expects margins to improve further to the high teens in FY22, owing to the company’s ongoing efforts to streamline global operations, further improvement in the performance of overseas subsidiaries, and the ramp-up of the Dahej plant.
CFSL is in the process of setting up a 6,000MT ethyl/methyl vanillin plant in Dahej at a cost of around Rs 180 crore. The project will be funded by an external commercial borrowings line of credit of $15 million ($5 million received in February 2021) from the International Finance Corporation; the remainder will be funded through the issuance of preferential warrants/equity and/or internal accruals.
The unit is expected to begin commercial production in Q1FY23, according to management. With the completion of this capex, CFSL intends to expand its presence in the aroma and fragrance segment as well as gain market share in the domestic vanillin market, which currently relies heavily on imports from China and is looking to de-risk, according to Ind-Ra.
Although Ind-Ra believes that the successful completion and stabilisation of the Dahej ethyl vanillin project and other planned capex programmes will improve the company’s revenue visibility and operating profile, they will pose a project risk until completion, according to the company.
Camlin, the corporate group, was founded in 1931 and is a pioneer in India’s art and stationery material. Camlin began diversifying into pharmaceuticals and fine chemicals more than two decades ago. On December 22, 2006, Camlin’s Fine Chemical Division was spun off into a new company called Camlin Fine Chemicals. Camlin Fine Chemicals Division’s entire management team and employees are now a part of the independent legal entity established under the Indian Companies Act 1956. Camlin Fine Chemicals Ltd. changed its name to Camlin Fine Sciences Ltd. in 2011.
Camlin Fine Chemicals is the world’s second largest manufacturer and marketer of food grade antioxidants TBHQ and BHA. Its goal is to become the world’s largest manufacturer of food antioxidants and ingredients. Their facilities are HACCP and ISO 9001 : 2000 certified.
Disclaimer: This document and the process of identifying the potential of a company has been produced for only learning purposes. Since equity involves individual judgments, this analysis should be used for only learning enhancements and cannot be considered to be a recommendation on any stock or sector.