TCI Express Listing

Dear Readers,

Congratulations !!! finally your patience paid off and TCI Express got listed. Some of the our readers had got the first experience of demerger process. Still we are receiving several comments about buy or sell. Both companies are having very good growth potential so need to hold at least for 3-4 years to get decent return. TCI was suggested at 250 and it went above 350 during demerger. Those who bought near 250 are in profit around Rs 100 per share of TCI and those bought around 350 are in no profit no loss. Those who are willing to buy now, can buy it with expected gain around 50% in next 2 years. Finalization of GST bill is still under process and some delay is possible due to political non cooperation. Company management is fully confident on future growth prospectus and it has negligible impact of demonetisation or GST delay.

http://www.moneycontrol.com/news/business/expect-15-18-revenue-growthh2-tci-express_8126401.html

http://www.tciexpress.in/pdf/TCI%20Express%20Ltd-%20Investor%20Presentation%20-%20Nov%202016.pdf

Omkar Speciality Chemicals Ltd

CMP = 148

Omkar Speciality Chemicals Ltd. (OSCL) is primarily engaged in the production of specialty chemicals and pharma intermediates. Diversified portfolio of over 200 products which include inorganic intermediates of Selenium derivatives, Iodine derivatives, Molybdenum derivatives, Cobalt derivatives, Bismuth derivatives, Tungsten derivatives and the organic intermediates include Tartaric acid derivatives and derivative of several other rare elements.  These products find niche applications in various industries like pharmaceutical industry, chemical industry, glass industry, cosmetics, ceramic, pigments and cattle and poultry feeds.

OSCL has 4 subsidiary companies (Lasa Labs, Rishichem Research Ltd, Urdhwa Chemicals and Desh Chemicals) with 9 manufacturing units in state of Maharashtra.

OSCL is importing and exporting  several raw material from and to abroad. Its location of all manufacturing is close proximity to consumption area of product or raw material and to the  ports like Dharamtar, Jaigad and JNPT besides connectivity to road and rail.  It will saves transportation time and costs significantly.

OSCL has a strong and well diversified customer base developed over the last 3 decades from different industry segments like pharmaceuticals, chemicals, glass, cosmetics, ceramic pigments, poultry, veterinary feed etc. Further the enhanced processes to cater to the specific needs of the customers gives OSCL an added advantage. Some of its major customers in the pharmaceutical segment include Cipla, Ranbaxy, Glenmark, Wockhardt and Ipca and Dr Reddy’s being its most vital customers in pharmaceuticals segment. Its other prominent customers in chemicals segment are Clariant-UK, BASF, Dupont, Asahi India Glass, Suguna Poultry, Venky’s India, Gharda Chemicals etc.

OSCL has good R&D capabilities and infrastructure to develop new high value added products and APIs.  R&D facilities are accredited by Department of Scientific and Industrial Research (DSIR) recognition. Mr.  Pravin Herlekar himself  chemical  Engineer  from  the  IIT Mumbai and he has a team of experienced scientist. With various product and process patents filed, OSCL’s Intellectual Property (IP) plays an integral role in developing a rich patent portfolio of the company. It  has filed claim for 18 patents of which 3 have already been granted. OSCL has acquired Rishichem Research Ltd in 2010 to strengthen its R&D. It has developed several new niche value added products like 5 iodo 2 methylbenzoic acid (used in anti-diabetic & brain tumour imaging),  di-azo salicylic acid (used in veterinary APIs), iodo benzoic acid (used as a pharma intermediate). Selenium anhydride (used in steroid manufacturing), cuprous iodide (used in tyre manufacturing) etc.

http://corporates.bseindia.com/xml-data/corpfiling/AttachHis/370607F0_C6AF_4012_9187_D0B6B85B04AA_182226.pdf

OSCL management has initiated process to demerge Lasa Laboratory in March 2016 and it is expected to be completed in March 2017.

http://corporates.bseindia.com/xml-data/corpfiling/AttachHis/982350B0_957E_4346_BBD4_DC4E8546CED4_153801.pdf

Investment Rationale

Increased restrictions due environmental issues have forced the chemical and API manufacturers to close unsafe units in China. It has created demand and supply gap and sharp rise in chemicals prices. Specialty chemicals are key ingredients for pharmaceuticals (APIs) manufacturing and APIs are main raw material for drugs manufacturing thus both are going to be key growth driver for OSCL and LASA.

Companies with higher production capacities will benefit most. OSCL has already got environment clearance for unit 5 which will double its current operational production capacity from  5,350 metric tonnes to 10,750 metric tonnes in next 4 -5 months. Company has expanded its capacity from 950 metric tonnes in FY 2011E to 10,750 metric tonnes FY 2016E.

Recently OSCL has posted best ever result for H1. Aggressive capacity expansion and strong R&D work in past 3- 4 years has started yielding reward and sales growth is coming through niche value-added chemicals.

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/953A9FD0_F62E_400F_98ED_AB04FD2F91B2_170133.pdf

OSCL has developed high entry barrier manufacturing processes for new niche high value added molecules for specialty chemicals and APIs. The company is also working in new fields like retroviral protease inhibitors (anti HIV) and oncology space. All these technical capabilities gives it clear edge over its competitors.

Lasa Lab (Veterinary API) to contributes higher revenue due to capacity expansion & also company has developed advanced intermediaries in Iodine Derivative segment like Anti-Diabetic which is in process of receiving approvals & will start commercial production post approval in coming quarters.

OSCL will continue to launch new high value added products, which find application in various end user markets, which offer significant growth opportunities to the company going forward.

OSCL has large product portfolio and strong customer base which covers several sectors. It has insulated the company from risk over dependency on specific sector or customer.

OSCL does not have direct competitor and it has an edge over its peers mainly on the back of its R&D focus, operational flexibility, product diversity and its ability to launch new products with IPR filing. 

Even though OSCL has very strong fundamental but in the last 3 -4 months it has not participated in rally of chemical sector  because promoters have pledged and sold some portion of their shareholding.

It is very easy to understand from above mentioned investment rationale that in the past 6 years OSCL has acquired 4 companies, increased its manufacturing capacity 10 x fold, product portfolio increased from 80 to 200 +,  patent filing for 18 product and 3 approval, same time company has paid good dividend every years since listing in 2011. Working capital cycle is on the high side because major raw materials like Iodine and Selenium are imported from Chile with transit time more than 2 months. Now demerger and listing of Lasa Lab is in process. All these activities are need significant capex and sufficient working capital to day-to-day business operations. Company has not gone for any enhancement in working capital or equity dilution. 

In this case if promoters has pledged or sold some portion of their shareholding to meet the business requirement than nothing wrong with it. In fact company has created huge asset and intellectual property in past 6 years. In future they have option to buyback or issue preferential shares against loan of 27.2 Cr to the company. Pledge shares will released  before end of December 2016 as per guidelines given by management. 

http://corporates.bseindia.com/xml-data/corpfiling/AttachHis/27CE8A56_19BF_44DD_95EB_151271EF4FF9_145815.pdf

Conclusion

Omkar Speciality Chemicals is one of the most trusted name for quality products and serving to all major customers like Cipla, Ranbaxy, Glenmark, Biocon and Dr Reddy’s being its most vital customers in pharmaceuticals segment.  Its customers in chemicals segment are Clariant-UK, BASF, Dupont, Asahi India Glass. Suguna Poultry. The company excels in supplying products to both the segments which have stringent quality concerns, reflecting its significant supplier credibility. 

Company has received environmental clearance for Unit V of Chiplun and expected to start commercial production in coming quarter. Overall it will increase the production capacity of Lasa laboratory more than double and sales growth is expected to grow at a robust rate in future.  Listing of Lasa laboratory is expected to be completed in Q4  it is going unlock decent value for investors. 

OSCL has corrected heavily in recent market correction due to demonetisation. At  cmp 148 it is providing best investment opportunity for short term as well as for long term. Allocation can be given upto 10%.

Greetings - Festival of Lights

Dear Readers

An Occasion to Celebrate auspicious festival of lights

Victory over Defeat ...

 Light over Darkness ...

Awareness over Ignorance...

An Occasion to Celebrate Life …

May this Auspicious Occasion

Light up your life with Happiness, Joy and Peace ...

Wishing you and your family a very Happy Diwali !!!

I will be out of station for one week and due to busy schedule I may not able to reply your queries on time.

Update on recent events and next stock

Dear Readers

Last week we have received several comments on 'surgical strike' and its effect on stock market. Indian armed forces and GOI are well prepared and  determined to tackle any situation for best interest of the country. It is only temporary fluctuation both market and stocks will recover quickly so nothing to worry about it.  

http://economictimes.indiatimes.com/markets/stocks/news/top-five-mistakes-to-avoid-when-geopolitical-tensions-hit-market/articleshow/54619893.cms

In the series of 'Best Stock Picks' next stock will be posted after Q2 results in November. Keeping in view of recent events and festive season, stock of this month is skipped. We have also agreed last year for 9 -10 stocks in 2016. 

http://dolly-bestpicks.blogspot.com/2015/12/feedback-result-update.html

Those who join the blog recently and looking for investment, Shree Pushkar Chemicals is still best buy option near 130.

Shree Pushkar Chemicals and Fertilisers ( cmp -117 )

                                                                               

Shree Pushkar Chemicals & Fertilisers Limited (SPCFL) was incorporated as chemical trading company in 1993. Over the years, the company has  diversified into wide range of products in 5 major segment viz. Reactive Dyes, Dye Intermediates, Acid Complex (comprising sulphuric and its derivative acids), Cattle Feed Supplement and Fertilizers (Single Super Phosphate & Soil Conditioner).

SPCFL has created a niche field in the dyestuff business through strong backward and forward integration in its operations which helped the company to manufacture other value added products leading to efficiencies in the cost of production and low dependence on raw materials from external sources. Company is one of the few diversified chemical manufacturers in India with 'zero waste' integrated facilities. SPCFL is an ISO 9001:2008 company and largest manufacturer of K Acid in India with currently two manufacturing facilities located at Lotte Parshuram, Maharashtra.  The company is also a recognized Government Export House.

Product Range

Dyes Intermediate

SPCFL is manufacturing dye intermediates like vinyl sulphone, gamma acid, K-Acid, H-acid and Meta Ureido Aniline. This segment has contributed 71% of total revenue of the company for FY 16. Further  H-Acid and Vinyl Sulphone are the major contributors to the revenue in the dye intermediate segment of business. The company is the largest manufacturer of K-Acid, a dye intermediate used to manufacture Reactive Dyes for dyeing of textiles. The company has an aggregate installed capacity of 8,000 MTPA of various Dyes Intermediates. The company exports its products to the world’s leading dye manufacturers like Huntsman Corporation USA and Archroma Switzerland. In addition to this, the company also exports to several countries like Brazil, Thailand, Mexico etc.

Dyes

SPCFL has started commercial production of different type of reactive dyes from May 2016. Reactive dye is the only class of dyes amongst all the classes of dyes which makes covalent bond with the fiber and becomes a part of it. Dyestuffs are critical inputs to several industries such as textiles, paper & packaging, leather, foodstuffs, polymers, coating etc. Reactive dyes are the absolute best type of dyes made for fabrics or fibers like Cotton, Linen, Rayon, Hemp, Bamboo, Paper, Jute, etc.

Acid Complex

SPCFL  is producing various acids and its derivatives like Sulphuric 98%, Oleum 23%, Oleum 65%, Chloro Sulphonic Acid etc. Most of the acid  production is used for captive consumption and excess quantity is sold in the local market.

FERTILIZERS

SPCFL has commissioned the plant to manufacture NPK and SOP with total capacity 30,000 mt in February and August 2016 respectively. In the fertiliser segment, SPCL has marketing tie up with the DCM Shriram group. SPCL also has its own brand “Dharti Ratna” in the soil conditioner space. SSP is primarily used as a crop nutrient and also find some application in construction, food and pharmaceuticals sector. Soil conditioner is added to soil to improve the soil’s physical qualities such as structure and aeration, water-holding capacity, tile drainage effectiveness, alkali soil reclamation, chemical incorporation, root development, yields and quality.

ANIMAL FEED

Di-Calcium Phosphate is widely used as an additive of feed for livestock and domestic fowls and as supplementary of phosphorus and calcium. SPCFL  is marketing cattle feed with brand name 'Pushp Ahaar'

Key Investment Rationale

SPCFL  has recently expanded its capacity both horizontally and vertically.  Strong backward and forward integration will help to reduce the cost and increase the operational  efficiency. The  forward  integration is to manufacture  dye  stuffs (black,  red,  yellow)  and colorants  from  current  dye  intermediates.  It will help to meet 1,000TPA  long‐term  manufacturing  and supplying arrangement with  Huntsman.    Its  backward integration  at  the  acid  division  followed by  SSP (sulphuric  acid  with  rock  phosphate),  soil conditioner, and  DCP  (acid  waste  with rock phosphate) production. Gypsum  (calcium  sulphate), which  is  a waste product, has  a  realisation  of  Rs 300‐400/tonne. However its conversion  into  soil conditioner (in combination  with magnesium) as a secondary nutrient gives a realisation of Rs 8,000/tonne. Company has set up  500kw  power plant to meet 40%  of  power requirements.

SPCFL has over a period of time treated its main effluents waste prudently thereby inventing new avenues for sales including fertilisers, soil conditioner and cattle feed. The dye  business  results  in  acid  production  along  with significant  waste  but  the company  created  demand for its  by‐products  and  converted  its  wastes  into commercially  viable  products, which  made  it  a  'zero‐waste'  player  thereby improving its operating efficiency. 

There is no listed company which is exactly comparable having a similar business model as that of SPCFL. There are companies like Bhageria Dye Chem, Kiri Industries, Bodal Chemicals are dealing in dye Intermediates. Atul, Aarti Industries, Vinati Organics are dealing in Speciality Chemicals and  Khaitan Chemicals & Fertilizers, Coromandel International, Rama Phosphates are in SSP and soil conditioners business but none of these companies are having similar presence in all 5 verticals  and under integrated facility with 'zero waste'.

Company offers "one stop" source of all their chemical requirements, it has created  large diversified customer base in domestic  like  Vinati  Organics,  Atul,  DCM Shriram,  Meghmani, Amul and Huntsman, Archroma among  international clients. It  has  an  exclusive marketing  arrangement with  Shriram  Chemical  & Fertilizers  for  SSP  in  Maharashtra  and  Karnataka  and has tied  up  with  Shivam  Chemicals  for  marketing  of DCP  in  Karnataka.  It  has  also launched its own soil conditioner brand named Dharti Ratna. with network of 125 dealers.

Location of integrated manufacturing is close proximity to consumption area of product or raw material and to the  ports like Dharamtar, Jaigad and JNPT besides connectivity to road and rail.  This saves time and costs towards transportation, loading and unloading charges and other ancillary charges. Further, it markets cattle feed supplement mainly in the states of Maharashtra and Karnataka while fertilizers are marketed within Maharashtra only. The Company has its own fleet of trucks / tankers for transportation of goods/ acids and thus reducing the dependence on transporters. Dye intermediates are mainly marketed in Maharashtra and Gujarat as both the states are considered to be the major hubs for Dyes manufacturing. This has helped the Company save time and cost towards transportation of raw materials and final products to / from domestic and international customers.

Conclusion

SPCFL has a stable and strong business model with healthy earnings growth visibility after recent commissioning of new production capacities. Strict environmental laws in the several countries have resulted in discontinued production of certain dyes for textiles and leather. SPCFL  has established itself as 'zero waste' chemical and dye manufacturer and it is providing long term sustainable growth opportunity for the company. The organised dyes and dye intermediate industry is expected to grow @ 15 - 20% in coming future.

Management is well determined to capitalize the opportunities and given update during recent investors conference call.

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/AAA868BC_C019_4B68_94B9_9891EC0503E0_144915.pdf

At cmp 118 SPCFL is very good investment option in chemical and dye sector for long term as well as for short term.

Update on TCI and Next stock

Dear Readers,

We have received several comments and emails about severe fall in TCI stock price on ex-record date of demerger.

Nervousness among retail investors is obvious, especially in those who are experiencing first time demerger process. As per assigned valuation of TCI demerger , it should trade above 230 but it fall below 200 on ex-record date of demerger. Generally this type fall is normal due to high selling pressure during initial few days and it is happening almost in every demerger. For example if you will analyse the recent demerger of Crompton Greaves and Aditya Birla Nuvo, in both cases stock price fall much below assigned valuation of demerger but price gradually moved up  within few months.    

Actually TCI is giving good opportunity to add in the range of 170 -190. If we compare TCI with other peers than its current valuation should be in the range of 270 -290 and it will achieve its actual valuation within year. Your portfolio will be in red only till listing of TCI XPS in next 60 days. Need to hold both stocks at least for 3 years to get actual benefit of GST implementation. 

In the  series of Best Stock Picks next stock will be posted on or before 12.09.2016.

Jubilant Industry - Back on Track

Jubilant Industries Ltd. is the flagship Company of Agri and Performance Polymers business of the Jubilant Bhartia group.  It is leading producer of Agri and Performance Polymer products comprising consumer products like adhesives, wood finishes, application polymers like emulsion polymers, food polymers and latex such as vinyl pyridine, SBR, NBR latex, Crop Nutrition, Crop Growth, Crop Protection and IMFL. Company  offers broad range of technology based products and solutions to customers in India as well as globally. Over the years, this business has attained a significant size in India and the Company aims at scaling up its business in global markets.

Performance Polymers

Performance polymers are having specific properties like temperature stability, chemical stability, mechanical properties and find wide range of application as given below.

Food Polymers

Jubilant Ind is number one in India and  one of the three major global suppliers of Solid Poly Vinyl Acetate (SPVA). Solid PVA is the major raw material for making gum base for Chewing Gum and bubble gum.

The Product is manufactured at a modern "state of art "manufacturing facility at Gajraula (UP). All grades of PVA have been developed by extensive in-house R&D efforts and technology improvements and conform to international standards and food Grade quality. PVA products are sold under the trade name of VAMIPOL.

All grades of the product comply with the Food Chemical Codex V and US FDA. The products as well as the manufacturing facilities are accredited with ISO 9001, ISO 14001 and OHSAS 18001 certifications. Products and the manufacturing facility are Kosher certified.

Jubilant boasts of a customer profile which includes the market leaders worldwide, in the chewing gum industry. Some of these are - The WM Wrigley Jr. Company, Cadbury (The Kraft foods Company) & Perfetti Van Melle Company. Jubilant is now expanding its portfolio of products in order to have a wider offering of food grade chemicals.

Latex

Jubilant Industry is ranked No. 1 in India and  No. 2 globally for manufacturing VP latex used in dipping of tyre cord and conveyor belt fabric.

Company also produce SBR latex for use in tyre cord fabric. Company is bulk suppliers of these lattices to various tyre OEM's and dippers located globally. NBR latex used in automotive gasket binding applications. VP latex products are sold under the trade name of ENCORD.

These various grades of latex are manufactured in Samlaya. The manufacturing facilities are accredited with ISO 9001, ISO 14001, OHSAS 18001 and REACH certifications.

Consumer Products

The consumer products are sold under brand name of 'JIVANJOR' and it is the second largest brand in the wood adhesive and finishing sector after Fevicol (Pidilite Industries). Jivanjor brand is focused on providing complete range of woodworking solutions ie adhesives & wood finishes, footwear adhesives and epoxy sealants to the customers with nationwide network setup.

Woodworking Adhesives

Jivanjor offers a range of ready to use wood adhesives, which are suitable for most wood joinery purposes. They are very popular and effective assembly adhesives in the woodworking industry. Water based adhesives comprise of All Rounder, Polystic Hero, and Vambond Excel. These are ready to use adhesives which set rapidly at room temperature & offer superior bond strength to users. Jivanjor also offers contact adhesive Champion which is a synthetic rubber based adhesive for exceptional fast drying & vertical lamination. Jivanjor adhesives are available in attractive packaging & in various pack sizes

Footwear Adhesives

Jivanjor offers a range of footwear adhesives suitable for most shoe components bonding purposes. The range of footwear adhesives comprises synthetic rubber based adhesives and the hugely popular two component polyurethane adhesives. The rubber based adhesives, which include RB 1001F, RB 1003, RB 1005 and FOAMBOND find huge popularity with upholsters & footwear manufacturers. On the other hand, the two component polyurethane adhesives, which include PU 2000, PU 2001, and PU 2002, are indispensable raw material for footwear manufacturers. These products guarantee superior bond strength in stringiest conditions.

Epoxy Sealants

Jivanjor offers a wide range of epoxy sealants ideal for any repair job like small crack and leakages in a very short period of time. The variants include Plumber’s seal, Mix n Fix, Fast Seal, White Putty, 10 Minute Putty, Industrial Grade Epoxy and Wet Set. These are uniquely fresh scented and soft enough to be molded into any shape, they have a very short curing time and display exceptional strength once they are fully cured. These can be sanded, drilled, sawed and painted upon to give the desired look. Jivanjor adhesives are available in an attractive packaging & in various pack sizes for convenience in use.

Wood Finishes

Jivanjor offers complete wood finishes system, stains and ancillaries for decoration & protection of wooden furniture. The wood finishes system includes Polyurethane finish, Melamine Non Yellowing finish, Melamine finish, Nitrocellulose finish & PU Alkyd finish. These systems offer exceptional fast drying properties, tough coatings and superior resistance. Jivanjor also offers a wide range of stains that can be mixed to generate unique colours to suit every desire. Jivanjor also offering ancillaries like sealers & thinners required for the purpose of successful application. The finishes systems are supported by technical team which provides intense technical training.

Agricultural Products

Jubilant offers a range of products in crop nutrition, crop growth regulator and crop protection areas under the brand “Ramban”, which is a widely accepted brand in the market. Jubilant is the leading manufacturers of Single Super Phosphate (SSP) in India which is also the largest selling product under the Ramban umbrella.

Crop Nutrition

This category of chemicals primarily aid in root and shoot development and increasing the crop yield. They help to provide conditioning to soil and fight against crop diseases. Jubilant “Ramban” brand is highly regarded in major parts of country by farming community for its quality, consistency and reliability.

RAMBAN SSP (Single Super Phosphate, Granule and Powder)

BENTOSULPH (Bentonite Sulphur 90%)

RAMBAN BHOO SANJEEVANI (Organic Manure)

NUTRA PLUS (Water Soluble NPK)

SULPHA GOLD (Sulphur 90% DP)

Crop Growth Regulator

The chemicals under this category primarily help to improve the strength and resistance of crops and curtail the unwanted vegetative growth, saving time and thus increasing the yield. Jubilant crop growth regulators are being used by the farmers to ensure the right growth of plant by balancing different crop life cycle stage. Jubilant offers product to increase crops growth and balance maturity.

VAM C(Chlormequat chloride 50% SL)

Power Plus 500 – Granules (Triacontanol 0.05% granules)

RIPEX (Ethephon 39% SL)

Crop Protection

Jubilant has a wide range of products that covers different aspects of crop protection. The products are used from seed planting to harvesting stage thus ensuring a secure yield for farmers. During crop complete life cycle plants are being destroyed by insects, pests, weeds & fungus.

Jubilant offers a wide range of products for protection of crops. They are primarily classified as fungicides, insecticides and herbicides.

Fungicides

Fungicides exhibit protective as well as curative action and help to control fungal diseases.

1.Vozim (Carbendazim 50% WP)

2.HEXON (Hexaconazole 5% EC)

3.Vozim Plus (Carbendazim 12% + Mancozeb 63% WP)

Insecticides

Insecticides effectively guard against chewing and sucking insecticides.

IKON (Imidacloprid 17.8%, SL )

CARTEX (Cartap Hydrochloride 4% G)

ALTER (Alphamethrin 10% EC)

CYMAX (Chlorpyriphos 50% + Cypermethrin 5%)

RAIDER (Chlorpyriphos 20% EC)

Herbicides

Herbicides to control unwanted weeds growth.

1.FIRE (Pretilachlor 50% EC )

2.CLODINOX (Clodinofop Propargyl 15% WP)

Industrial Chemicals

Sulphuric Acid H2SO4 98.4%

Sulfuric Acid (H2SO4) is a strong mineral acid. It is a basic raw material used in a wide range of industrial process and manufacturing operations.

SODIUM SILICOFLUORIDE - Na2SiF6 [Technical Grade]

Sodium silico fluoride is formulated for cement additives, glass industries, ceramics and allied industries. It is white amorphous powder that comprises of high grade chloride, phosphate and allied compositions.

Indian Made Foreign Liquor ( IMFL)

Jubilant Industries has been manufacturing IMFL products for the various established brands in India, engaged in liquor business. Total installed capacity is 100,000 cases/month for IMFL. With a configuration of 5 automatic/semi-automatic lines we can handle all sizes of bottles.

All lines are equipped with required Vats for storage of ENA and labeling machines which provides flexibility for bottling various sizes of IMFL. Manufacturing unit at Nira is fully equipped with state of art laboratory to support product quality and standards.

Research & Development

Jubilant's technical expertise and experience enables maximization of efficiencies and profitability. State of art R&D lab is based in Noida with team of qualified scientists work constantly on developing customized solutions for diverse end applications .

Distribution Network and Manufacturing Facilities

Jubilant Industries has geographically diversified manufacturing facilities situated across India at Gajraula (UP), Kapasan (Rajasthan), Sahibabad (UP), Samlaya (Gujarat) and Nira (Maharashtra). Jubilant's consignee warehouses are located on the different  high demand locations to ensure the smooth and efficient supplies.

Investment Rationale

Jubilant Industry was a good profit making company in 2011 with EPS above Rs 35 but the problem started just after entering into retail sector with Total Superstore retail chain in Bangalore. It has started posting losses since 2012 only due to retail business. Last year company has sold its four retail hypermarket stores in Bangalore via slump sale to Aditya Birla Retail Ltd.

http://www.morestore.com/images/Website/Pdf/Press_Release_May_12.pdf

http://www.moneycontrol.com/stocks/reports/jubilant-industries-limited-1491001.html

Jubilant Industry product portfolio is related to chemicals, Agri, construction, food, automobile tires, consumers which are expected deliver high growth rate in future.

Jubilant management has given focus to promote consumer product brand 'Jivanjor' more aggressively to gain further market share by improving brand visibility and expanding distribution footprint pan India. The business will also focus on expanding reach in OEMs and in Project channel. A big chunk of adhesives produced are consumed by plywood, veneers and laminates sector. Indian plywood market is  growing at 7-8 percent and is expected to continue such growth in future. 

Even though woodworking adhesives market is dominated mainly by Pidilite Industry but Jubilant Ind has lot of scope to expand its market share because adhesive industry has been growing at an estimated 9 % per annum in volume terms and at 14 percent per annum in terms of value form last three years. Increased activity in real estate, new construction & renovation is likely to fuel further growth in this industry. 

Wood Finish market is dominated by Asian Paints in retail channel. The end users are upgrading from basic varnish and nitrocellulose finishes to more value added finishes like melamine and PU (Polyurethane) for superior aesthetics and performance. The premium segments are driving rapid market growth and products demand of Jubilant Ind is also increasing at similar rate.  

Quality wise Jubilant consumer products are meeting or exceeding its main peers like Pidilite and Asian Paints.

Performance Polymers business alone generating consistent revenue near 400 crores and net profit above 30 crores. Now with increased focus on Agri and consumer products it will increase profit and margins. 

  

Conclusion

Jubilant Industries has very strong product portfolio with brands like Vamipol (1st in food polymer in India), ENCORD (1st in VP Latex in India),  Jivanjor (2nd largest after Pidilite) and Ramban (4th largest in India) as well as world leadership position in Food Polymer & VP latex segments.  Jubilant has sold loss making retail business to pursue independent growth strategy by concentrating on these growing segments.

Market capital of Jubilant Industry is only 192 crores with annual turnover above 600 crores and expected to post profitable results in coming quarters, it is very good investment opportunity available at low price of Rs 163.