Thirumalai chemicals – multibagger stock for 2016?

According to Dynamic Levels Researchers, ThirumalaiChemicals belongs to the multibagger group for the year 2016. The stock has strong fundamentals and the analysts are optimistic that it would give high returns. After Budget, it has consistently been a top performer and has shown a positive price

Quarterly results:

The total income from operations slumped by 26 per cent. In the current June quarter it stood at Rs. 167.94 cr as compared to Rs.227.04 cr in the same period last year.

The Net Profit fell by 13.8 per cent in the current June quarter and stood at Rs. 15.48 cr as compared to Rs.17.96 cr in the same period last year. However, since Dec, 2015 quarter its net profit has shown an upward movement. Therefore, the company is showing positive growth.

Products:

• Phthalic Anhydride
• Maleic Anhydride
• Malic Acid
• Fumaric Acid
• L(+) Tartaric Acid
• Speciality Chemicals
• Diethyl Phthalate (DEP)

The impact of some of the products of Thirumalai chemicals on various sectors:

• : The primary use of phthalic anhydride is that it acts as a chemical intermediate in the production of plastics. Plastic industry is contributing majorly to the economy growth of many sectors like Auto, Infrastructure, Textiles, Pharma and the list is long.
• Maleic anhydride: Around 50 per cent of world maleic anhydride output is utilized in the manufacture of UPR – unsaturated polyester resins. Chopped glass fibers when added to UPR it produces fibreglass reinforced plastics which are utilized in pleasure boats, automobiles, tanks, bathroom fixtures and pipes. Thus, it caters to many sectors, Auto being one of them.
• Fumaric Acid: It is used as a food additive, as an acidity regulator. Fumaric Acid is generally used in beverages and baking powders, thus catering to the Beverage sector. It also contributes to the Pharma sector as it has medical benefits as well. It activates the primary cellular defense against the cytotoxic effects of oxidative stress.
• Speciality chemicals: These provide a variety of effects on which many sectors like chemical, textiile, pharma,etc. rely. Some of the categories of speciality chemicals are agrichemicals, adhesives, construction chemicals, textile auxiliaries and the list in endless. Other industrial sectors such as automobile, aerospace, cosmetics, food, agriculture, textile manufacturing, industries are also highly dependent on such products.

Conclusion:Thirumalai Chemicals is serving to big developing sectors like Chemical, Pharma, Textile, Auto,etc. This makes the stock a multibagger stock. Moreover, it is trading at a P.E. multiple of 17.72 as compared to the chemical sector P.E. which approximately stands at 25. This makes the stock a cheaper bet than other companies in the sector. Also, the scrip has consistently remained a top performer after Budget and has shown a positive price movement in the past one month. The Dynamic Levels Researchers recommend a buy in Thirumalai Chemicals with a target of 650.

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