Tuesday, February 22, 2011

Clariant Chemicals - Final Dividend on 24 Feb 2011

Clariant Chemicals - Results and final dividend on Thursday , 24 th Feb 2011.
Summary - Trading buy - Buy Clariant on or before 24th Feb ith potential 15-25% returns based on dividend expectations ( and not on results as it is already been priced in). Stop loss 700.
Cmp 700
PE 14
Trailing dividend yield 3.6%
But more than results.. the only big trigger could be a bumper dividend.
It sold its Thane Land for Rs. 240 crores in July `10 to Bombay based Real Estate Developer Kalpataru but have to see in Dec `10 quarter if the proceeds are received or not.
From this article it seems the deal was completed on 7 Feb 2011.
Clariant also will be declaring results on 24 Feb 2011. So have to see if this land sale is booked in CY 2010 or Q1 2011. ( It generally gives interim dividend on April)
Assuming the land sale money has been received and going by its track record of 80-90% dividend payout ratio.,it can declare total dividend of 80- 90 per share vs 700 cmp or yield of  10%-12%.( 10 rs interim dividend already given in Apr`10).
Basis of the above calculation is :
9 months till Sep`10 PAT of 100 crores and so CY 2010 PAT could be 120 -130 crores and land sale would fetch 240 crores so total PAT of 360 crores.
If it declares such a dividend of 80 rs. then at least a 100 to 200 rs pop should be expected .i,e 15% to 25% upside.
Last year (and minimum guaranteed) dividend of 25 per share or at cmp of 700 yield of 3.6% but PE of 14x. close to fairly valued. as earnings growth hasnt been great this year..
So buying Clariant before 24th would be a trading buy based on dividend expectations and not on results.
Clariant Chemicals - has been a 16 bagger since 2001 and a classic buy and hold stock with dividend CAGR of 22 % and share price appreciation ( excl. dividends ) of 36% CAGR in the last 10 years. It was 40 Rs per share in 2001 and last year CY 2010 dividend was 25 Rs per share.
10 year share price Chart  here

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