Himadri Chemicals: Down But Not Out!

Himadri Chemicals: Down But Not Out!

Himadri Speciality Chemicals, India’s largest integrated speciality carbon chemical maker, had a rough time lately, both on the business front and on the bourses.

Its share price have slumped over two year low immediately after realizing poor set of numbers for the fiscal second quarter to September 2019 (Q2FY20).

The company’s standalone operating profit or Ebitda (earnings before interest, tax, depreciation, and amortisation) declined 34% on year to Rs 94 crore on account of drop in sales realizations due to slowdown. Ebitda margin contracted 430bps at 19.3% from 23.6% in a year-ago quarter.

Net revenue was down 19% at Rs 487 buy steroids online crore. The company’s net profit decreased 35% at Rs 51 crore on YoY basis.

The slowdown in aluminum, graphite electrode, tyre and automobile industry and overall weak business environment in the last few months has led to lower sales realizations.

Unless there’s a revival in demand the company’s earnings prospects will continue to remain under pressure.

Another area of concern is its huge debt payment obligations. According to the last reported balance sheet, Himadri had liabilities of Rs 834 crore due within 12 months and liabilities of Rs 322 crore due beyond 12 months.

Offsetting these obligations, it had cash of Rs 14.07 crore as well as receivables valued at Rs 379 crore due within 12 months.

So its liabilities outweigh the sum of its cash and (near-term) receivables by Ra 763 crore.

While this might seem like a lot, it is not so bad since Himadri has a market capitalization of Rs.3,100 crore, which brightens fundraising prospects, if need be, to strengthen its balance sheet.