Hello Sir,

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:

 

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Not often, right? We think we have found one and recommended recently to our Premium Members. For details - click HERE

 

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

 

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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.

 

Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/

 

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Name: Ekansh Mittal     Email Id: [email protected]    Ph: +91 727 5050062

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