Company Profile :-
Adi Finechem Limited engages in the manufacture and sale of specialty fine chemicals in India, the United States, Europe, and Japan. It provides oleo chemicals and products for the nutraceutical industry. The company’s oleo chemical products include dimer fatty acid, monomer fatty acid, linoleic fatty acid, and soya fatty acid for use in amines, alkyd resins, plasticizer emulsifiers, polyamides, lubricants, metal soaps, and enzymes; saturated fatty acid used in alkyd resin, amines, and esters; distilled fatty acid for alkyd resins and textile auxiliaries; glycerin for use in textile auxiliaries and paints; and oil for industrial purposes, such as oil feed chemicals, biodiesel, and mould release agent. It also offers intermediate nutraceutical and health products comprising natural concentrated tocopherols for the natural vitamin E/food, feed, and cosmetic industries; and natural concentrated sterols for the natural sterols, food, and pharmaceuticals industries. The company was formerly known as H. K. Finechem Limited and changed its name to Adi Finechem Ltd.
Why to Buy?
Specialized Products :-
More than 55% of Adi Finechem‘s business consists of specialized products like Dimer Acid and Tocopherol where it is either sole or one of the lowest cost producer in India, providing edge to the company.In remaining products also,prices move in tandem with raw material prices giving AFL stable margins.
Capacity Expansion :-
It has lined up additional Rs 22cr capex for taking capacity to 45,000 MT which is expected to be operational by Oct’14. Phase 1 of capacity expansion has already completed and we will likely to see the numbers will getting reflected from coming quarters.The revenue potential after the expanded capacity is Rs 280 cr p.a.(FY14 revenues Rs 152 cr).
Excellent growth :-
Our view :-
At 318 CMP company is trading at 20 times of FY14 PE and we expect company to post 20 Rs. EPS in FY15. So a company operating in speciality chemical business is currently trading at 16 PE of FY15 earnings per share. Further, capacity expansion will continue to deliver growth for the company. Hence we recommend this stock at CMP of 318 with the target of 30% upside potential.
No comments:
Post a Comment