Chemcrux Enterprises - A dark horse?


(Saurabh) #1
  • Chemcrux enterprises is a Gujarat based company dealing in manufacturing of chemical intermediates for bulk drugs, dyes and pigments.

  • The end consumers are the organizations which are into manufacturing of these drugs and dyestuff.

  • It was incorporated in 1996 by technocrat promoters Girish Shah and Sanjay Marathe from IISc. / IIT.

  • The Company started its business activities in the year 2000-01 by taking over the running business of
    M/s. Chemcrux, a partnership firm of the promoters, as a going concern.

  • The promoters currently hold 73% of the equity.

  • Office location: Manufacturing unit in Ankleshwar and registered office in Vadodara.

  • Raw Material: The basic raw material they use are chloro and nitro toluene based chemicals which is procured domestically as well as from International markets (mainly China).

  • End user application: The benzoic acid intermediates it supplies are used in manufacturing of following important drugs:

  1. FUROSEMIDE: Sold under the brand name “Lasix” is used for the treatment of fluid build up due to heart failure, kidney diseases, high blood pressure, hypertension, etc.

  2. Mefenamic acid: Used for the treatment of mild to moderate pains from various conditions including blood loss from menstrual periods.

  3. Mebendazole: Used to treat parasitic worm infestations including pinworm, hook worm, etc. Its application is also currently being tested as an anti cancer treatment.

  4. Chlorpromazine: Its primary usage is to treat psychotic disorders such as schizophrenia, bipolar disorder, etc.

  • Customers: Some of its customers are Sanofi, Shree Krishna pharma, Su pharma, etc. They also export to Europe, Italy, Egypt and U.S.

  • Employees: Current strength is around 70 with around 40% contract staff.

  • Outlook and growth: The company is planning to setup another manufacturing unit to increase the production and looking for various options.

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Financial Information:

  • The current MCap is around Rs. 20 Crore.

  • Available at 8 P/E.

  • The revenue growth in last 3 years is around 17%.

  • OPM is stable around 13% from last 3 years.

  • Interest coverage ratio > 8 which is very good.

  • D/E ratio is less than 0.5 for last 3-4 years.

  • Earning yield: 13%

Some margin of safety is there since earning yield is currently much more the GSec/Treasury yield.

Risks:

  • SME company, very low liquidity.

  • Minimum lot is 4000 shares.

  • Need to increase the capacity for further growth, current one is utilized at 90%.

  • No visibility of management succession planning.

Screener snapshot:

Pictorial Snapshot of Company:

Friends, please post your views on the company and the business in general. There is very less information which is available online.

Disclaimer: I am invested in the company. Please do your due diligence before investing.


(Vijayk) #2

Established in 1983 and still at 20 crore market cap. That’s almost like zero growth company for past many decades!
A decent business can reach 1-2 cr profits in 5 years and hence, 20 crs mkt Cap! Infact reaching 2 cr profits can be done by almost anyone on this forum itself in many kind of businesses!


(Saurabh) #3

Respect your point of view but don’t agree with a generic statement that a decent business can make profit of 1-2 Cr in 5 years. Each business has its own priority.

Flipkart never made profit ever doesn’t mean it was not a decent business.

Market capitalization is not a function of how many years you are in a business.
Look at the market cap of Liberty shoes, Dai-ichi Karkaria, etc from screener and you would know what I mean.

Stock investing is solely based on future projections, that’s why this thread. Regarding micro / nano caps which have made big on this forum, following threads can be used:


(Manish Vachhani) #4

(Manish Vachhani) #5