Ark horse stock of the day: Chemfab Alkalis gets locked in upper circuit

Shares of Chemfab Alkalis experienced a sharp rise today, hitting the upper circuit. It began the day at Rs 349, zooming by 13% compared to the previous day’s closing price of Rs 308.40 on the BSE. The stock surged by 20% during the intraday session with significant volume. Currently, while writing this article the shares of the company is up by Rs 61.65 and at Rs 370.05.

Upon analysing today’s share volumes, it can be observed that there has been a significant increase of more than 9.42 times in volumes on the BSE.

The stock’s 52-week highs and lows stand at Rs 477.45 and Rs 165.16, respectively. With a market capitalisation of just Rs 524.80 Crore, the stock has displayed positive performance in recent times, delivering a 27% return over the last three months and an impressive 121% return in the last one year. Furthermore, it has given a significant return of over 156% to investors in the last three years.

Financial Performance

If we check the company’s financials, in FY23 annual revenue experienced a modest increase of 22% YoY, rising from Rs 272 Crore to Rs 331 Crore. The operating profit of the company stands at Rs 112 Crore, accompanied by an operating profit margin of 34%. Furthermore, the net profit of the company amounts to Rs 66 Crore.

The debt present in their balance sheet is mere Rs 2 Crore with a debt-to-equity ratio of 0.01 times, which can also be considered a debt-free company.

The company’s return on capital employed (ROCE) and return on equity (ROE) are at 28.2% and 20.8%, respectively. The book value of the company is Rs 256, whereas the price-to-book ratio is just 1.44 times. The shares of the company are trading at a PE of 7.63 times in the market.

Regarding ownership, the promoters of the company possess 73.11% of the company’s shares. Whereas stakes held by foreign institutional investors (FIIs) and domestic institutional investors (DIIs) are 0.28% and 0.07%, respectively. The remaining portion, which accounts for 26.54%, is owned by public investors.

Business Overview

Chemfab Alkalis Limited, an Indian company, specializes in the manufacturing of basic inorganic chemicals and polyvinyl chloride (PVC-O) pipes. The company operates through two segments that are chemicals and PVC-O pipes. In terms of chemicals, the company produces caustic soda lye, liquid chlorine, hydrochloric acid, hydrogen gas, and sodium hypochlorite.

In addition to chemicals, Chemfab Alkalis Limited manufactures PVC-O pipes, offering them in two pressure classes that are PN12.5 (12.5 kg/cm2) and PN16 (16 kg/cm2). The company provides a wide range of PVC-O fittings.

Furthermore, it also Salt Division 1, located in Tamil Nadu, is strategically positioned just 30 km away from CCAL Puducherry. It encompasses two expansive salt fields that are Kanthadu in the Villupuram District and Chunampet in the Kanchipuram District. The Kanthadu salt field covers an extensive area of 1,223 acres, while Chunampet spans 450 acres. This coastal property, situated in mainland India’s southernmost state, offers optimal conditions for salt production.

The company’s Kalapet Plant is accredited as the Greenest Plant in the industry that produces Chloralkali Chemicals.

1 Like