The 6-Fold Jump In M-Cap Since January ‘09 Is More Than Sensex’s Growth Of 1.7 Times
AHMEDABAD-BASED dyestuff manufacturer Kiri Dyes, which launched an IPO in early-2008, has widely outperformed the benchmark BSE Sensex in 2009. The six-fold jump in the market capitalisation of this company since January 2009 has been more than just 1.7 times growth in the Sensex. Apart from the successful implementation of its backward integration projects and improving profitability, its acquisition of DyStar boosted its stock market performance.
Although the full details are not yet available, the single location company from Gujarat with an annual turnover of close to Rs 300 crore has agreed to buy selective assets of the world’s leading dyestuff manufacturer DyStar. DyStar, which filed for a bankruptcy protection a couple of months ago, is a Rs 5,500 crore turnover company with 20 production units in eleven countries.
For quite some time, Kiri Dyes had been contemplating inorganic routes to propel its growth. In August 2009, its board had approved raising Rs 250 crore through qualified institutional placements (QIPs) or FCCB/GDR etc. Simultaneously, it increased the limit of FII investment to 49% from 24% earlier.
The company also raised its borrowing powers from Rs 300 crore to Rs 700 crore and also set up an overseas subsidiary.
Kiri Dyes had raised Rs 70.7 crore by way of an initial public offer of its equity shares in April 2008 to set up plants manufacturing its raw materials such as sulphuric acid, H-acid, olieum and chlorosulphonic acid. This backward integration has enabled the company to expand its operating margins, which stood at 21.2% for the half year ended September 2009 compared to 16.3% in the corresponding period of last year.
The company also entered into a joint venture with China’s Well Prospering Company to set up an export-oriented dyestuff manufacturing unit in Gujarat that commenced operations in July 2008. Well Prospering had acquired a 8.3% stake in the company through a pre-IPO placement.
During 2009, the promoters’ shareholding in the company increased to 69.8% as of end-September 2009 against 66.6% at end 2008, while FIIs raised their stake from 3.1% to 4.4%.
At the current market price of Rs 657, the scrip is trading 90 times the earnings for the trailing 12 months. The company’s future prospects do appear bright, with its imminent jump in the global dyestuff market through the acquisition of DyStar. However, the run-up during the past 12 months means that most of these positives have already been factored in.
AHMEDABAD-BASED dyestuff manufacturer Kiri Dyes, which launched an IPO in early-2008, has widely outperformed the benchmark BSE Sensex in 2009. The six-fold jump in the market capitalisation of this company since January 2009 has been more than just 1.7 times growth in the Sensex. Apart from the successful implementation of its backward integration projects and improving profitability, its acquisition of DyStar boosted its stock market performance.
Although the full details are not yet available, the single location company from Gujarat with an annual turnover of close to Rs 300 crore has agreed to buy selective assets of the world’s leading dyestuff manufacturer DyStar. DyStar, which filed for a bankruptcy protection a couple of months ago, is a Rs 5,500 crore turnover company with 20 production units in eleven countries.
For quite some time, Kiri Dyes had been contemplating inorganic routes to propel its growth. In August 2009, its board had approved raising Rs 250 crore through qualified institutional placements (QIPs) or FCCB/GDR etc. Simultaneously, it increased the limit of FII investment to 49% from 24% earlier.
The company also raised its borrowing powers from Rs 300 crore to Rs 700 crore and also set up an overseas subsidiary.
Kiri Dyes had raised Rs 70.7 crore by way of an initial public offer of its equity shares in April 2008 to set up plants manufacturing its raw materials such as sulphuric acid, H-acid, olieum and chlorosulphonic acid. This backward integration has enabled the company to expand its operating margins, which stood at 21.2% for the half year ended September 2009 compared to 16.3% in the corresponding period of last year.
The company also entered into a joint venture with China’s Well Prospering Company to set up an export-oriented dyestuff manufacturing unit in Gujarat that commenced operations in July 2008. Well Prospering had acquired a 8.3% stake in the company through a pre-IPO placement.
During 2009, the promoters’ shareholding in the company increased to 69.8% as of end-September 2009 against 66.6% at end 2008, while FIIs raised their stake from 3.1% to 4.4%.
At the current market price of Rs 657, the scrip is trading 90 times the earnings for the trailing 12 months. The company’s future prospects do appear bright, with its imminent jump in the global dyestuff market through the acquisition of DyStar. However, the run-up during the past 12 months means that most of these positives have already been factored in.
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