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Indo Borax and Chemicals ltd, as the Management says is synonymous with Boric Acid and is referred to as the industry standard for many comparisons made in the industry. The Company's principal activity is to manufacture and sell chemicals. It's products include boric acid and borax. So, basically the company has a very streamlined product portfolio and considering the past, the management does not seem interested in expanding the basket of products.
In India, there are many companies where the management needs to be really motivated and need to be told about creating wealth, else you find them content with whatever little they are able to achieve without tapping their true inner potential. Indo Borax and chemicals seems a similar case, where although the company has been doing well, however there's no visible expansion of either the infrastructure or the product portfolio.
As I mentioned, the performance of the company has been good over the last 4 years. The revenue of the company have almost doubled from Rs 23 crore at the end of Mar'06 to Rs 45 crore at the end of Mar'09. The growth in bottom-line has been even better from Rs 2.55 crore to Rs 7.87 crore for the same period. This year i.e. FY 2009-10 there's a drop in net profit of the company to Rs 4.74 crore, largely because of the exceptional item of loss of sale of investment of Rs 1.67 crore.
The company has a very small equity base at just Rs 3.48 crore. I mentioned earlier that the management lacks inner motivation to expand the operations of the company and this can be well gauged from the fact that for the last 6-7 years the equity base has remained at just Rs 3.48 crore with almost negligible debt. If we ignore the fact that there's no visible expansion in the forthcoming quarters, the company is still being cheaply valued by the market.
Here we have a company with zero debt on its balance sheet, making a profit close to Rs 5 crore and available at a market capitalization of just Rs 23 crore. The other important point that is worth mentioning is that they have close to Rs 3.5 crore cash on their books, thus an EV/EBITDA multiple of less than 3.
In India, there are many companies where the management needs to be really motivated and need to be told about creating wealth, else you find them content with whatever little they are able to achieve without tapping their true inner potential. Indo Borax and chemicals seems a similar case, where although the company has been doing well, however there's no visible expansion of either the infrastructure or the product portfolio.
As I mentioned, the performance of the company has been good over the last 4 years. The revenue of the company have almost doubled from Rs 23 crore at the end of Mar'06 to Rs 45 crore at the end of Mar'09. The growth in bottom-line has been even better from Rs 2.55 crore to Rs 7.87 crore for the same period. This year i.e. FY 2009-10 there's a drop in net profit of the company to Rs 4.74 crore, largely because of the exceptional item of loss of sale of investment of Rs 1.67 crore.
The company has a very small equity base at just Rs 3.48 crore. I mentioned earlier that the management lacks inner motivation to expand the operations of the company and this can be well gauged from the fact that for the last 6-7 years the equity base has remained at just Rs 3.48 crore with almost negligible debt. If we ignore the fact that there's no visible expansion in the forthcoming quarters, the company is still being cheaply valued by the market.
Here we have a company with zero debt on its balance sheet, making a profit close to Rs 5 crore and available at a market capitalization of just Rs 23 crore. The other important point that is worth mentioning is that they have close to Rs 3.5 crore cash on their books, thus an EV/EBITDA multiple of less than 3.
Email: Ekansh@hbjcapital.com
