Home Markets Whispers December 2018

Whispers December 2018

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By IE&M Research

IOL Chemicals and Pharmaceuticals Ltd.

BSE Code/ NSE: 524164 / IOLCP; Face Value: Rs10; CMP: Rs157
52 Weeks H/L (Rs): 181.90 – 68.60, Market Cap Rs (crore): 886

We covered this stock in our May 2018 issue under Company Analysis column when it was trading at Rs 93 only. Since then it has zoomed and now trading at Rs 166. The analyst who provided the Company’s inside information then, is still bullish on this counter and his prediction is Rs 1000 in another two to three years. His reasoning is that BASF has closed its plant in USA which was its competitor. BASF is getting a plant in Germany which will be functional only in 2022. IOL Chemicals has posted robust performance consistently in the second quarter. Year on Year (September 2018 vis a vis September 2017): Net Revenue increased by 94%, EBIDTA increased 169%, and Net Profit increased by 767 %. Globally, prices of Ibuprofen have increased substantially due to lack of capacity expansion by existing manufacturers. IOLCP is the only Ibuprofen manufacturer who is expanding capacity to meet the shortage demand.

Nocil Ltd.

BSE Code/ NSE: 500730 / NOCIL; Face Value: Rs10; CMP: Rs162
52 Weeks H/L (Rs): 236.00 – 140.00; Market Cap Rs (crore): 2673

The global tyre industry has committed USD7.5b toward expansion plans, while the Indian tyre companies have lined up capex to the tune of Rs 180b over the next few years. Nocil has also earmarked capex of Rs4.25b at its Navi Mumbai and Dahej plants. Since the growth in rubber chemicals is highly dependent on demand from the tyre industry which is the largest consumer of rubber chemicals (65%), Nocil is likely to get benefit since Nocil owns a big share of 50% in the domestic rubber chemicals market and around 5% globally. With a wide product range, and global presence, the Company has all the aspects required to ensure a big market share expansion. According to a report tyre industry will grow at 12-14 % over the next 4-5 years.

Federal Bank Ltd.

BSE Code/ NSE: 500469 / FEDERALBNK; Face Value: Rs 2; CMP: Rs 83
52 Weeks H/L (Rs): 116.75 – 67.05; Market Cap Rs (crore): 16794

Federal Bank has delivered relatively strong performance in a quarter that looked challenging on account of the Kerala floods. The bank is well positioned to gain market share in both the corporate and retail segments. It is in the process of inching towards the 10m customer mark, and therefore, the bank should be able to increase cross-selling of its products. The bank has 15% market share in inward remittance. It has sold 26% stake in FedFina for Rs2.8b to True North. The Bank’s exposure to NBFCs is 10-12% of its total loan book. Total net stress loans currently stands at around 2.8% of the loans down from 7.1% of the loans in Q1FY16.

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