Mehabe score: 3 G Factor: 4 Piotski Score: 5 The stock has a rating HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 4 and Piotski score of 5.
Description
Oriental Carbon & Chemicals started operations as Dharuhera Chemicals Limited in 1978 and was later merged with Oriental Carbon Limited in 1984. It belongs to the JP Goenka Group of Companies. In 1994, OCCL set-up a manufacturing facility for the production of Insoluble Sulphur, which is now the flagship product of the company. OCCL also manufactures Sulphuric Acid & Oleum.
Main Points
Market Share: #
OCCL is the sole manufacturer of Insoluble Sulphur (IS) in the domestic market.
Majority of demand for insoluble sulphur is derived from the automotive tyres industry.
It enjoy a domestic market share of nearly 55%-60% and around 10% market share in the global market.
OCCL has established itself as a preferred first/second supplier to all major tyre manufacturers in global markets such as Continental AG, Goodyear, Bridgestone, Kumho Tyres, Apollo Tyres, Bridgestone, J K Tyres, MRF Tyres, Ceat Tyres, Goodyear India etc. 80 per cent of OCCL’s revenues come from customers of five years or moreSite:OCCL
Market Cap:
Rs 1,084 cr
Price:
1085.0
Trading pe:
14.5x
Book-value:
533/share
Div yield:
0.92 %
Earning yield:
8.75%
Face-value:
10.0/share
52week high:
1188.90
52week low:
672.00
Technical Analysis
Stock trades at 1085.0, above its 50dma 1020.18. It also trades above its 200dma 915.45. The stock remains bullish on techicals
The 52 week high is at 1188.90 and the 52week low is at 672.00
Price Chart
P/E Chart
Sales and Margin
Strengths
–
Weakness
– The company has delivered a poor sales growth of 4.17% over past five years.
Competition
– The industry trades at a mean P/E of 27.8x. Pidilite Inds. trades at the industry’s max P/E of 95.48x. OCCL trades at a P/E of 14.5x
– Industry’s mean G-Factor is 3.5 while the mean Piotski score is 8.0. OCCL has a G-Factor of 4 and Piotski scoreof 5.
– Average 1 month return for industry is 2.4%. The max 1- month return was given by Oriental Carbon: a return of 13.8 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 104.0 cr compared to Rs 85.0 cr for period ended Mar 2020, a rise of 22.4%
Operating Profits reported at Rs 36.0 cr for period ended Mar 2021 vis-vis 26.0 for period ended Mar 2020 .
Operating Margins expanded 402.7 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 24.78 compared to Rs 28.48 for previous quarter ended Dec 2020 and Rs 17.1 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 333.0 cr for period ended Mar 2021 vis-vis sales of Rs 340.0 cr for the period ended Mar 2020, a fall of 2.1%. The 3 year sales cagr stood at 0.9%.
Operating margins expanded to 34.0% for period ended Mar 2021 vis-vis 29.0% for period ended Mar 2020, expansion of 500.0 bps.
Net Profit reported at Rs 75.0 cr for period ended Mar 2021 vis-vis sales of Rs 72.0 cr for the period ended Mar 2020, rising 4.0%.
Company recorded a Net Profit CAGR of 9.6% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 15.0% compared to 16.0% over the last 3 Years. – The stock has given a return of 57% on a 1 Year basis vis-vis a return of 3% over the last 3 Years. – The compounded sales growth on a TTM bassis is -2% vis-vis a compounded sales growth of 1% over the last 3 Years. – The compounded profit growth on a TTM basis is 9% vis-vis a compounded profit growth of 10% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 0.68% vis-vis 0.7% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 30.4% vis-vis 28.62% for Dec 2020
Conclusion
– – The company has delivered a poor sales growth of 4.17% over past five years.
The business fundamentals of the stock remain stable. Stronger near term results will build interest in the stock. We suggest to wait for a upturn in business performance.
Technically, the stock remains above its 50 DMA 1020.18 and is trading at 1085.0, thus bullish price action wise.
