I was recently looking at an interesting company - Tide Water Oil Ltd (TWOL).
The major product brands of TWOL are “Veedol” and “Nippon Mitsubishi”.The product range includes automotive lubricants (engine oils, gear oils, transmission oils), industrial lubricants (hydraulic oils, superclean hydraulic oils, gear oils, specialty lubricants) and automotive and industrial greases.
It has also invested in wind power (which a lot of companies have done primarily for tax benefits) but the revenues (2 cr) is negligible in the overall scheme of things.
What is interesting is that this year the company aquired Veedol International Ltd from BP plc and has gained access to the Veedol brand in over 120 countries of the world. The company has established a subsidiary in Dubai, Veedol International DMCC, to cater to Middle East and North Africa.
Now some numbers:-
Key Risks:
Valuation:-
It trades at a PE of roughly 10 times earnings and 1.9 times Price/Book. It has been a regular dividend payer and is likely to continue to do so. Also, the company is available at a much cheaper valuation as compared to its peer - Castrol, although it is much smaller in size.
Catalyst for Valuation Trigger
The Dept of Divestment, Ministry of Finance, is planning to sell Andrew Yule's, United Insurance's and LIC's stake in TWOL to a strategic investor.
Please refer to http://www.divest.nic.in/PIM_TWOL(19April).asp for further details.
The major product brands of TWOL are “Veedol” and “Nippon Mitsubishi”.The product range includes automotive lubricants (engine oils, gear oils, transmission oils), industrial lubricants (hydraulic oils, superclean hydraulic oils, gear oils, specialty lubricants) and automotive and industrial greases.
It has also invested in wind power (which a lot of companies have done primarily for tax benefits) but the revenues (2 cr) is negligible in the overall scheme of things.
What is interesting is that this year the company aquired Veedol International Ltd from BP plc and has gained access to the Veedol brand in over 120 countries of the world. The company has established a subsidiary in Dubai, Veedol International DMCC, to cater to Middle East and North Africa.
Now some numbers:-
P&L
Statement
|
FY12
|
FY11
|
FY10
|
FY9
|
FY8
|
FY7
|
Sales
|
1004.47
|
861.42
|
751.58
|
610.48
|
504.83
|
420.58
|
Other
Income
|
1.98
|
4.72
|
3.51
|
0.05
|
4.35
|
2.39
|
Op
Profit
|
75.65
|
99.06
|
91.66
|
47.7
|
35.97
|
15.8
|
EBDIT
|
75.65
|
103.78
|
95.17
|
47.75
|
40.32
|
18.19
|
Interest
|
1.1
|
1.89
|
1.93
|
3.1
|
2.59
|
3.52
|
Depreciation
|
9.26
|
9.71
|
6.18
|
3.39
|
2.5
|
1.76
|
PBT
|
86.13
|
92.18
|
87.06
|
41.26
|
35.23
|
12.91
|
Tax
|
27.11
|
30.3
|
31.54
|
18.23
|
12.14
|
3.98
|
PAT
|
57.92
|
64.16
|
57.79
|
27.55
|
23.18
|
8.97
|
EPS
|
664.86
|
736.46
|
663.34
|
316.23
|
266.04
|
102.96
|
Num of
shares
|
871,200
|
871,200
|
871,200
|
871,200
|
871,200
|
871,200
|
Dividend
per share
|
120
|
60
|
50
|
30
|
20
|
15
|
Dividend
Yield
|
1.78%
|
0.89%
|
0.74%
|
0.45%
|
0.30%
|
0.22%
|
Dupont
Analysis
|
||||||
OPM(%)
|
7.53%
|
11.50%
|
12.20%
|
7.81%
|
7.13%
|
3.76%
|
NPM(%)
-- (A)
|
5.77%
|
7.45%
|
7.69%
|
4.51%
|
4.59%
|
2.13%
|
Asset
turnover(avg) -- (B)
|
2.16
|
3.29
|
3.69
|
3.96
|
3.81
|
3.51
|
RoA(%)
|
12.45%
|
24.53%
|
28.38%
|
17.88%
|
17.48%
|
7.48%
|
Financial
Leverage -- ( C)
|
1.51
|
1.00
|
1.00
|
1.02
|
1.05
|
1.13
|
RoE(%)
-- (=A*B*C)
|
18.85%
|
24.53%
|
28.38%
|
18.24%
|
18.30%
|
8.49%
|
- A lot depends on crude prices.
- The company is owned by Andrew Yule (a PSU), United India Insurance Company Limited and Life Insurance Corporation of India, so there is possibly some amount of government control or "inefficiency" built in.
If the sale goes through, and we don't see any push back from political front (read Mamata Banerjee, as this is a Calcutta headquartered company), then this can act as a trigger for the stock price.
Disclosure:-
Please consult your financial advisor for your investments. This post is not an investment advice and I do not take any responsibility for your gains or losses!
