HIDDEN GEM STOCK – PACL – UP TO 165% GAINS

By | 24th February 2018

PUNJAB ALKALIES & CHEMICALS LIMITED

TARGET PRICE Rs. 60     CMP Rs.22.60     UPSIDE : 165%


The chemistry of excellence

BSE CODE 506852
Market Cap Rs.61.34 crore
52 Week High Rs.36.75
Face Value Rs.10
No. of Shares 2,70,68,644 (Fully paid)
Promoters 33.49%*

Others 66.51%**
*Zero Pledge Punjab State Industrial Development Corporation Limited
**17.35% by IDBI Bank 3.02%by IFCI 1.06% by Punjab & Sindh Bank 1.09% by Punjab National Bank 1.82% by LIC

Rationale
  • CAUSTIC SODA PRICE SHAVE RISEN 30% SINCE AUGUST 2017, HENCE PACL SHOULD REPORT DECENT PROFITS IN COMING QUARTERS.
  • From sick to healthy, a turnaround story. PACL loss for 9M have nosedived to 3.39 Cr vs 17.79 cr (Turnaround of 14.40 Cr) in view of rising Caustic Soda prices, demand and limited supply. And, trend is expected to be continued.
  • FY19E NP Rs.12 Crores.
  • Current market cap is just 20% (Rs. 62 Cr vs FY18E Sales (330 Cr).
  • PACL should report NP in Q4 as Caustic Soda prices are higher compared to Q3.
  • PACL is the beneficiary of the Punjab Government’s decision of disbanding the transport unions in the state of Punjab.
  • Disinvestment candidate: Few years back Punjab Government wanted to privatize PACL. If Disinvestment process is kicked off again; Stock price can go up Multifold.
Promoted by the Punjab State Industrial Development Corporation,
Punjab Alkalies and Chemicals(PAC)was incorporated as Punjab
Alkalies. Its name was changed to the present one in April 1993. In
January 1994, its caustic soda plant commenced operations. In Sep.87,
The company commission edits caustic soda concentration and flaking
unit, and in 1988, completed the changeover from graphite anodes to
dimensionally stable metal anodes in all the cells, and also installed an
anode control and protection device units caustic soda plan.

Caustic Soda Lye: Caustic soda is known as lye(liquid) or sodium
hydroxide. Lye (Liquid) is widely used in alumina refineries and in the
manufacturing.It is also a raw material for a large number of
chemicals used in the paper,textiles,dyes,refinery and other
industries. Considered to be the most common base in chemical
laboratories,caustic soda also finds use in the production of food
additive.

Caustic soda flakes: Caustic soda flakes mostly produced by Aditya
Birla Chemicals (ABCL) and for more details click here.

 

Products & Capacity:

 

  • CausticSoda 99,000MTPA
  • LiquidChlorine 87,714MTPA
  • Hydrochloric Acid 39,600MTPA
  • Sodium Hypochlorite 1750MTPA
  • Hydrogen Gas 277.20MTPA

FUTUREOTLOOK:

Sales
9M/FY18 238
9M/FY17 226
FY18E 330
FY19E 370
 
Loss/Profit
9M/FY18 -3.39
9M/FY17 -17.79
FY18E -1.00

FY19E 12

 
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