Monday, February 14, 2011

Multibase India Ltd-sound growth prospects

Multibase India Ltd ( BSE Code :526169) is currently in its 20th year of operations.
Primary products:  Thermoelastic Elastomers, Thermoplastic master batches.
Plant location: Daman
Market positioning : Market leader in its category of products.
Parentage : 75% subsidiary of Multibase SA, France which in turn is a subsidiary of Dow Corning, USA
Multibase India  is a specialty and technical chemicals manufacturing company. It is engaged in the manufacture and distribution of thermoplastic elastomeric compounds and silicon enhanced products. The company offers a wide range of polypropylene compounds, thermoplastic masterbatches, thermoplastic elastomers, and siloxane masterbatches. Its product rangeincludes TPSiV, a thermoplastic silicone vulcanizate; Siloxane Masterbatches, Multibatch, Multi-Flex, Nylex, Multi-Pro, and Multi-Flam.
User industries for primary products of Multibase:
Asthetics: Car mats, IP/DP center console skins, control panel knobs, seat belt housing, hand brake, cup holder, A/C grills and components
Fluid Transportation:Air Duct Housing, Window cleaning duct
Safety: Driver Airbag covers,Passenger Airbag Covers, Knee Airbag Covers , Side Airbag Covers, curtain Airbag Covers
Weather Seals: Static & semi dynamic glazing seals, Acoustic Seals, Asthetic seals, Thermal seals
Structural parts: Dash board, Door panel, centre console,Wheel trims
Health, Personal Care, Cosmetics: Tothbrushes, Razor handles, Hairbrush handles, cosmetic packaging
Houseware:kitchen utensil,small appliances ( irons,kettle), washing machine
Sports: swimming accessories ( flippers,mask, snorkel)
Personal electronics: Mobile phone housing, ear buds,key board
Wire & Cables:Optical fibre,pipe extrusion,HFFR  wire & cables
Electrical protection:Electrical switch,Electrical housing, Electrical contactor
Fluid & product delivery:gaskets and seals,water cooler seals,flexible plumbing,hose & tubing
Packaging: Carrier bags, woven sacks,Stationery (interleaf sheets, folder covers), thermoformed food trays, Corrugated PP boards
Window seals & gaskets: window seal, door seal, refrigerator seal
Paid up Equity Capital : Rs 12.62 crore
Debt: Rs.0.93 crore
Revenue: Rs.32.84 cr
Profit before tax: Rs.3.50 cr
Net profit: Rs.2.70 cr
EPS: Rs.2.13
Dividend: Nil
6-months ended Sept 2010:
Revenue: Rs.19 cr ( 10% growth yoy)
Profit before tax: Rs.1.53 cr ( 25% de-growth yoy)
Net profit: Rs.1.02 cr ( 48% de-growth yoy)
Key Catalysts:
1)   Increased volumes/sales :The company has been increasing its presence in the Automotive sector in India. It offers  a wide gamut of applications to this sector, as detailed above. Increased volumes will have a high positive impact on bottomline.
2)   The current installed capaicity is 6000 TPA. Current capacity utilization is less than 30% of the installed capacity. So, Multibase can  over the next 3-4 years comfortably reach a 100 cr plus turnover without any capacity expansion.
3)  Delisting – though this is more in the nature of optimistic speculation, it canot be ruled out considering the growth prospects.
4)  Mandatory Air Bags in 4 wheelers: It is expected that over the next 3-4 years, Air bags as a safety feature  may become mandatory for all new 4 wheelers , just as seat belts were made mandatory a few years back. The proposal is currently with the Ministry of road  transport and highways and may come up for consideration when the amendments to the Motor Vehicle Act are notified.
At the current price of Rs.29 per share, the company may seem overpriced on the traditional PE scale. However if one considers the growth prospects for its products , market leader status and strong parentage, it appears a good investment.
At the time of writing this report, the author /his family have an investment interest in the stock mentioned above. Under no circumstance does the information in this report represent a recommendation to buy or sell the above-mentioned stock.  This report has been prepared and issued on the basis of publicly available information, internally developed data & other sources believed to be reliable. This is just a suggestion solely for information purposes and does not constitute a solicitation to any person to buy or sell a security. While the information contained therein has been obtained from sources believed to be reliable, no responsibility (or liability) is accepted for the accuracy of its contents. Readers using the information contained herein are solely responsible for their actions and are advised to satisfy themselves before making any investments.


  1. Hi there

    Considering the news published today, govt. is planning to make air bags mandatory for auto companies. Can you pls share your latest views on this stock @ CMP of 85?

    Thanks in advance for your response.


  2. hello equity tracker Delhi,

    as and when it does materialize, it'll be a big big positive and a game changer in the true sense of the word. My sense is Auto companies'll resist this and it'll be sometime before it actually does get implemented.

    in the meanwhile, news like the one we read in TOI today shall help bring the stock in focus to a larger and hopefully better crop of investors.

    had done a small update note earlier which provides a helicopter view of the possible market & opportunity size :

    hope it helps...thanks

  3. Thanks for the prompt seems the stock has already reacted slightly to the article that was published today in TOI :)

    I completely agree that if this gets implemented will be a huge +ve trigger for this organization.

    Thanks for pointing to the other note that you had posted.

    Let's see how this move from govt. spans out...keeping the fingers crossed :)

    As always, eagerly waiting for your next hidden gem :)

    Thanks again!