Nitin Agrawal Moneycontrol Research
In the last couple of weeks, amid market volatility, stellar earnings from midcap companies may have missed investor attention. Here is list of all such companies which should be on investors’ radar.
The first company on the list is Prakash Industries, one of the largest integrated steel manufacturers in India, with an integrated steel capacity of 1.2 million tonne per annum and captive power plant of 230MW.
Riding the upturn in the steel cycle, the company posted a strong set of Q4 FY18 earnings on the back of highest sales realisation, with domestic steel and ferro alloy prices witnessing a steep rise of over 30 percent on a year-on-year (YoY) basis. Growth in sales volume and higher capacity utilisation also aided performance. Net sales in Q4 FY18 grew 45 percent YoY and earnings before interest, tax, depreciation and amortisation (EBITDA) margin expanded 849.5 basis points YoY. Profit after tax (PAT) witnessed a YoY growth of 343.7 percent.
The management now plans to expand its integrated steel plant capacity to 3 mtpa in a phased manner over the next five years. It also plans to add 0.4mtpa sponge iron capacity and 30MW power co-generation capacity in FY19.
The next company on the list is also from the steel sector: Vardhman Special Steels (VSSL). It is India’s leading steel bar producer, catering to sectors such as engineering, automotive, tractor, bearing and allied industries.
The company posted a strong 33.7 percent YoY growth in Q4 FY18 net revenue. However, EBITDA margin witnessed a 85bps YoY contraction on the back of rising raw material prices and operating and manufacturing expenses. This was partially offset by a fall in electricity expenses and employee costs. PAT grew 52.4 percent YoY, led by a fall in the interest cost.
With marquee clientele, plans for increasing melting and rolling capacities and strong outlook on automobile sector, the company beckons investor attention.
The least known about on the list is Sadhana Nitro Chem (SNCL). The company manufactures and markets nitrobenzene, its downstream derivatives and other intermediates for various applications in the aerospace, pharmaceutical and agro space. It also produces optical brightening agents, plastic additives, special fibres, epoxy resin hardeners, dyes and performance chemicals.
The company posted a significant 166.8 percent YoY growth in topline and an EBITDA margin expansion of 2,577.9 bps YoY. PAT grew a whopping 1,648.8 percent YoY. For the last two quarters, the company has been posting a strong set of numbers indicating turnaround in the business.
Fourth on the list is Atul which is one of the largest integrated chemical company in India. It manufactures 920 products and 460 formulations across six business divisions: aromatics, dyes, bulk chemicals and intermediaries, colours, pharmaceutical chemicals, crop protection bulk actives, polymers performance materials and floras.
The company recorded net sales growth of 20.4 percent YoY and EBITDA margin expansion of 268.5 bps YoY, driven by reduction in operating and employee cost as a percentage of net sales. It also managed to reduce interest cost by 39 percent YoY which led to 56.5 percent YoY growth in PAT. In terms of segmental performance, life science chemicals and other chemical businesses witnessed a revenue growth of 18 percent and 15 percent YoY, respectively. Earnings before interest and tax (EBIT) margin witnessed a 73bps and 19bps YoY expansion, respectively.
Recent capacity addition, positive outlook on the Indian chemical industry and steady performance make it worth pick.
The last on our list is India Glycols which is one of the leading manufacturers of glycols, ethoxylates and polyethylene glycols (PEGs), performance chemicals, glycol ethers and acetates, natural gums and potable alcohol.
In Q4 FY18, the company posted a strong 21.3 percent YoY growth in net revenue and 240.6bps expansion in EBITDA margin. PAT grew 157.5 percent YoY on the back of a rise in other income and fall in interest cost.
With an increase in anti-dumping duty by China on glycol ethers imported from the US, India Glycol, being the largest player in bio-mono ethylene glycol in the world, is well-placed to capture this uptrend.
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