Hope you are doing well.
Remember, in late 2020, Pharma API companies were the darling of the market. Most are down 40-50% from their highs and in downtrend. Their high margins of FY 20-21 didn't sustain. Some of them will soon be available at reasonable valuations on long term mean margins and that will be a good time to invest.
IOL Chemicals and Pharmaceuticals is a major player in the pharma API segment and the stock is down more than 50% from the highs of 850 recorded in 2020.
Recently, we decided to look at the company.
Below, we have shared our notes from the Aug'22 presentation of the company. Hope you find them useful for your own investments or to add the stock to your watch list:
[New Stock recommendation] - How often does one get a High growth stock, Market leader with almost 50% market share, Minimal debt at Cheap valuations?
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IOL Chemicals and Pharmaceuticals - Aug'22 presentation notes
- Incorporated in 1986, IOLCP is one of the leading Pharmaceuticals company and is a significant player in the field of specialty chemicals with world class facilities
- Largest producer of Ibuprofen and the only company worldwide being backward integrated with ~35% Global share
- Largest producer of Ethyl Acetate at Single Location in India
- 2nd Largest producer of Iso Butyl Benzene (IBB) with ~30% Global share
- Over 20 products are commercialized with 8 products in pipeline
- Debt free company, No debt raised since 2017
- Zero Discharge Effluent Treatment Plant
- Approved USFDA facility since 2015, re-certified in 2019
- EUGMP Certification in 2013, 2017 & Re-certification in 2020
- Captive co-generation unit with capacity of 17 MW to meet power and steam requirements
- Pharma products -
- IOLCP is the largest producer of Ibuprofen with ~35% Global share and the only company worldwide being backward integrated for all Intermediates and Key Starting Material of Ibuprofen
- Among the largest producer of Metformin in world
- Added 8 new products in its API portfolio basket in last two years
- API commercialized - Ibuprofen, Ibuprofen Lysinate, Ibuprofen Sodium, Dex-Ibuprofen, Metformin HCL, Clopidogrel Bisulphate (Form II), Pantoprazole Sodium, Fenofibrate (Micronised), Gabapentin, Lamotrigine, Ursodeoxycholic Acid, Levetiracetam, Losartan Potassium, Paracetamol
- API Pipeline/Validation - Irbesartan, Valsartan, Vildagliptin, Sitagliptin M Phosphate, Quetiapine Fumarate, Allopurinol, Minoxidil, Mesalazine, Ketoconazole, Sacubitril, Edoxaban
- Chemicals segment -
- IOLCP first commenced manufacturing Ethyl Acetate in 1996, with a starting capacity of 3000 tonnes per annum. Today, the Company has grown this business to become the largest single location plant in India, with a production capacity of 100,000 tonnes per annum
- India’s second largest manufacturer for Iso Butyl Benzene (IBB) with ~30% global share
- Captive consumption of Mono Chloro Acetic Acid with 7,200 TPA capacity
- Asia’s first continuous dual technology (green chemistry) plant for MCA and Acetyl Chloride
- IBB, MCA and Acetyl Chloride are key starting materials for Ibuprofen
- Management commentary -
- Over the next few years, our focus will be on diversifying into other specialty chemical products and increase the share of non-Ibuprofen business
- The investment planned in setting up a new plant will aid the Company in strengthening its position in western market and cater to our global customers
We are working on few more interesting stock investment opportunities and will share something good in the next few days. You can get it along with our other Premium Members by signing up HERE
Disclaimer: This is not a recommendation to buy/sell IOL Chemicals and Pharmaceuticals. These notes are as announced by the companies on exchanges and only for the purpose of information and education.
SEBI Research Analyst Registration No. INH100001690
Research Analyst Details
Name: Ekansh Mittal Email Id: [email protected] Ph: +91 727 5050062
Details of Associate: Not Applicable
Analyst Certification: The Analyst certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.
The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision
This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Ekansh Mittal/Mittal Consulting/Katalyst Wealth is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Ekansh Mittal or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Neither Ekansh Mittal, nor its employees, agents nor representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. Ekansh Mittal/Mittal Consulting or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement.
The recipients of this report should rely on their own investigations. Ekansh Mittal/Mittal Consulting and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in this report. Mittal Consulting has incorporated adequate disclosures in this document. This should, however, not be treated as endorsement of the views expressed in the report.
We submit that no material disciplinary action has been taken on Ekansh Mittal by any regulatory authority impacting Equity Research Analysis.
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