CMP Rs 89 (FV 1) Analyst : Janak Shah (M.B.A. Finance)
Market Cap Rs 876 crs Date: 1st Sep 2015
Target : Rs 130 Time frame : 1 year target(Multibagger)
About the Company:
The company is promoted by the Ashish Dandekar family and other partners. It is the biggest Anti oxidant products and systems supplier. It has recently diversified into other chemicals. The company has a very niche product and market.
The company has a wide array of products. It is the largest in anti oxidant products and has recently diversified into Aroma and Performance chemicals. In case of Antioxidants, it is not only the worlds biggest in TBHQ and BHA, but it also has an integrated upstream. The aroma products of the company include Vanillin and Ethyl Vanillin which has a huge market of 20000 TPA. The technical team has recently de-bottlenecked the manufacturing facility which has resulted in the capacity up from 600 MT to 1000 MT per month with minimum investment and substantial saving cost.
For the year ended March 2012, the company reported sales of 252 crores and reported a net profit of 10 crores. The year ended that is March 2013 the company has seen sales of 313 crs and Net profit of Rs 14.7 crs. For the year March 2014, the sales of the company has risen to Rs 374 crores and the Net profit of Rs 19 crores. For the year 2015, sales rose to 430 crores and net profit was at Rs 26 crores.
The EPS is about 2.6 per share. Net profit margin has risen swiftly from under 4% to about 6%. This year the Net profit is expected to be in the region of Rs 35 to 40 crores. EPS can touch 4 per share.
Promoters hold about 52% while the , public holding is at 46% with 2% with fii and dii
Comparisions to Peers:
The company can be compared to some well managed chemical companies like Vinati Organics, Aarti Drugs, Omkar Speciality Chemicals etc. It can get a PE of 15-30.
The company has proposed to have subsidiaries in China and Mexico. The new upcoming plant for Vanillin at Dahej will have capacity of 6000MTPA and that of HQ will have 9000 MTPA. New state of art research plant is commissioned at Tarapur.
The company has aggressive growth plans and also have commissioned the previous expansions successfully.
The share which is quoting at Rs 89 has the potential to cross the 115 mark in the medium term and can also cross the 135/- mark in the next 1 year. It is a fundamentally very sound company with niche specialized product.
( Disclosure: The analyst has no holdings in the company as on date of issue being published)
The analyst has submitted all information as per SEBI requirement for the criteria of a research analyst