While the majority of stocks that were listed in the last few years struggling to trade above their issue prices, Fine Organic industries stood out among its peers and has given shareholders nearly 8x returns since its listing.
The stock made a strong entry on July 2, 2018, when it was listed at a premium of 4.0% over the IPO price of ₹783 and closed the day at ₹822.8, a 5.1% premium over the issue price. The IPO was subscribed to nearly nine times.
Within a year of its listing, the stock rose by 90%, and within two years, it doubled investors' wealth by gaining 168%. Since its listing, the stock has delivered an astounding return of 774.50% to date, and it is currently trading near its all-time high of ₹7,328.8, which was set on September 14, 2022.
Fine Organic Industries is the largest manufacturer of oleochemical-based additives in India and a key producer globally. The company produces a wide range of specialty plant-derived oleochemical-based additives used in food, plastic, cosmetics, paint, ink, coatings and other specialty applications in various industries. It is India's first major producer to use slip additives, according to media reports.
The depreciating rupee, supply interruptions, the China+1 strategy, and the rise in global demand have all helped the specialty chemical sector in recent months.
India’s speciality chemicals companies are expanding their capacities to cater to rising demand from domestic and overseas markets. With global companies seeking to de-risk their supply chains, which are dependent on China, the chemical sector in India has the opportunity for significant growth.
According to the IBEF report, Indian speciality companies are witnessing interest from strategic investors led by Japan, Korea, and Thailand, as they seek to diversify their supply chains from China.
China constitutes about 20% of the global Specialty chemical industry ($800 billion), and even a 5% shift in market share from China to India can translate to an $8-billion opportunity for the Indian Specialty chemical companies, said domestic brokerage firm, Sharekhan.
For the past seven quarters, beginning in December 2020, Fine Organic's net profit has consistently grown. The company reported a net profit of Rs. 159.8 crore in Q1FY23, which was a record-high. It posted a net profit of ₹35.9 crore in the same quarter of the last fiscal.
Total revenue increased by nearly 110.52% to ₹764.3 crore in the June-end quarter of FY23, compared to ₹363.05 crore in the same period last year.
Further, the company’s EBITDA grew almost four-fold to ₹214.6 crore in Q1FY23 as against ₹52 crore in the corresponding quarter of last year. Similarly, the EBITDA margin of the company increased by 91.11% YoY, to 28.70 from 14.54, expanding by almost 1400 bps, which is the highest to date.
Following the company's Q1 announcement, many domestic brokerage firms raised their target prices, and the stock met all of them in a matter of months.
Meanwhile, the stock saw its FII holdings rise from 6.8% in June 2021 to 7.2% in the June 2022 quarter. FIIs have been bullish on the company for a long time. The promoters own 75% of the shares in the company. Mutual funds reduced their holdings from 11.4% to 10.9% in the June 2022 quarter. Regular shareholders own 6.9% of the company.
An average of 10 analysts polled by MintGenie have a 'hold' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
