Company : CAMLIN FINE CHEMICALS
BSE Code : 532834
Group/Index : B
CMP : Rs.56/-
FV : 10
Recommendation : ACCUMULATE
Camlin fine chemicals is an unnoticed company operating in a sector with huge potential.Company is the demerged arm of Camlin ltd,and a manufacturer of some niche fine chemicals used mainly in food processing and pharma sector.It has two divisions - Food processing Chemicals and Industrial products. In the food processing chemicals segment company manufacturing antioxidants which are used mainly in edible oil and other food items to increase shelf life.Its anti oxidants TBHQ and BHA commanding a 30% market share in the global market and it is the market leader in this category.Company having strong tie - up with Kemin Lab of USA for R&D and marketing for the products in food segment.Recently company introduced a new product in the form of a natural spray for giving natural freshness for vegetables and fruits and increasing the shelf life of these items without any harm to the consumers health.This products is filed for patent and it is expected to become a blockbuster product of the company.Another recently launched niche product is Ascorbyl Palmitate for cosmetic and baby food industry.Now company is strengthening its marketing wing throughout Europe and USA. As part of its backward integration programme ,company recently acquired a subsidiary of Borregaard which manufacturing Hydroquinone .There are only five companies in the world manufacturing Hydroquinone which is the main raw material of Camlin Fine Chem's product. Due to short supply of Hydroquinone ,company faced interruptions and low margin situation in the past .This acquisition will ensure the easy availability of raw material and help to improve its margin .Company steadily increasing its sales market share in previous years and its turnover improved from Rs.47 Cr in 2006-2007 to Rs.125 Cr in 2009-2010. Bottom line improved from a loss of Rs.2 cr to a profit of Rs.4.3 Cr in this period .In FY 2011-12 company is guiding a turnover of Rs.200-250 Cr with an improvement in margins.In short , it is a company with good management with clear vision, working in a sector with huge potential . Currently ,this FV 10 company is trading with a P/E multiple of 9 .The parent Camlin ltd with FV Rs.1 is trading with a P/E multiple of 24 .Considering all the positive factors including the global market leader position in certain products, increasing popularity of ready to eat and ready to serve food items in India , initiatives of management to introduce new products and their history - it is a stock to accumulate at current price of Rs.56/-
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