Couple of observations
Couple of observations :
1.They have focused on API’s and CRAMS and new Drugs.
2.Thus trying to not be too dependant on Ibuprofen.
3. The Speciality Chem biz is turning around .
4. Promoters took stake at 205.
5. Debt is being reduced drastically which will add up to the bottom line by eps of 10 when it becomes total debt free , which is not faroff.
You know, I like when people pay too much attention on Negatives then Positives which makes the most cleverest and learned person not to invest in it and the stock remains underowned. That is where it becomes multibagger…lol
Magnificent 3Q20 https://www.bseindia.com/xml-data/corpfiling/AttachHis/a653a550-1eb3-480d-aa09-312c2d889184.pdf
Small notes from quarterly filing
Revenue from last quarter Chemical sector increased 18.35% and Drugs 11.12% and after deducting intersegment the net rise in top line is 13.90%
Finance cost down from 6.09 cr to 3.76 Crs
Changes in inventory is -0.73 cr to 9.78 Crs i.e 10.51 crs ( How they value the inventory no notes in return )
COGS down from 55.6% to 54.25% of the revenue .
Net tax out go increased from @7.45% to 10.24 ( 1.1 Cr of earlier period tax has been paid and 1.64 cr is deferred tax but taken in to account )
Employee benefit , depreciation and amortization remain same
Regards
See the Joint MD interview on 18th Feb…Ibuprofen price already increased to 18$ from 15$, going to reach 20$, means INR 1400 per kg, which is very good price…other API companies impacted due to raw material due to coronavirus outbreak in Hubei/Wuhan(China), but IOLCP is integrated player, so no issues…110 cr Net Profit expected in Q4…going to be debt free by Q4…next year EPS can be ~80…even if market gives 4 PE, price comes to 320…if company gives dividend then it will get back shareholders faith in a big fashion and can command 10+ PE------then stock price is expected to be ~800-----lets see how it goes…but definitely worth investing money here , at least for mid term…
Disc - invested…
Mr garg told in the interview… Revenue 2100 and profit 380.
Link is in the forum above
FUTURE GUIDANCE, GROWTH & VALUATIONS
• Management has guided 20% topline and bottom line growth but this was prior to break out of Corona virus in China and hence this number could look better.
• Presently no shares have been pledged by the promoters.
• Based on annualised numbers we expect revenues of Rs 20bn in FY20E and PAT of Rs 3600m. Assuming 20% growth in FY21E, we are looking at revenues and profits of Rs 24bn and Rs 4300m respectively.
• The stock is currently trading at attractive valuations of 3.1X FY21E earnings
One can look at BUYING into the stock.
Excellent interview by Joint MD, company will also consider dividend paying after becoming debt free by Q4 or Q1, this will be lovely.
Factors working for IOL Chemical and Pharma
ibuprofen…normally 45% export for IOL, But this time it will be 55%…more export means, more price( 18$ now) compared to domestic market…
Capacity utilisation (operating leverage) will be 100% in 1 to 2 months, economies of scale will play out to help EBIDTA…
Less interest cost due to debt pre repayment…only 60 crore debt left now…soon to be debt free…Will help to report more net profit…
Lesser tax obligations due to new tax slab. 35% tax paid in Q3, it will be less in Q4 and it will help net profit…
USD vs INR depreciation will also help the company with INR profit, with the ibuprofen export volume increase in a big way…
New products revenue will be 350 crore, promising becoz this will reduce dependency on single product ibuprofen,this will help with stability and attract long term investor like MF, insurance company.
Company has intention to pay dividend after becoming debt free in Q4 or Q1…great sign…this will help regain the shareholders faith and minority shareholders friendly attitude will improve management quality parameter…
As per joint MD, this year total revenue will be 2100 crore plus…9 months around 1450, so 650 crore plus revenue in Q4.
Net profit for Q4 should be 110 crore plus, MD has been quite defensive on this prediction. Considering all these factors net profit can be expected 120 crore plus in Q4.
With additional capex coming on(to be funded by internal accrual) and new products launching every year, the revenue and net profit(EPS) to be on upward trajectory in next few financial years as well. 80 plus EPS to be expected in FY21.
All these factors are working for IOL…long way to go PE re rating has already started and can go a long way…current PE is ~4, can go to 10 to 15 range, leaving the stock return potential to the investors…
The promoter also said in an interview that the only major raw material they sourced from China is Sodium. Anyone knows if the above companies are up and running again - promoter indicated so but need to verify the situation on ground.
Ibuprofen is one of the main OTC product that people in western countries are stocking up to deal with coronavirus. With backward integrated manufacturing setup, IOLCP seems nicely placed to gain with sufficient margin of safety given low PE. The major risk in long term may be the over-supply due to new capacity coming up in 2021 by BASF but current year OTC consumer demand may result in some additional gains. Prescription demand is only to patients who go to doctors. Much of current OTC demand could be because of people preparing for potential dooms day which is likely to be much larger than prescription demand.
Need to understand more as read rumours somewhere that the promoter has a chequered history and the script being operated. Any details around this will help - PM is fine if posting here may lead to unnecessary flaring of emotions.
Risks/contradictory views welcome!
Disc: Invested
I feel low promoter stake as well no recent moves to increase promoter stake (by open market purchase) puts bit of question mark of claims of great future of this company. I am aware this is not the only criteria but with small cap companies with unknown promoters and unknown auditors, it is better to be safe than sorry. Generally when market gives lower PE to any stock, there is reason for that. I have learnt it hard way 
. So just adding note of caution. I hope I am wrong here.
Observing promoter behavior there is something unsettling to me. The number of times I have seen them on CNBC alone this month has been in double digits.
As soon as API report came up, the joint MD nonetheless was on a call with CNBC to allay concerns.
I would expect this only from a very large company if the news was very critical.
Regards
Disclosure:- Was invested. No transactions done in the last 30 days.
IOL Board meeting on 11th March to consider Interim dividend for FY 2019-2020.
This should help regain the trust on the promoter in a big way…!!!
Promoter hold ~42%, they also got the warrants i think last year, converting them will increase the holding by another 2-3%.
I had a close look at the cash flow statement…CFO looks very good, without any doubtful item…company(any company) can manipulate the Profit and Loss statement BUT not the cash flow statement…so personally, i dont see any major issues…there is a related party transaction, for which details are needed, otherwise all look good, profit are real, they are paying the debt in advance, cash flow looks very good, now the dividend…take it other way—promoter has 42% currently, that means 58% are outsiders and promoter are distributing the 58% of the total dividend to the outsiders…thats a good thing right…anyway lets see, how market re-rates the stock…in coming days…
Dear Moderator, It was unfortunate that I have been flagged here and still my post , maybe other,is copy pasted at money control message board. I regret such things and am disappointed .
Looks like members like me in parts. Just like famous people like Krishna in parts.
I believe that the post that was flagged by members were nothing against anyone but if someone flag my post and it is taken off or hide it then it is too much restriction. Someway other also write negative views for a stock which hurts in a bad way when they give reason why they are not investing! Does it mean, they have not invested and hence have BIASED opinion? Don’t I have the liberty to write them on their face that yours is a Biased writeup as you haven’t invested?
BTW, the guy who has copy pasted my post of here at MMB, I go by " Nakul" at MMB.I have replied there to the members who just copy pasted my write up which was positive, which members were challenging here.They don’t like IOL Chem and still copy paste there at MMB. They flag me here and do plagiarism.
INR 3.00 Dividend declared by the Board(30% of the stock FV 10). Good move, considering this is an interim one, it looks good amount, we can expect better for the year end. This should definitely help the stock re rating.
Disc - invested
The Corona Virus situation developing in China is expected to benefit Indian API manufacturers.
IOL Chemicals seems to be a big beneficiary since it is a large and integrated manufacturer Ibuprofen.
Before investing one may like to read the below article to get a better understanding about the business and the company.
Hello Anand,
Could you please check the latest price of ibuprofen and share the details/trend here and any details on the export data, if possible? Thanks in advance.
I have gone through the article and after doing some independent research I have found some positive issues in relation to the company are missing which according to me are
