Promoter sells nearly 5.5 lakhs shares in open market.
The above lot has been picked up by HDFC MF and L&T MF with each picking up 275K shares.
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What do seniors think about promoters selling such a large quantity of shares in the open market. I am a newbie and consider it as very negative news, since the number is very huge. Kindly share your views.
This sale by promoter must have been after discussing it with the MFs. So I donât feel it should be a concern.
Oriental carbon promoters sold 2.75 lacs shares to ICICI MF.
See it has positive as market as recognised the company.
Enjoy the ride.
Disc : Invested and plan to add more as it is still cheap and oliopoly industry.
Is Icici the 3rd entrant besides hdfc n L&T MF?
Where is the news on ICICI MF? I see only HDFC and L&T
With reference to the latest concall dated Aug 04, 2015, below are my observations:
- Companyâs capacity utilization levels were around 90% for FY 14-15.
- New capacity addition will be operational in April 2017 for Phase 1 (5500 MT) and April 2018 for Phase 2 (5500 MT).
- Hence, unlike the past performance, topline would not grow at 20-25% levels until the new capacity gets operational. Management mentioned that there will be better growth in the bottom line when compared to the topline. This may be due to operating leverage. However, I do not foresee any great compounded growth in the EPS until the additional capacity gets operational.
May be until Q3 of this year we may see a good growth due to lower base of last year. - So, at the current price of around 640, I do not see any good MOS. As the growth for the next 1-1.5 years slows down, the market might dislike it and push the price down. May be then, there will be a good time to relook at it.
However, I do like the quality of the business and its future outlook:
a. good demand for its products.
b. less competition.
c. foray into new markets (US).
d. pricing power to a decent extent.
e. Foreseeable increase in demand for its product.
f. Growing radialization of tyres India. (CVs)
g. Well managed company (financials). In the concall, management conveyed that they would not expand capacities hugely at one go, and would go steady based on the opportunity size available. I prefer realistic management over optimistic ones.
h. Communicative management. (though recently)
These are my views. Views invited, specially on business and valuation front at CMP. Thanks! 
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Hello Everyone,
While reading the past AR of 12-13, the company mentions that (Page No. 6) -
The sales of Insoluble Sulphur was 3% lower than the previous year due to lower demand. The low sales was a result of global as well Indian tyre plants cutting production due to slowdown in Indian as well as global economy. Further, due to lower demand, the impetus for tyre companies to speedily approve our new plants and products was absent resulting in delayed approvals.
This also makes us understand that sales may not be always in the uptrend in the future. Hence, profits shall be lumpy. Hence, one should inculcate more MOS when planning to enter this stock.
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L&T Mutual Fund and HDFC Small and mid cap fund have taken positions in OOCL.
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Observations
Every year in annual report company have mentioned the total amount MTâs of insoluble sulphur sold, however I find it very surprising in FY15 annual report this figure was not mentioned. Since revenue from insoluble sulphur for FY15 being very near to FY14, the quantity(MT sold) will be nearby FY14 quantity sold which was 19224MT.
Assuming 11000MT new capacity being fully operational by FY 2019 we get new capacity of approx 30000MT which is 11-12% CAGR growth. And also not to forget they will have some debt by that time too. The ROA for last 3 years have been around 12% so the returns on incremental capacity seems decent but not great. At this point of time (11 PE). I see less margin of safety for new allocation. Will add if price goes below 430. Positives I see are company is able to generate good cash flows and management seems to be doing what they talk from Mundra Plant capacity addition experience.
Disc : Invested. Will add if there is correction from CMP of 515
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Agree with your assessment,would be difficult to increase sales/EPS in next 2-3 years with already high utilization levels of the plant.
Few negatives for OCCL from hereon uptil 2017:
- Ltd upside on sales and margins so EPS likely to be in similar range
- Promoters sold ~5% stake at 550 levels acknowledging the upcoming challenges and pressures
CMP @ 550+ doesnt excite and seem to be running ahead of valuation. Many things can change in next 2 years so I would rather sit and watch the market landscape from the sidelines. No MoS currently in my view.
Discl : Hold a small portion, would add in 400-450 range
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A few things to note:
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Company may have some pricing power because of limited suppliers and long standing relationships.
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Stake sale was to institutions that are known to be long term holders - good pedigree.
I think these are HMVLâs results and not OCCLâs you are on the wrong thread. Cash in HMVL is >600 Crores as per their 6M Balance sheet. OCCLâs results are are in the first week of November.
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Decent results by OCCL. Strong EBIDTA margin, PBT and PAT margin. Though sales have decreased. PBT grew and PAT decreased due to higher tax provision.
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The way I see it, I think OCCL is running at 100% capacity utilization. The downsides to this are that sales are not going to improve till capacities are expanded (unless price is hiked). However, it is a good sign that the company can sell everything it produces. We should see a meaningful growth in financials when the expanded capacities come online in 2016. Till then, only de-bottlenecking of production lines and price hikes would lead to top line increase.
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If I am not wrong, expansion is in April 2017 and April 2018 as mentioned in the footnotes of Q2 results
Typo there, I meant 2017 (starting from 2017, I mean).
H1 presentation -
http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/10EA76EB_E1F8_489F_A92E_291F3219EE09_110243.pdf
(Reiterates ~ 48% capacity expansion in next 2-2.5 years)
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Looks interesting and keeping a watch during these turbulent times.
Just wondering why there is no Chinese competition here. Is it that Chinese only supply to their domestic markets
Since it seems only eastman (thru solutia acquisition), occl and shikoku. Too hard to believe no Chinese players here