IOL Chemicals 2020 Multibagger Analysis

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In this post we can explore the potential of IOL Chemicals & Pharmaceuticals as a Multibagger.

Corona Situation

The current corona situation & induced recession has provided N number of Multibagggers to the showcase by under-valuing the companies. As you know the severe damages of corona is done, A smart investor should foresee the continued impact in other sectors.

As you can see real estate, construction, hospitality, hotels businesses are going to be dull in upcoming 6 months unless they convert themselves to digital.

However few other sectors are gaining from Corona troubles & China hatred of the world. Digital businesses, Contact-less Delivery, Online Education, E-Commerce are few gainer sectors.

Specialty Chemicals Sector

As we can see Specialty Chemicals sector is on Boom from past 1-2 years due to Chinese Regulations on the Chemicals industries. The newly formed China Hatred is also accelerating the moving out of Manufacturing from China. This is beneficial to India.

Futurecaps have identified few multibaggers in this sector after ensuring the Yearly & Quarterly Profit Jumps. Few of the multibaggers are Valiant Organics, Bhageria Industries & the report is shared with Paid Subscribers. This IOL Chemicals is a Free Multibagger for our followers.

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IOL Chemicals & Pharmaceuticals

NSE CodeIOLCP.NS
BSE Code524164 
URLhttps://www.iolcp.com/
CMP310
Free ReportYes
Publish DateApr-30-2020

About Company

IOLCP was established in 1986, IOLCP is India’s one of the leading generic pharmaceutical company, and is significant player in the Organic chemicals space. IOLCP has wide presence across various therapeutic categories like, Pain Management, Anti-diabetic, Anti hypertensive, Anti Convulsants, etc.

The capabilities are nurtured by pursuing & implementing the high standards of excellence in our operations. Company have built products cater to the key industrial sectors of Pharmaceutical, Flexible Packaging, Paint & Lamination, Ink, Pesticides, Specialty Chemicals etc. It has a huge customer base on Inflammation, APIs.

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Warren Buffet, Value & Growth Checklist

Here we can explore IOL Chemicals as a Multibagger based on Warren Buffet Checklists.

CapitalizationIdeally below 5000 Crore. IOL Capitalization is 1800Crore – So it can provide good amount of growth to reach 100K Capitalization
History of Consistently Increasing Sales, Profits, EPS & Cash FlowYes.
Durable Competitive AdvantageCompany should have a Unique Product.
Moderate. The key product is Ibuprofen.
Future Growth Drivers / Sector GrowthModerate
Conservative Debt (long term debt < 3 Net Profit)Low Debts
Debt Equity Ratio, Current RatioLow Debt Equity Ratio, Current Ratio is good too
Return on Equity must be Above Average68%
Low CAPEX required to maintain current operationsModerate
Inventory Turnover Ratio, Debtor Days, ROCEGood
Management is holding / buying the stockPromoter holding is at 41% & Increasing
Market Price < Intrinsic ValueYes, 99% Discount. Intrinsic Value Calculator
Stock Price is consolidating (now)No.
Stock Price is growing in past years along with EPS growthYes
Consolidated PE, PB Ratio, PEG RatioPE good, PB good, PEG good
Cash Flow Positive, Net Profit % greater than 8%Cash Flow: Okay Net Profit %: 21%
Paying Dividends, TaxNo dividends payout. Further Investigation required.
EPS Growth Rate50% above past 2 years
Jump in Trailing Result EPSYes
Jump in Quarterly Result EPSNo.
Expected Gain in 5 Years500-1000%
Price Movement Graph,
52 Week High & Low
Price closer to 52 week high
Volume AnalysisHigh Volume (crash high on bear times)
Power of BrandModerate
Corporate Governance, Reputation of LeadersOkay
Fraud reportedNo. High remuneration badnaam is there.

Positive Factors

Here are the positive factors regarding IOL Chemicals

  • Company is having Steady EPS Growth
  • Company have enough Capacity Utilization left for 100% till 2025
  • IOL is debt-free
  • Corona times not impacted the Revenue & Profit of the company much
  • High Intrinsic Value returns

Concern Factors

Here are the concern factors regarding IOL Chemicals

  • Company is trading near 52 week high
  • Huge dependency on API IBuprufen – any banning on this by government / customers will impact profitability
  • Not paying enough dividends (but our management check did not yielded negative results)

Summary

Based on the above analysis I would like to say that the IOL Chemicals possess Multibagger Stock properties and one can Invest in 2020.  The Investor can expected Huge Returns like 1000% on this stock if the current growth rate is sustainable & the industry, government do not play bad.  It can be considered as Low Risk High Returns investment.

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