Friday, 23 October 2015

Camphor & Allied Products Ltd - Re-rating Candidate


The Ace Investor
Camphor & Allied Products Ltd
  Listed on BSE: 500078
Currently trading around 400 with a market cap of around 200 crores.
Promoters hold 57.66% stake
Total Debt is around 100 crores, Total Reserves around 128 crores.
Interest coverage ratio is more than 4.

Camphor & Allied Products Ltd (CAPL) is an Indian specialty chemical company, It is the largest exporter of specialty aroma chemicals which finds application in a wide range of products including deo & perfumes, cosmetics, fabric care products and other personal care products.

Fragrance chemical portfolio of the company includes: Astromeran, Astrone, Astrolide, Capinone, Dihydroterpineol, Dihydroterpinyl Acetate, Fenchone, Isoborneol, Isobornyl Acetate, Ketone 101, Terpineol, Terpinyl Acetate, Citwanene, Isolongifolene, Longifolene, Camphor.

CAPL is having two manufacturing units at Bareily U.P and Vadodara, Gujarat.

CAPL is in a tie-up with Agan Aroma & Fine Chemicals, a subsidy of Makhteshim Agan which itself is now controlled by Chem China which is the largest Chemicals company in China.

Products manufactured at CAPL vadodara plant is marketed by Agan worldwide and Agan is also providing technology assistance to CAPL.

CAPL is now promoted by India's largest fragrance manufacturer Oriental Aromatics Limited, It took over the company by acquiring stake at Rs 167 per share.

 Lets take a look at Camphor's financial snapshot since 2005

As you can see CAPL has grown well from FY05 to FY12, Sales of 74 crores have now increased to 355+ crores.

CAPL is trading only at 200 crore market cap with sales at 355+ crores. 

CAPL has an EPS of around 37, And in the coming quarters with the raw-material costs around its lows, CAPL should easily expand their net profit this FY and report better numbers.

Tie-up with Chem China somewhat hedges the China threat that specialty chemical companies otherwise face.

The total share capital of the company is only 51,33,674 and the promoter holds 57.66% stake which means only about 21 lac shares are available in the market.

Though there are no Public shareholders holding more than 1%, The annual report reveals the top shareholders to be Hirji Eddie Nagarwalla who held 0.87% at end of FY15 and another major shareholder is Keva Constructions Private Limited which holds 0.96% stake in Camphor (CAPL).

A little use of Google will show that Keva Constructions is a subsidiary of S H Kelkar which is a direct peer to Camphor & Allied Products Ltd and a fragrance manufacturer. 

Recently, the IPO of Indigo Airlines (Interglobe Aviation) triggered Spicejet to rally more than 60% in few days just because Indigo was commanding good valuation, However Spicejet at large has been in financial trouble and it was given clearance to fly only recently and there is not much clarity on how long it will remain profitable.

The major trigger for re-rating in CAPL is the IPO of fragrance and aroma chemical manufacturer S H Kelkar which opens on 28th October 2015.

CAPL with annual EPS of around 37 and current market price of 400 is trading at just under 11 P/E with a good track record and good management.

 While S H Kelkar with an annual EPS of 4.13 is coming out with an issue price of 170 valued at 41 times to its FY15 EPS.

At present, CAPL is trading at 11 P/E, If we apply the 41 P/E that S H Kelkar should be getting with their IPO the share price of CAPL should be at 1500+.

All in all, Looking at the issue price of S H Kelkar it is obvious that Camphor & Allied Products Ltd deserves major re-rating and is a value pick at current levels of around 400 trading at 11 P/E and having MCAP/Sales ratio at only 0.56.

Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that i might have Camphor & Allied Products Ltd in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.

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86 comments:

  1. Hi. Can you please provide opinion on kilitich drugs

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  2. Missed rally from 350 3 days back it was my dad call

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  3. Your point is correct. it may get rewards rated

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  4. How Is Gati for investment......please check pennar industries too

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  5. Other than rerating, no mention of business growth or any indications of projected sales growth of either CAPL or AGAN Worldwide or China Chem is mentioned here. So, how to know that Co will clock similar revenue growth patterns in the future. Also, are AGAN Worldwide or China Chem solely dependent on CAPL? Need more clarity on this reco.

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    Replies
    1. Re-rating is the major buzzword in this stock, What is the future of spice jet for it to rally 60% in a matter of few days? By reporting profit only for two quarters and great financial instability in the whole sector?

      Delete
  6. Already its in uc. Can I buy in this price?

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  7. Do you mean that on the basis low P/E ratio and spicejet analogy can drive the stock price of CAPL to new highs?

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    1. IPO and the reception to it does give an example about the sectors fair value, We have seen how Prabhat Dairy has changed things for Umang Dairies and how Indigo pushed Spicejet to highs even though no major sustainability is expected from Spicejet's financials.

      The next IPO is S H Kelkar and Camphor is in the same business so the re-rating should happen in Camphor too.

      There is another IPO of VLCC coming up which is basically a slimming clinic and it shall result in re-rating of Talwalkars.

      Delete
  8. Some blogs have copied your pick , is it a coincidence ? Or a planned plot by rival blogs to take the limelight ?

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  9. Porinju Veliyath website coverd Camphor & Allied Products Ltd on the same day after you gave the pick , you have some big following :-)

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  10. Sir, Seems to be great idea in the making. I found of particular interest Contract Work/Order from International Flavor & Fragrance (USD 9 Bio M. Cap, 16% of Global Market Share and stated intention to acquire through acquisitions USD 1 Bio of topline by 2020). Seems very scalable and perfumery chemicals biz from Rs 55 Crores inn FY 2013 is now at RS 165 Crores (FY 2015). As per IFF for the period of forecast CY 2014 - 2019 - 75% of Growth is expected from GA.

    Best Wishes.

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    Replies
    1. Smart investor you are brother, I missed covering it in the whole post.

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  11. Super pick once again sir. Will try to buy 500 atleast on monday...

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  12. Sir how much cash is capl generating from fragrance products alone when compared to a h kelkar fragrance products.
    And also does this matter,?

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  13. Hi sir wanted view on your earlier recommendations Smruthi Organics and Vidhi Dyestuff? Is it good time to accumulate

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    Replies
    1. Smruthi Organics another quarter of narrowed loss and operational profits returning looks good for future, Vidhi has exploded from 15s to 70s now will consolidate.

      Delete
  14. Sir please your view upon Trident.. Necter life ..BGR energy... Thanks

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    Replies
    1. For trident and other textile plays i would like to say Textile industry at large is in trouble and the problems are going to be over anytime soon.

      Regarding Nec Life, i am not closely tracking it.

      BGR Energy is in the power project sector and i am not much interested in this sector.

      Delete
  15. Sir please your view upon Trident.. Necter life ..BGR energy... Thanks

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  16. Sir your view on Rexnord electronics and Innovative tech park

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    Replies
    1. I think the products of Rexnord are not unique and the competition is also heavy in its business therefore scalability of their business is always under check.

      Never heard about Innovative Tech Park

      Delete
  17. Sir, your views on atul auto, tfciltd, fcel, dynacons tech...

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    Replies
    1. Atul Auto is a good stock positive on it, TFCI is okay, Fcel too much hyped but not tracking.

      Dynacons i guess this is the one where Arun Govil or Govli is taking entry as promoter, Till their business plan is not known i am not interested in this.

      Delete
  18. Sir what is future of marksans pharma

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  19. Sir please share your view on Patel's Air Temp at CMP.

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  20. Will appreciate your opinion about A) EMMBI Industries, MIC Electronics, Cerebra?? B)Arvind Remedies- looks like a Bad Penny.. unsteady financials and low promoter holding..
    How does one interpret the low promoter holding stocks??

    Thanks in advance

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    1. Mic is good, Emmbi not tracking, Cerebra nothing special..

      Arvind Remedies is tomorrow's Dr Datson Lab.

      Delete
    2. Thanks for your valuable opinion.

      I am very impressed with the performance of MIC and the space looks promising. But MIC has a rather low promoter holding... Is there a reason for this?

      How does one differentiate the good ones from the lemons in the market..when the promoter stake is less than 30-40%.

      Thanks again.

      Delete
    3. Recently promoter holding has increased from 8 to 11%+, I think at Rs 5 i was asked again and again about it and that time i didn't track this counter so i have missed this one.. It can turnaround and become big but for the moment i have stopped tracking it since i missed it at 5...

      So i cannot tell you clearly whether this is a good one or some lemon.

      Delete
  21. how is Kanpur plastipacks sir!!!!!

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  22. Nice tips...sir i have izmo 2000 shares @ 55. What i do...

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    Replies
    1. Izmo is a e-commerce play, not much can be seen on Financials right now, its a game of valuations.

      Delete
    2. And how about palred technology...i have 3400 shares at 89 level....here future is bright or not? I can hold for 2 years...pls suggest

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    3. Palred is a valuation game, I don't have much comment to offer on it.. Let's see if it gets funded like Flipkart, but overall its looking good (their portal LatestOne.com) has been looking good i mean

      Delete
  23. Sir.. What about adani enterprise and PMC fincorp?

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    Replies
    1. Adani group will prosper, PMC Fincorp never heard about it.

      Delete
  24. Hello Sir please give your view on growth story for Mastek at current market price. Till the demerger mastek had decent run but now seems its topped out. Should I hold or exit and invest in better scip like Viddhi please advise.

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    Replies
    1. Mastek i am not tracking nor closely aware about their business

      Delete
  25. Sir Please share ur view for Dr Datson lab share ...whether it will relist or not.

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    Replies
    1. Its gone, and its gone forever.. So avoid penny stock next time!

      Delete
  26. Sir please also share ur view regarding Winsome Diamond & Jwellery share.I have 100000 share i can hod for 5 yeares or more.

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    Replies
    1. No sales, yet loss, No fundamentals yet you have 1 lakh shares? And to top it all want to hear from me.

      Delete
  27. Sir whats your view on Meghmani Organics Ltd & Srikalahasthi Pipes Ltd ?

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    Replies
    1. Sri Pipes good, no comments on Meghmani

      Delete
  28. Sir heard on TV channels since long that orchid chemical is coming multibagger stock but still is not moving as per recommendation .....please your valuable vier in this stock thanks

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    Replies
    1. If we start believing Tv Channels we cannot succeed, You have to look at the fundamentals by yourself and decide if it looks feasible to invest.

      Delete
  29. Sir, what about jaiprakash associates and gvk enterprises ?

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  30. Sir your view on alembic limited and camlin fine sciences pls

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    Replies
    1. Camlin decent, Alembic doesn't make a value investment.

      Delete
  31. Your views on kddl and indraprasth hospitals. Thnx

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  32. What do you think about the following- 1.Kopran (Potential Turnaround) good pharma company 2.HFCL (Highly Manipulative Stock) in a good space.. Optical Fibres, Digital India and NOFN I thought were big triggers but this counter has not seen much appreciation in the last few years. I have both the stocks in my portfolio. (My entry price is not too high and I'm not losing a lot of money). Would highly appreciate your views.

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    Replies
    1. FY15 consolidated numbers of Kopran still shows loss and i don't find it turning around right now.

      HFCL totally under the grip of operators not a good case for investment.

      Delete
  33. Sir, could you please post the performance report of all your recommendations. thanks

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    Replies
    1. These are not recommendations, anyway you can see http://theaceinvestor.blogspot.in/2015/09/review-10.html it helps

      Delete
  34. Do you track Kiri Industries from Chemical Sector? Seems it's a turnaround story.

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    Replies
    1. KIRI is for the traders i am not keen to invest in this stock.

      Delete
  35. sir,
    your view on future consumer which has recently tied up with patanjali ayerveda

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    Replies
    1. Even though price of 19 suggests that it is cheap in real the market cap is at 3165 crores while sales is at 1300 crore... Doesn't make sense.

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    2. Dear Ace Even though please study the recent development. I think it will be a multibagger

      Delete
  36. sir please give ur valued view on gujarat themis biosyn and vinati organics.. i purchased former at 64 and latter (in deep trouble) at 556

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    1. Guj Themis: Sales of 31 crores and Mcap of 90 crores and P/E of 20 is very expensive when compared with Parnax Labs... Even Dishman or Lincoln look better and cheaper than this.

      Vinati good growth and in probabilities the growth will continue however downsize your holding since it looks aggressively priced.

      Delete
  37. Good evenig sir...sir i have samtex fashion 3000 shares at rs 16.97 level ..now its 16.44. What i do sir...explain and also suggest me abour archies i have 1000 shares at 31.10...thank u

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    Replies
    1. Samtex looks good to me, Archies has no growth in last 6 years.. Why should one buy that..

      Delete
  38. Sir whats ur recommendation on Satin credit...

    Thanks,
    Ram

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  39. added a small lot....if it is real value pixk ..will add huge...just watching carefully....!! if it is operator game....will be bye bye from this blog for ever...!!!!

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  40. Sir , How you look at Themis medicare & deep industries ?

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  41. Sir, Trust u doing well. With Kelkar grey at 22, Camphor in on track. Thought would seek your opinion on - Kwality Limited, MCap 2100 Crs, Long Term Debt 145 Crs. Topline Rs 5,800 Crores. Sales CAGR 34%, PAT 22% (last 4 Years). Now the rest trade at as high as 1.5 time P/S. And the best of all - Bad Promoters who are changing for the better. If they do 10K topline - post a 500 Crores capex.

    Best Wishes.

    P.S - Fair to think i have coloured opinion due to my vested interest,

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  42. Sir, Can you suggest whether Rcom and Amtek auto is good for short term? Am new to market

    Thanks

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  43. Sir, Hope you are doing well. Want to know I am starting new to the market and with a seed capital of 2 lakh and a 3yr horizon for this money. Can you please advise out of all the stocks mentioned by you in your portfolio including camphor, which are the 5 I should pick as a fresh start.

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  44. Sir , camphor has posted results .pls share ur views about results

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  45. Sir, If any possible Visesh Infotechnics price recovery in future.

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  46. just because some ipo is being issued at an insane price , it doesnt make the business prospects of the peer co any better nor is the rerating guaranteed just becoz spice jet had one.
    what matters is the business prospects and future outlook. You may be right in your pick. But this rerating I dont agree and If at all it s a trading idea and definitely not an investing one

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  47. I agree. It is a reasonably good stock. Not sure if it is investment grade or not. Its Eqaxscore is 83 out of 100.

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  48. I am impressed with your idea and post.. keep up the good work. --Balvant

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  49. Sir your views on xchanging solutions and chartered couriers please

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