Multibase India Ltd: A Deep Dive into the Specialty Plastics Manufacturer
By NewsFromStockMarket.com | Updated: 12 May 2024
Stock Snapshot
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- Current Price: ₹281 (BSE) | Market Cap: ₹355 Cr
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- 52-Week Range: ₹222 – ₹622 | Dividend Yield: 18.8%
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- P/E Ratio: 24.5 | ROCE: 11.6% | ROE: 8.58%
Company Overview
Incorporated in 1991, Multibase India Ltd (BSE: 526169) is a subsidiary of France-based Multibase SA, specializing in manufacturing polypropylene compounds, thermoplastic elastomers, and silicone masterbatches. These products cater to automotive, construction, and industrial sectors. With a focus on niche materials, the company operates in a competitive space dominated by giants like Supreme Industries and Astral.
Financial Highlights of Multibase India
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- Dividend Powerhouse:
Multibase stands out with an eye-catching 18.8% dividend yield, backed by a consistent payout ratio of 26.6%. This makes it attractive for income-seeking investors.
- Dividend Powerhouse:
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- Debt-Free Balance Sheet:
The company boasts a zero-debt status, ensuring financial flexibility and reduced risk during market downturns.
- Debt-Free Balance Sheet:
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- Recent Performance:
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- Q3 FY24 Sales: ₹17.15 Cr | Net Profit: ₹2.38 Cr
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- TTM Sales: ₹69 Cr | Net Profit: ₹15 Cr
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- Despite a -10% sales CAGR over 5 years, recent quarters show modest recovery (8.96% YoY sales growth in Q3 FY24).
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- Recent Performance:
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- Valuation Metrics:
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- Trading at 2.58x book value (Book Value: ₹110), the stock appears premium compared to peers.
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- ROE remains subdued at 8.58%, reflecting challenges in profit retention.
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- Valuation Metrics:
Strengths & Weaknesses
Pros:
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- Zero debt and strong liquidity position.
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- Sector-leading dividend yield.
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- Stable promoter holding (75%).
Cons:
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- Stagnant Growth: Sales declined by 10% over 5 years.
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- Low Efficiency: ROE of 8.58% lags behind industry median (14.99%).
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- High Valuation: Elevated P/B ratio despite recent price correction (-8% in 1 year).
Peer Comparison
| Metric | Multibase India | Industry Median |
|---|---|---|
| Market Cap | ₹355 Cr | ₹392 Cr |
| P/E Ratio | 24.5 | 25.65 |
| Dividend Yield | 18.8% | 0.14% |
| ROCE | 11.6% | 14.99% |
While Multibase outperforms peers in dividends, it trails in growth and efficiency. Companies like Kingfa Science (ROCE: 30.06%) and Responsive Industries (37.62% sales growth) highlight competitive pressures.
Quarterly Trends & Technicals
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- Sales Volatility: Quarterly sales fluctuated between ₹13.81 Cr (Dec 2021) and ₹19.23 Cr (Jun 2024), reflecting demand cyclicality.
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- Margins: Operating margins improved to 13.82% in Q3 FY24, up from 6.64% in Sep 2022.
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- Technical View: The stock trades below its 50-DMA (₹290) and 200-DMA (₹300), signaling short-term bearishness.
Investment Considerations
Multibase India suits dividend-focused investors comfortable with moderate growth. However, its premium valuation and inconsistent sales trajectory warrant caution. Long-term investors should monitor:
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- Revival in automotive/construction demand.
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- Improvement in ROE and sales CAGR.
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- Sustainability of high dividend payouts.
Verdict: A high-yield, low-growth play ideal for conservative portfolios. Risk-tolerant investors may await better entry points below ₹250 (near book value).
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