Vivid Global..Niche Player

Company Name: Vivid Global (BSE code: 524576)

Industry: Commodity Chemicals

Investment horizon: 3 years (This may not generate immediate return in short term)

Recommendation: Allocate not more than 10% of your portfolio. At CMP of Rs.39 it is trading at a discount of 35% from 52 week high   

About the Company:

Vivid Global Industries is an ISO 9001 - 2008 certified company which is well known in the field of Dyes and Dye-intermediaries and Speciality chemicals for the past 43 years

Management:

The group was promoted by Mr. Sudhir M Mody, a Chemical engineer from USA who has dedicate more than 43 years in the field of Dyes and Dye – Intermediaries and is now managed by Mr. Sumish S Mody, Chairman and Managing Director, MBA graduate from USA who is in charge of all commercial and financial operations of the group who has more than 20 years’ experience in the field

It is having its registered office in Tarapur in the state of Maharashtra, India and having its Factory at Vapi in the state of Gujarat is one of the largest manufacturers of Dye intermediaries such as N.Methyl J.Acid, Phenyl J. Acid, and Rhoduline Acid

Major product segments include

Dye Intermediaries

Reactive Dyes

Direct Dyes

Acid Dyes

Pros and Notable Points:

• Major clients are Archroma (Formerly known as Clariant)

• Almost 90% of the India’s export of Phenyl J. Acid is being done by this company and 60% of N. Methyl J Acid exports are also done by this group - Monopoly

• It has been awarded a Star Export House

• (It will be awarded if any company has achieved at least 15 cr of export performance)

• Promoter holding as on 31^st March is at 50.18% and promoters are increasing their stake from open market

• The Company has opted to major expansion of their Production capacity and hence have installed new Plant and Machinery in their Factory premises at Tarapur (Maharashtra). Due to this expansion the Installed capacity of the company has risen from 720 MT to 1400 MT p.a which will increase the top line in the coming years

 Cons:

• Currently it is trading at a P/E of 20

• Liquidity concern – Low volumes

• Volatility in Crude oil prices

 Financial Highlights:

• Healthy Dividend Pay-out ratio of 35%

• Approximately 50% revenues come from exports only

• Revenues are grown at 20% from past three years

• Net profits are grown at 40% from past three years

• Return on Equity for the past 3 years is 30%

• Company debt is 1.2 Cr and the debt to equity ratio stood at 0.3 which can be also construed as a Zero Debt company (Since the company’s net profit itself is 1.8 Cr). Company has reduced the debt from 2 Cr

• Very Low market cap – 34 Cr

• Operating Margins are at 7.5% which can be increased once the company increased the market share

• Cash Flow from operations are in line with Net profits

Narration	2012	2013	2014	2015	2016	2017
Sales	8.24	15.50	27.47	27.50	26.86	35.76
Expenses	8.35	15.47	26.03	25.83	24.84	33.10
Operating Profit	(0.11)	0.03	1.44	1.67	2.02	2.66
OPM	(1.33)	0.19	5.24	6.07	7.52	7.44
Net profit	(0.20)	0.38	0.78	0.86	0.98	1.81
EPS	(0.24)	0.44	0.88	0.97	1.07	1.98
PE Ratio	(10.42)	10.38	4.14	5.28	10.43	19.24
Price	2.55	4.60	3.64	5.12	11.20	38.15

Rating:

• Fundamental rating: 72

• Technical rating: 78

• Overall rating: 75

Valuation:

With the investment horizon given, considering all the inputs of estimates the valuations are at Rs.105

Valuations are made at 15X projected FY 20 EPS

(The valuations are calculated on the basis of financial inputs/estimates but investors are required to invest based on the business potential and business risks too) 

ANNUAL REPORT FY 16