Prefer Manali Petrochemicals: Prakash Diwan

Prakash Diwan of Altamount Capital Management told CNBC-TV18, "Manali Petrochemicals is one of those petrochemical play which possibly is slightly unnoticed. It actually belongs to the Southern Petrochemical Industries Corporation Limited (SPIC) group which his very well run company belonging to the AC Muthiah family. It is one of the most efficiently run plants. When I was going through matrix of others, when Chennai petro started doing well, you were trying to scout other plays in this space. This is slightly different from the fact that it is not pure hydro carbon. It manufactures what is called propylene glycols and propylene oxide. These are raw materials that go into right from perfumes, food flavours, fragrances, leather and furniture. The end users industry is huge. The company has expanded its capacity three times all of a sudden."

"There is no other units which was seeing very promising, we spoke to them and there are extremely bullish on the kind of user demand. The softness in crude is helping them tremendously on the input side. The company doesn’t actually have any debt which is very remarkable for a petro chemical business. It is a very capex intention plat otherwise. The market capital is not very large by Rs 300-320 plus crore is decent enough, it has about Rs 100 crore of cash on its book great dividend yield of four percent," he said.

"If you look at earnings per share (EPS) expected next year FY16, I would believe it at about 4.5-4.6 even at that, it is still at Rs 20 or whatever it is. It is trading at about less than five times FY16. So it is something which is bit small for people to have notice earlier but belongs to a good pedigree. They have trebled their capacities now and the input side is actually impacting them now. Everybody thought it would start from January but most of them had inventory which really didn’t give that complete benefit but softness in crude which is the raw materials is also going to help," he added.