When one is researching a stock, the first port of call has to be the valuepickr forum. This is because the experts there have developed the salutary habit of digging deep into the innards of every stock and flushing out its dark secrets.
We saw in the case of two stocks, Kitex Garments and Vaibhav Global, of how the experts at the forum had raised several red flags which ultimately led to the downfall of these stocks even though some eminent value investors had expressed unbridled optimism in both stocks.
Fortunately, in the case of Oriental Carbon Chemicals Ltd, the experts at the valuepickr forum have issued a clean chit and not raised many red flags.
In fact, Ayush Mittal, the co-founder of the valuepickr forum, is one of the earliest discoverers of the potential of Oriental Carbon. It may be recalled that Ayush Mittal has been awarded the prestigious title of “Wealth Wizard” by Forbes for his stellar contribution to the World of stock research. So, one can be confident that he knows everything that is there to be known about researching stocks.
In an article of October 2011, Ayush Mittal pointed out that Oriental Carbon’s profits have grown at a CAGR of 74% and that the business is not cyclical in nature. After making several other salient points, Ayush concluded that “It would be tough to find manufacturing companies having 30%+ operating margins” and that the “current valuations seem to be a bargain”.
Well, Oriental Carbon was then quoting at Rs. 120. Today, it stands at Rs. 594 which means that Ayush Mittal is richer by nearly 400%.
Today, six years later, Oriental Carbon still retains its charm and continues to attract savvy and heavy-duty investors.
Anil Kumar Goel, one of our favourite stock wizards, is clearly smitten by Oriental Carbon. He held 158,000 shares as of March 2016. He has increased his holding to 165,000 shares as of June 2016. Seema Goel held 81,000 shares as of 31st March 2015. Her holding as of date is not known.
In addition, two heavy-weight mutual funds, L&T Prudence Fund and HDFC Small & Mid-cap Fund, have muscled their way into the stock and cornered 4.54% of the equity.
|ORIENTAL CARBON & CHEMICALS LTD – KEY FUNDAMENTALS|
|MARKET CAP||(Rs. CR)||612|
|EPS – TTM||(Rs.)||[*S]||49.98|
|LATEST DIVIDEND DATE||14 JUL 2016|
|BOOK VALUE / SHARE||(Rs.)||[*S]||277.76|
Why Oriental Carbon is so alluring to the savvy investors has been explained by Daljeet Kohli in his latest initiating coverage report.
Daljeet has made four crisp points which sums up the entire story of Oriental Carbon:
(i) OCCL is the third largest player in insoluble sulfur manufacturing after Solutia Inc, USA a subsidiary of Eastman Chemicals, USA and Shikoku Chemicals Corporation, Japan;
(ii) The current market share of OCCL across the globe is 9% and 60% in Indian market;
(iii) OCCL will be the beneficiary of the rising demand of Radialized Tyres especially from the Commercial Vehicles segment in India;
(iv) OCCL’s capacity expansion along with entry in North American market along with adding new larger clients is another catalyst for the stock.
Daljeet has foreseen a target price of Rs 700 for Oriental Carbon which means that hefty gains are in the offing.
Karvy has also conducted an expert analysis of Oriental Carbon and recommended a buy. Karvy has emphasized that Oriental has an “entry barrier” and that the “capital intensive business with high technology barrier coupled with long approval processes of tyre manufacturers acts as a deterrent for entry of new manufacturers”.
SKP Securities is also gung ho about Oriental Carbon’s prospects. It has recommended a buy on the basis that “With radialisation of tyres for commercial vehicles yet to start in India, domestic demand for IS is likely to grow faster than tyres” and “OCCL is incrementally enjoying a favourable market positioning as the ‘Second Alternate Supplier’ in global markets; particularly in the West”.
The stock has also been meticulously analyzed by Vikrant Yadav who appears to be an expert in the field. After a lot of number crunching and analysis of facts, Vikrant Yadav has concluded that “OCCL has a unique business with guarded technology. OCCL’s ability to become a significant player in such a niche market makes it an attractive proposition. The current valuations are cheap and possibility of permanent loss of capital is significantly low.”
So, the unanimous opinion of the experts makes it clear that the shareholders of Oriental Carbon will have a lot to be cheerful about in the foreseeable future!