DE - NORA (INDIA) LTD - WILL IT BE A MULTIBAGGER ?

MNC’s always enjoying premium valuations in Indian

Stock market ,especially companies operating from niche

space.De Nora India (DNI) is a niche company commanding a

market share of about 75% where it is operating , but

overlooked by the investor fraternity- may be because of  the

complex nature of business in which it involved .

This company is a 51.25% Subsidiary of Gruppo De Nora

of Italy ,the world leader in design,erection and

commissioning of electrochemical plants. DNI’s main business

includes coating of anode and Cathode using in Chlor Alkali

plants and corrosion systems used for preventing corrosion

in SAW pipes ..etc. Along with this ,company is also supplying

electro-chlorination equipments for purifying water  for

drinking and Industrial purpose. The erstwhile Mercury Cell

technology used in our country is now gradually converting

into Membrane Cell technology, which is opening huge

chance for company’s product. Even if the new cells need

not require coating in the initial few years of operation it

should be coated periodically thereafter which is a big

opportunity for the company. In last  year DNIL introduced

Platinized  Titanium Anodes  for  surface  finish application

in India .Company’s factory located at Goa is equipped with

most modern facilities and it is getting full support of its

parent company. Lying of large network of pipelines in oil

and gas sector,building of new bridges ,different type of

concrete protection requirements ..etc are expected to

bring good business for company’s Cathodic protection

division.On the negative side ,company’s business

have some cyclical nature,and is related with the fortunes

of Chlor Alkali industry which is now  started showing revival.

Secondly there was an order against the company  by the

Directorate General of Supplies and  Disposals, Ministry of

Commerce and Industry which restricts the company from

business with certain  government departments for a

period of five  years  .But, DNI  challenged this order and

in last month got an order stating that the time period

reduced to just one year starting from 22.02.2010.

Even if it may slightly affect the

performance in very near future,there is good scope

for its business in private sector and also in export front.  

FINANCIALS

DNI’ financial year ending is in the month of December.

Last financial year witnessed one of the worst performance

in recent past where company posted a turnover of Rs.13.45

Cr and a net loss of Rs.33 Lac(excluding other income).

But ,for the qtr ended June 2010 alone company posted a

sales of Rs.4.74 Cr v/s Rs.2.29 Cr and a net profit of

Rs 1.20 Cr v/s .58 Cr. Half year EPS is Rs.2.14 v/s Rs.1/- .

Company is very liberal in dividend payment which paid 50%

in 2004 ,70% in 2005 ,69% in 2006,58% in 2007,25% in 2008.In

2009, due to loss company skipped the dividend and it is

expected to give higher yield in this year due to better

prospects. Considering the support from the parent

company which is the world leader, revival in the user

industries ,chances of a turnaround performance ..etc

company may turn as a multibagger going forward.

CMP is Rs.79/-(Trading in both NSE and BSE)