BASF India, the chemical major and 52.69% subsidiary of BASF AG, reported an impressive performance for Q1FY09.
Net sales registered a growth of 61.4% to Rs380.82 crore mainly on back of 134.2% growth in agricultural products business to Rs175.9 crore. Though there were higher trading purchases, decline in all other heads of expenditure improved margins.
Higher sales, better margins aided by higher other income led to 83.9% spurt in PBT to Rs56.60 crore. PAT was up by 84.4% to Rs36.65 crore.
BASF has a diversified product portfolio and is present in following business segments — agricultural products and nutrition (27 % of net sales), performance products (52.3% of net sales), plastics and fibres (16.1% of net sales), chemicals (3.5% of net sales). Within these segments, company offers products imported from BASF group companies as well as those produced locally.
With a view to cater to increasing demand from automobile industry, the company is planning to set up compounding plant for engineering plastics with a capacity of 9000 tonnes per annum (tpa), expected to go on stream by second half of 2009.
Capex incurred is estimated at Rs17.2 crore and will be financed by internal accruals and borrowings. This plant will also cater to needs of electrical as well as electronics industry.
The company is expected to maintain a strong performance in its major segments and will continue to derive support from its parent company. At the current market price, the stock is trading at 7.9 times FY09 expected EPS of Rs35.7 and 6.6 times FY10 expected EPS of Rs42.8 We recommend a BUY in the counter with long-term view.