Akshar Chemicals...Speciality Chemicals (Vinyl Sulphone)

By -

Company Name: Akshar Chemicals (BSE Code: 524598)

Industry: Speciality Chemicals

Investment Horizon: At least 2 Years

Allocation: Allocate not more than 10% of your portfolio, at a CMP of 850 Range it is a value buy and can add on dips too

About the Company:

The Company was promoted by Mrs. Paru M. Jaykrishna in 1989. It is headquartered in the chemical belt of Mehsana (Gujarat). It is engaged in the business of dyes and pigments manufacturing.

Business Segments:

Dye Intermediaries – (Includes Vinyl Sulphone) – Used in Textiles – Cotton, Silk, Wool
Dyes – Same as above
Pigments – Used in Paint Industry, Plastics etc.

Vinyl Sulphone has contributed to 68% of revenues and CPC green business contributed to 32% of revenues in FY 17

It Produces 9240 Metric tonnes of Vinyl Sulphone and 1440 Metric tonnes of CPC green pigment

Pros and Notable Points:

  • One of the fastest growing vinyl sulphone manufacturers in India and India’s leading exporters of vinyl sulphone.
  • It has almost have 45% market share in Indian Vinyl sulphone exports
  • With the intent to control the pollution, the Chinese government taken an initiation of shutting down of the biggest Chemical Manufacture company (Hubei Chuyuan) and some other companies in China which contributes more than 30% of Global Dye production – Which led to shortage of products in the markets
  • Simple Demand and Price concept again – Demand increased and Prices also increased simultaneously. The Chemical prices have gone up by more than 100% to which resulted in tremendous increase in top line in terms of both price growth and Volume growth
  • But that only has reflected in only two Quarters i.e. Sep 16 and Dec 16 and cooled in next quarters due to seasonal effect and increase in Crude oil prices
  • And maybe it will take some time for Chinese companies to recover
  • Received many awards for Outstanding export performance in Merchant Exporters Panel
  • Promoter holding is at 70%
  • DIC Corporation of Japan has 2.9% stake in this company
  • Credit Rating of A1 from CARE and ISO certifications like ISO 9001: 2008

Check Goa Carbon up 40% in just two weeks

Cons:

  • Volatility of Commodity prices
  • A Little highly priced over peers

Join FB group for more updates


Financial Highlights:

  • Revenues are grown at a CAGR of 38% from past 5 years
  • Profit after tax has grown at 85% from past five years
  • Return on Equity for past three years stood at 34% and Return on Capital Employed stood at 48%
  • Debt for the Company is Rs.30 Cr which is just 50% of FY 17 Net profits and the Debt Equity is at 0.3
  • With Fixed assets of Rs.50 Cr, the company is able to generate bottom line of Rs.50Cr in FY 17 which demonstrates the operational efficiency of the company – Capacity utilisation during the year was 80%
  • Company is exporting almost 90% of its sales
  • Dividend Pay-out ratio is 35%
  • Had a Capital expenditure plan of up to Rs.175 Cr – for backward integration of the CPC green business and going for aggressive expansions
  • The Company has low equity base of just Rs.7 Cr



Narration
2012
2013
2014
2015
2016
2017
Sales
            51.89
            95.83
          144.87
          199.82
          187.71
          259.79
Expenses
            53.70
            89.73
          113.75
          172.53
          155.48
          180.16
Op Profit
            (1.81)
              6.10
            31.12
            27.29
            32.23
            79.63
OPM
            (3.49)
              6.37
            21.48
            13.66
            17.17
            30.65
Net profit
            (3.89)
              3.79
            20.04
            16.00
            16.64
            51.93
EPS
            (7.85)
              7.65
            40.46
            21.88
            22.75
            71.59
Price to earning
            (2.82)
              3.56
              3.28
              6.65
              9.72
            11.67
Price
            22.11
            27.25
          132.88
          145.59
          221.25
          835.55

Management:
  • Mrs. Paru M. Jaykrishna -- Founder, Chairperson and Managing Director
  • Mr. Gautam M. Jain
  • Mr. Jayprakash M. Patel
  • Mr. Param J. Shah
  • Dr. Pradeep Jha
  • Mr. Kiran J. Mehta
  • Mr. Gokul M. Jaykrishna
  • Mr. Munjal M. Jaykrishna - Joint Managing Director & CFO

Rating:
  • Technical Rating – 69
  • Fundamental Rating – 76
  • Overall rating -- 73

Valuation:  

With the investment horizon given, considering all the inputs of estimates the valuations are at Rs.2250

Valuations are made at 11X 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) 

This is a cyclical stock, once it has got a momentum – no one can stop the ride

Note: Some of the information mentioned here is obtained through company website, annual reports

ANNUAL REPORT FY 16 

Comments

Post a Comment

Popular posts from this blog

Prolife Industries...Niche industry ...a Potential Multibagger

By -
Prolife Industries CMP: 159.7 Current market cap: 63 Cr  1. Company engaged in mfg of Dyes, Pigments, pharma and agro chemicals 2. After the demise of previous MD, his son taken over the responsibility of MD – He is just 28 years old but has extensive experience in R & D 3. Future growth a. Mgt planning for 150-200 Crs topline as the company invested in capex in the last 3-5 years from their cash flows b. New products added with better margin joining i. Violet acid which has world wide demand – they are tapping eurpoean markets ii. Very few players in producing this iii. Continous spending on R&D and getting c. Superb ROCE maintaining above 25% d. Fantastic cash management – entire cash cycle is less than a month e. With a net margin of 20-25 crs and higher ROCE, it can demand higher multiples of 40 times and can be a 1000 cr enterprise value (bcoz of net debt free too) 4. Deployed experienced mgt across different countries to grab more export share 5. Managemente is highly...
Read more

This Pharma Stock has potential to generate 100% Return in Short term

By -
Image
In the current market scenario, the market is in downtrend and many have sectors have underperformed So one has to chose the selective sectors which are defensive enough to their portfolio So Pharma would be one sector which can help to stablize your portfolio becuase many global factors are positive for this Industry due to recent Covid-19 issue What happended to pharma industry till now?? The Pharma Index has been consolidating for almost 5 years till now, let me show you some numbers So in the above image its clear that, the pharma index has made multi year top in April 2015 at 14000 levels and now its trading at 8412 From the above, its giving breakout on monthly charts which means now entering into  bull phase back with a logical reason Coming back to the company The company which i am disussing now is Cadila Health Care .  Now Its trading at 350 levels Let us discuss some facts and interesting points about Cadila Health Care for investment pu...
Read more

How to Start Forex Trading for Beginners 2020

By -
Image
                       Forex trading is one of the largest market in the world with almost $5 trillion daily volume when you compare with the equities, it is just $85 billion and US Treasury market is $550 billion. So it is bigger than the US equitues and Treasury markets put together Where do these Forex markets operate?  We have different stock exchanges for equities like New york stock exchange, London stock exchange, Bombay Stock exchange located at their respective cities.  But for Forex - there is no physical location! You heard it right. There is no central location for Forex market, it is only the global electronic network of banks, financial brokers, financial institutions and traders who buy and sell currencies  When do these Forex markets operate? One of the interesting future for Forex market is it operates 24 hours a day except on weekends Let us consider Asia/Kolkata as the base time, becu...
Read more

Indian Metals…Raising star

By -
Image
Company Name : Indian Metals & Ferro Alloys (BSE code: 533047) Industry: Mining and Minerals Investment Horizon : 3 years (This can give a consistent return over the investment horizon) Recommendation : Allocate not more than 10% of your portfolio, at a CMP of 497 is a value buy and try to add on dips About the Company: Established in 1961 in the Eastern State of Odisha known for its rich natural resources, IMFA is India's largest, fully integrated producer of ferro alloys with 187 MVA installed furnace capacity backed up by 258 MW captive power generation and extensive chrome ore mining tracts. They are unique from the quality perspective due to comprehensive ISO 9001 Quality Management certification besides ISO 14001 Environment Management and ISO 18001 Occupational Health & Safety certification. Over the years, we have developed long standing relationships with multi-nationals like POSCO of South Korea, Marubeni Corporation and Nisshin Steel of Ja...
Read more