BASF India: Q4FY13 Performance Beats Street Estimates

BASF (India) announced its March 2013 quarter results which have been better than street expectations. After posting a sluggish performance in the preceding quarter, the company has managed to put in a strong financial performance for the March 2013 quarter. It posted a topline of Rs 820.90 crore as against Rs 821.25 crore in December 2012 and Rs 764.05 crore in March 2012. However, one should understand that it is a cyclical business and hence we need to understand it on a YoY basis.

On the operational front, the PBIT for March 2013 stood at Rs 24.71 crore as against Rs 16.17 crore in March 2012. The PBIT margins have increased to 2.75 per cent as compared to 1.99 per cent in March 2012. On the bottomline front, the company has posted a net profit of Rs 13.32 crore for March 2013 as against Rs 7.98 crore for March 2012.

On its segment performance, the agricultural solution division managed to post a better performance. Revenues from the division increased to Rs 88.62 crore for March 2013as compared to Rs 59.98 crore in March 2012. Its performance product division witnessed marginal gains as the revenues from the division stood at Rs 348.39 crore as against Rs 326.15 crore in March 2012. Similar was the story with the plastic division where the revenues for March 2013 stood at 187.58 crore as compared to Rs 186.70 crore in March 2012.

As regards the earnings from these divisions, losses in the agricultural division declined to Rs 6.79 crore as compared to Rs 14.73 crore in March 2013. The earnings from the performance products for March 2013 stood at Rs 23.87 crore as against Rs 30.18 crore in March 2012. It was the performance of chemicals and functional solutions that managed to bring in better numbers for the company. The company has announced a dividend of Rs 4 per share.

The noticeable factor here is that despite a few bad quarters, the company has managed to put in a better performance for FY13. The topline for FY13 stood at Rs 3940.63 crore as against Rs 3515.94 crore in FY12. The PBIT stood at Rs 195.69 crore and Rs 163.33 crore correspondingly. On the bottomline front, the net profit for FY13 is Rs 114.08 crore and Rs 100.86 crore in FY12. On the valuation front, the CMP of Rs 581 discounts its FY13 earnings by 22x (EPS Rs 26.35). We recommend that investors hold the counter with a long-term perspective. A new position can be taken at the current levels too.