India Glycols: Buy for 21% upside in 3 months

Rudra Shares And Stock Brokers | Feb. 1, 2017, midnight


Investment Rationale


Leading company that manufactures green technology based bulk, specialty and performance chemicals and natural gums, spirits, industrial gases, sugar and nutraceuticals.


Company has identified exports as a key future growth driver:-


Major export markets are the South East Asia, Middle East and China as company have logistic advantage in these region. Company export chemical products to more than 40 countries worldwide and the thrust for exports would be to other regions in Europe, USA, Japan & Latin America for promotion of Bio-MEG and Bio-EODS.


Stellar Performance........

  • Strong balance sheet with strong financial position
  • Strong margin recovery at EBITDA level i.e. 11.54% in Q4 FY 17 as compared to 2.64% in Q4 FY 16.
  • Strong growth of 13.2 50/0 on Y-O-Y basis in terms of revenue.
  • Increase in Net plant with huge decrease in Debt during the year.


ETHYL ALCOHOL (POTABLE) & EXTRA NEUTRAL ALCOHOL- During the year, company registered total sales value of Rs 1317.39 Crores as compared to 5 1162.63 Crores last year in the Ethyl Alcohol [Potable] division With respect to Industrial Chemicals, company registered total sales value of Rs 2143.38 Crores during year as compared to Rs 2043.81 Crores last year. In addition to this, company registered a sales of C 148.61 crores in FY 17 compared to Rs 70.17 crores in FY 16 in Neutraceutical division.


With stellar performance during Q4 FY2017 as well as segment wise performance in FY17, INDIA GLYCOL is expected to deliver a good set of numbers & robust performance, going forward.


Company has gained the position of premium quality Extra Neutral Alcohol (ENA) suppliers in the international markets. Company is having license for operations in and sale of Country Liquor and Indian Made Foreign Liquor (IMFL) in the States of Uttar Pradesh and Uttarakhand. Company had launched its premium products under the brand name of "V2 O Vodka" in three flavors viz. Orange, Green Apple and Smooth in Vodka category and Soulmate in Whisky category.


Company is continuously looking for growth opportunities and to reduce its cost of production. Further, Company, as part of long term strategy, is shifting from commodity to niche markets and specialty products and would divert Ethylene Oxide (Eo) molecule for Bio-MEG and Eo Derivative/ Specialty products which will give better returns. Further, as a part of expansion of Ethoxylates, company has initiated promotion of Bio-Ethoxylates in the international market which is gaining acceptability and can be good opportunity for better realization in the niche market segments.


Company aims to increase its business by developing new products and applications especially in areas of textile chemicals, oil field chemicals, paper chemicals, home care & personal care applications. It has already established itself as a major domestic specialty ethoxylates company and with the increased capacities, the scope for exports would be explored for higher growth.


Considering above criteria coupled with stellar performance during FY17 & Q4 FY17, volume growth in coming years & no plans to raise capital as of now, we recommend to BUY share with price target of Rs 226 in short term.



  • Trend line shows support Rs 166.90
  • Two parallel trend line shows support at Rs 160 & resistance at Rs 190.
  • If it will cross this trend line, then it may reach to next high Rs 220 -230, which shows difference between support & resistance.

 

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