Camlin Fine Chemicals: Long Term Value

Camlin Fine Chemicals. BSE: 532834

Current Market Price: Rs 102

Market Capitalization: 59.22Cr
Sales March 2009: 100Cr,  ROCE: 19.02,  Total Debt: 26.2Cr

This is a stock I have been recommending for quite some time (when it was in mid 50). It has run up sharply and is now close to its lifetime highs. We are right now in crossroads, Buy/Sell/Hold the company stock.
Camlin Fine Chemicals (CFC) is an offshoot of Camlin a well established stationary and art brand in India from 1931.  CFC came into existence when the promoters of Camlin were looking for new areas to growth beyond their stationary business. Fine chemicals/Active Pharma Ingredients (API) was identified as future growth area (Two decades back). CFC growth started when Ashish Dhandekar took over responsibilites of the Fine Chemical division of Camlin. With CFC becoming a stable business it was seperated from the parent company on Dec 22, 2006 with majority control to Ashish.

CFC is defined as leading manufacturer & exporter of Bulk Drugs, Fine Chemicals and Food Grade products. It has established itself as 2nd largest manufacturer in the world of food grade antioxidants TBHQ & BHA with 70% market share in India.

Since its inception as an independent company in Dec 2006 the company has made forays into Sucralose, neutrachemicals Glucosamine through acquisition of Sangam laboratories, Speciality chemicals through Chemolutions Chemicals Ltd, Renewable Energy and Consumer durables with Fine Brands. Company has recently announced approval of rights issue.

Suggestion:  Promoters have made acquisitions at price close to Rs 80 when the company was established as an independent entity (Link). Company is still in its infancy considering the fact that it was established as an independent firm on dec 2006. Company is trying to increase its business areas by entering into Neutrachemicals, Renewable Energy, Consumer Durables all this will require time to settle and businesses to be profitable. I would advise reduction in holding as market cap. approaches close to 75Cr or when rights issue date is announced. 
Dilution in Return on Capital:
- Additional raising of capital
- Foray into new areas like consumer goods (Fine Lifestyle Brands)
- Renewable Energy & specialized chemical (Chemolutions Chemicals Limited)

Long Term Value: Considering the strong promoter's it would however be advisable to hold some stock and accumulate more at lower levels (below 75Cr Market Cap)  in the next few years as a long term value proposition.