In this post we can explore the potential of IOL Chemicals & Pharmaceuticals as a Multibagger.
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.
IOL Chemicals & Pharmaceuticals
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.
Warren Buffet, Value & Growth Checklist
Here we can explore IOL Chemicals as a Multibagger based on Warren Buffet Checklists.
|Capitalization||Ideally below 5000 Crore. IOL Capitalization is 2700 Crore – So it can provide good amount of growth to reach 100K Capitalization|
|History of Consistently Increasing Sales, Profits, EPS & Cash Flow||Yes.|
|Durable Competitive Advantage||Company should have a Unique Product.|
Moderate. The key product is Ibuprofen.
|Future Growth Drivers / Sector Growth||Moderate|
|Conservative Debt (long term debt < 3 Net Profit)||Low Debts|
|Debt Equity Ratio, Current Ratio||Low Debt Equity Ratio, Current Ratio is good too|
|Return on Equity must be Above Average||68%|
|Low CAPEX required to maintain current operations||Moderate|
|Inventory Turnover Ratio, Debtor Days, ROCE||Good|
|Management is holding / buying the stock||Promoter holding is at 41% & Increasing|
|Market Price < Intrinsic Value||Yes, 99% Discount. Intrinsic Value Calculator|
|Stock Price is consolidating (now)||No.|
|Stock Price is growing in past years along with EPS growth||Yes|
|Consolidated PE, PB Ratio, PEG Ratio||PE good, PB good, PEG good|
|Cash Flow Positive, Net Profit % greater than 8%||Cash Flow: Okay Net Profit %: 21%|
|Paying Dividends, Tax||No dividends payout. Further Investigation required.|
|EPS Growth Rate||50% above past 2 years|
|Jump in Trailing Result EPS||Yes|
|Jump in Quarterly Result EPS||No.|
|Expected Gain in 5 Years||500-1000%|
|Price Movement Graph, |
52 Week High & Low
|Price closer to 52 week high|
|Volume Analysis||High Volume (crash high on bear times)|
|Power of Brand||Moderate|
|Corporate Governance, Reputation of Leaders||Okay|
|Fraud reported||No. High remuneration badnaam is there.|
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
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)
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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