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Tuesday, March 13, 2018

IOL Chemicals & Pharmaceuticals Limited. (IOLCP)

MCap: 430.53Cr

IOLCP is part of the Trident Group of companies located in North India. Company was established in 1986, IOLCP is India's one of the leading generic pharmaceutical company, and is significant player in the Organic chemicals space. IOLCP has wide presence across various therapeutic categories like, Pain Management, Anti-diabetic, Anti hypertensive, Anti Convulsants, etc. 

Our capabilities are nurtured by pursuing & implementing the high standards of excellence in our operations. By delivering consistent results & quality we have earned the admiration of customers and stakeholders. Innovative Strengths & Strong Growth have made us the market leaders. We have built up our expertise responding to diverse customer requirements Our products cater to the key industrial sectors of Pharmaceutical, Flexible Packaging, Paint & Lamination, Ink, Pesticides, etc. Efficient teamwork & strong associations have guided us to success. Accolades for our environmental policies have come from the highest levels of power. 

Through an unwavering focus on Quality, Commitment & Delivery, we have charted our way to success in our operations and have won the admiration of our customers. Our success is built on the strong pillars of innovation, quality, & dedicated customer service. By incorporating these & other business strengths, we have boosted our capabilities to maintain the leading edge in the industry & earn the loyalty of our customers.

IOLCP is focused towards Quality, technology upgradation and expansion has provided an unwavering path of success. Every milestone achieved has left behind a remarkable footprint in the growth chart of the organization.

  • 1986 Incorporation of IOL Chemical & Pharmaceuticals
  • 1991 Commencement of Acetic Acid production
  • 1996 Commencement of Ethyl Acetate Production
  • 1999 Commencement of Acetic Anhydride Production
  • 2000 Commissioned Ibuprofen Plant
  • 2006 Commissioned Co-Generation Plant
  • 2009 Commissioned Iso-Butyl-Benzene, Mono Chloro Acetic Acid & Acetyl Chloride Plant
  • 2012 Commissioned Multipurpose Plant
API: Under API division in Pain Management and its derivative and salts, in Life Style Drugs Metformin Hyderochloride, Lamotrigine, Fenofibrate Clopidogrel Bi sulphate Ursodeoxycholic acid and many more are developed for commercial distribution across the globe. Company is focusing on generic product development and cost effective commercialization. Presently, 6 API's are already commercialized and 10 API's are in the advance stage of development

Speciality Chemicals: The Speciality Chemicals division produces Ethyl Acetate from organic alcohol for use in a variety of end products in markets, including flexible packaging, pharmaceuticals, textiles, food processing, pesticides and paint industries

The major product is Ibuprofen (commonly known as Brufen) IOLCP manufacturers inhouse chemicals required for ibuprofen ie. IsoButyl Benzene (IBB), Mono Chloro Acetic Acid (MCA) & Acetyl Chloride. 

Sales have steadily increased over the years.. IOLCP is all set to cross 1000Cr in sales this year.. with sales increasing 3x in past 10 yrs.. from 300Cr (2008) to now 1000+Cr in 2018..
Net Profits are also the highest in past 10 yrs.. though the margins are in low single digits.. (1-2%) 

In general we should expect netprofit of 5-6% which on sales of 1000Cr should result in profits of around 50-60Cr

Cash flows from operations have also been fairly steady and increasing.

Stock seems to have bottomed out and ready to begin its upward journey.. 
Dec 2015: Promoter stake: 39.92% No of shareholders: 9,193
Dec 2016: Promoter stake: 39.92% No of shareholders: 12,009
Dec 2017: Promoter stake: 41.19% No of shareholders: 21,923

There has been no new issue of shares but the promoter stake has increased.. also Trident is listed as a non promoter entity .. when clearly it should be in associates.. or promoter group..

Lot of corporate shareholders.. looks like promoters had stake through other companies and they are re-organizing their stake.. Stock price should have reflected the increase in sales and profits but that seems to be missing.. 

Conclusion: IOLCP is part of the trident group of companies.. which is a well established business house. IOLCP is concentrating in Ibuprofen market and has backward integrated and is increasing capacity..Promoters seem to be re-arranging their shareholding and this could be the reason the stock is quoting at attractive levels.. good time to accumulate for long term investors..

PN: this is for my blog and is a timeline for my own though process.. Please do your own deep dive before investing and take assistance of SEBI recognized advisor.. 


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