DSIJ Mindshare

Stock Pick From Chemical sector

This section gives a recommendation of a stock having stock price below Rs 100 with sound fundamentals and expected to give handsome returns over a one-year time horizon..                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          





HERE IS WHY

Received nod for sale of 10 products in the

US market
Strong financials

Attractive valuations

INDO AMINES

THE CHEMISTRY OF GROWTH

Indo Amines is engaged in the manufacture of organic and inorganic chemical compounds. The company's geographical segments include India and the rest of the world. The company manufactures fine, specialty and performance chemicals providing a package of products and technical services for Indian and global markets. It also develops and supplies perfumery chemicals and active pharmaceuticals ingredients. Indo Amines' product range includes aliphatic amines, aromatic amines, aliphatic nitriles, aromatic nitriles, halides, alcohols, fatty acids, fatty amides, fatty tertiary amines, fatty poly amines, cycloalkanols and cycloalkanones. The company has manufacturing sites, located at Vadodara, Dombivali, Rabale and Dhule.

Indo Amines has received approval for 10 of its products from the US environmental protection agency for sale in the US market. The board of directors of the company has acquired 100 per cent stake in Classic Oil, which has now become a wholly-owned subsidiary of Indo Amines.

Indo Amines has put up strong financial performance in the last five financial years. The company's topline increased 5.51 per cent CAGR in FY12-FY16. Its EBITDA was 15.64 per cent CAGR in last five fiscal years. Indo Amines' bottomline also boosted 17.77 per cent CAGR in FY12-FY16.

On the financial front, Indo Amines' revenue increased 4.39 per cent to Rs.185 crore in 9MFY17 as compared to the same period in previous financial year. The company's EBITDA too rose 48.12 per cent to Rs.21.7 crore in 9MFY17 on a yearly basis. Its net profit also boosted more than three times to Rs.6.75 core in 9MFY17, as compared to the same period in the previous fiscal year.

On TTM basis, Indo Amines' revenue increased 14.88 per cent to Rs.266 crore on YoY basis at the end of December 2016. The company's EBITDA also rose 26.11 per cent to Rs.35.71 crore. Its net profit boosted 49.73 per cent Rs.12.67 crore on a yearly basis at the end of December 2016.

Indo Amines has cut down its total debt-to-equity ratio to 1.01x in FY16 from 1.14x in FY15. The company's interest coverage ratio stood at 4.59x in FY16. The company's ROE and ROCE stood at 19.20 per cent and 19.18 per cent in FY16, respectively.

On the valuation front, the share price of Indo Amines is trading at trailing 12-month (TTM) PE of 26.08x as compared to peers such as Chembond Chemicals (72.45x) and National Peroxide (31.78x). At the same time, the company's PE is trading in line with industry PE of 26.13x. We recommend our reader-investors to BUY the stock.

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