Chemcon Speciality Chemicals - Red herring or True Value

Stock Opportunities Untested - but worth a good look
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Anybody tracking semi conductors industry and Chemcon has niche product that has use in semiconductors

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Yes, I am tracking Chemcon - is the sole producer of HMDS which s critical in semiconductor manufacturing. It is a hazardous material.

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Check latest November 9 earnings transcript.
In answer to Saurav Kataruka’s question it is said that no capability in present is of Semiconductor based HMDS. Beware be safe :pray:t4:

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Hello,
Anybody still tracking this company. I came across it few weeks ago and on the face of it seemed like a good opportunity.

Could someone please throw some light on reasons for lower demand for HMDS and CMIC. Is it that Chinese players are dumping more of these products in India and Chemcon is losing market share, or the demand for the chemicals itself has come down? If its the latter, that could mean that there is less demand for penicillin based drugs and also Tenofovir. Could someone confirm if thats really the case.

Based on the CAPEX done, looks attractive on P/BV value given that the price has fallen. Though the new plants are delayed, but they havent stopped the plan.

Product concentration is a risk, though the latest presentation talks about some new products.
Have not seen any new customer name since last couple of years in the presentations. The company stopped doing concalls, not a good sign.

Would appreciate your inputs/thoughts.

Disc: tracking

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Company has been in bearish mode since its listing. But Following things makes the company a better opportunity -

  1. Total shareholders decreased from 90,000 to 69,000
  2. Promoter stake has stayed same 74.47% , FII stake has been increased, DII stake has been reduced in the latest quarter where single mutual fund sold all its shares of 0.27%
  3. Borrowings has been reduced from 64 cr to 25 cr
  4. Past 2 quarters shows earnings decline and a profitability has been bottomed out. If current quarter result shows a growth or a turnaround. It can be a great for the company at the current price
  5. The company has been doing Capex under plant P 10 and P11
  6. Above two Capex plan likely to commence their operation this year - which helps company to diversify its products , generate fresh revenue, de risking dependence on Limited products
  7. The expected product is likely to be in the chloride and benzyne derivatives. Both the products are largely imported in India. Hence, a big opportunity might open for the company.
  8. Biggest of all for company is use of HMDS in semiconductors industry - which company dominates in HMDS. But there is very less clarity about when semiconductors manufacturing will start in India and can Chemcon supply HMDS to this manufacturers at the right quality grade and compete with China pricing

If company secures order from semiconductor manufacturers to supply HMDS then it’s new era for Chemcon

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I can shed some light on point no. 8 regarding semiconductors.
I had been a long term investor in chemcon for the same reason. But if you go through the previous con-calls of 2022-23, they have stated it many times that big semiconductors company require purest of pure HMDS for semiconductors and the trust factor with Indian companies (or in this case, chemcon) is not established/verified. Hence, semiconductor is not the sector they are targeting.

Note - I exited the stock somewhere near 2023 end and have not followed since. If the story/ views of management has taken a change then that is something I am not aware of.

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