2026-05-14 04:35:16
Latest Post
Cybertech Systems and Software Ltd Q4 FY2025-26 consolidated net profit at Rs. 7.06 crores
JSW Dulux Ltd Q4 FY2026 consolidated PAT rises to Rs. 125.7 crores
LIC Housing Finance Ltd Q4 FY2026 consolidated PAT up at Rs. 1492.54 crores
Nitco Ltd Q4 FY26 consolidated loss at Rs. 7.78 crore
Chemfab Alkalis Ltd Q4FY26 consolidated profit at Rs. 48.46 lakhs
Research
BASF - Provision for impairment leads to decline in YoY profitability - Centrum
Posted On : 2012-10-23 22:12:05( TIMEZONE : IST )
Provisioning for impairment of assets for the discontinuation of expandable polystyrene (EPS) business to the tune of Rs88.4mn led to 17.8% YoY decline in PAT for BASF. All business segments reported decent revenue growth except for the agri solutions business which reported 6.2% YoY decline. The plastics business witnessed a turnaround with Rs50.5mn EBIT from an EBIT loss of Rs27.8mn in Q2FY12. We believe that the plastics business would gain traction going ahead with the discontinuation of loss making EPS business. The company is proceeding with its capex plan with capex for H1 slated at Rs857mn. We continue to believe that BASF's focus on high growth segments along with integration benefits would aid earnings expansion. Maintain 'Buy'.
- YoY revenues up by 4.9%: BASF reported 4.9% YoY jump in revenues at Rs10.1bn from Rs9.6bn owing to healthy growth across segments expect for agri solutions. Revenue growth was impacted as agri solutions business witnessed 6.2% YoY decline in revenues at Rs2.58bn (Rs2.75bn). The company was able to maintain its operating margins at 6.7% owing to better show by the performance products segment. Operating profits thus grew by3.2% YoY to Rs670mn from Rs649mn.
- Provisioning for impairment leads to decline in bottom-line: Despite decent operating performance, BASF's bottom-line declined by 17.8% YoY at Rs281bn due to provisioning for impairment loss for the discontinuation of its expandable polystyrene (EPS) business. Adjusted for impairment loss, the PAT would have been almost stable on a YoY basis.
- Optimistic on growth, maintain Buy: BASF's plastics business turned around from loss to Rs50.5mn EBIT profit partly due to the discontinuation of loss making EPS business. We believe the company's focus on high growth and high margin segments would drive future profitability. Also, BASF is progressing well with Dahej greenfield project (Rs10bn) with capex of over Rs857mn in H1. We have adjusted our FY13E estimates for the provisioning. The stock is available at ...x FY13E EPS of Rs27.3 and ...x FY14E EPS of Rs38.2 respectively. We maintain 'Buy' on the stock with a price target of Rs802.
