CHEMFAB ALKALIS - Leader in Technological Dynamism

Company History                                          CMP Rs.- 90

Company was promoted by first generation visionary technocrat Dr C H Krishanmurthi Rao also known as 'Water Man' of India . He brought several technologies in the field of chemical industry and giving India its first reverse osmosis-based desalination technology. Company was the first to introduce the Monopolar Electrolysers in 1985. Recently company become first to instal BiTAC® Electrolysers for its Chlor - Alkali plant. Dr. Rao passed away in 2012 when company has planned to expand it production capacity. Expansion plan hampered by National Green Tribunal, South Zone, in an appeal filed by a party, granted an ex party stay, restraining the construction activities pertaining to the expansion and operation of the plant without valid consent order. Chairman Suresh Krishnamurthi Rao (Son of Dr CH K Rao) has taken wise decisions and direction to take the company to new heights.

Story about Our Investment Interest 

 

The Chlor-Alkali is process for the electrolysis of sodium chloride. It is the technology used to produce chlorine and sodium hydroxide (caustic soda), which are commodity chemicals required  for various industries like  textile, paper, food processing, pharmaceutical, soaps and detergents, petroleum, cleaning agent, mining, refining etc. Electricity and salt are the major items costing 70% to 80% of total production cost. The electrolysis process has a high energy consumption.

 

 After seeing the delay from the court for capacity expansion and vacating the stay. Chairman Suresh Krishnamurthi Rao has taken decisive decision and went for backward integration to increase the profitability of existing plant by implementing below mentioned two initiatives.

•  Replacing old plant with latest high energy efficient Bipolar BiTAC® Electrolysers Plant from CEC, Japan. It can save 40 to 50% of total energy consumption of the company. New plant was commissioned in the month of March 2015 after stabilizing the operation it will improve overall operational efficiency of the company in coming quarters.

• The Company has acquired and developed 632 acres of salt fields and the production of salt is expected to commence from this quarter. These salt field  can fulfill entire salt requirement of the company.

Key Favorable Factors

• Investor friendly company and long history of paying high dividend.
• Low equity base - 91,71,697 share of Rs 5 FV and 75% held by promoters.
• Strong balance sheet with reserves of Rs 140 crores 
• With new energy efficient plant and captive salt field will result considerable growth in net profit and EPS. Company is going to add some new products, it will give further boost in EPS
• Court has canceled and  vacated the stay and Company has filed petition seeking directions to authorities concerned for the grant of Consent to establish (NOC) for the expansion. Hopefully company will get approval with in year time and company has sufficient cash reserve to complete it without taking major debt. 
• Currently stock trading at  Rs 90 and market capital of company is only Rs 82 crores. There is scope of major appreciation in coming quarters.

Conclusion

Company has solid fundamental, good visionary management, products with evergreen market demand and application. The company has all required elements to give handsome return in near future, Investors can buy and hold it for long term to get multiple gain.

Q1 RESULTS UPDATE

Dear Readers, 

We have received the Q1 results for all stocks suggested in this blog. Congratulations to all the blog readers who has bought the stocks on recommendation price or bought below recommendation price.All stocks has given decent return in short period as given in stock score card.

Most of the stocks went down (0% to - 31%) after recommendation. Investors has got enough chance to add at much lower level. Those who bought at lower level has gained more than 100%. It means they have got the better deal and bought the asset (stocks) at discount. Reason behind discussing above is that most of the readers started buying the stock when stock price already gone up more than 50% from lowest level. Last week market corrected significantly and some of the stock price came down sharply and panic started with stress.

Stock market is all about buying at low and selling at high and only 20% investors following this rule are the gainers. Remaining 80% are buying at high and selling at low are the looser. After analyzing thousands of comments posted on this blog and g+ I still feel that there is lack of confidence, knowledge and patience in our reader's group. I have the hope and confident that you will become successful investors and also help your friends to be successful.

Waterbase Q1 Result

Company has shown YoY growth 18% in top and 24% in bottom line. It is in line with market expectation. Feed capacity addition and seed (Hatcheries) business will start in coming Q2 and Q3 respectively. Price fluctuation after Q1 results mainly due to profit booking because stock has moved from 45 to 120 in last 3 months with 166% net gain. Strictly hold for long term.

 
Pondy Oxides Q1 Result

Company has shown good growth in top and bottom line. It will improve further in coming quarters with increase in capacity utilization of new plant. Hold for better gain.


DTIL Q1 Result

Company has published standalone result with EPS 5.12 which is good by seeing the slight delay in monsoon and most of its pears like Mcleod and Jayshree tea has posted loss in Q1. The main business growth will come from Malavi Africa and Indian tea retail business in coming quarters. Company is expanding its plantation area for Tea and Macadamia and it will generate consistent revenue for long term. Nothing to worry about decrease in promoters share holding because YVES LOMBARD ASSET MANAGEMENT AG is an foreign investor exiting from DTIL and DPL. Strictly hold for long term.

 

Xpro India Q1 Result

It has shown flat results for Q1. Dielectric film business will grow with time. In manufacturing field it is time taking process to build the customer base. Other business of the company  thermoplastic co-extruded sheets and BOPP films has not performed well because of slow economic growth. Hopefully it will perform better with change in economic condition in the country. Sudden fall in stock price because of poor results and profit booking after sharp rise from 30 to 74 in just 2 months. Hold for long term.



JK Agri Q1 Result

Company has posted good results because if we see the price capping on BT cotton seed and delayed monsoon has effected very severely to its peer companies like Monsanto and Kaveri seed. In such conditions JK Agri has given far better results than its pears. This R&D company is in final stage of launching new products in the market before next season. Strictly hold for long term and add more after Q3.


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 Next Stock Suggestion

 It will be posted on 23.08.2015 (Sunday)