Ashok Alco-Chemical Ltd - Is it a hidden gem ?

What is your opinion about Ashok Alco-Chemical Ltd ?

Ashok Alco - chem Limited (AACL) was incorporated as a Public Limited Company on 18th November 1992 under the Companies Act, 1956 in Maharashtra. The Company was promoted by the Kadakia family for manufacturing and marketing of Industrial Alcohol, Acetic Acid and other downstream products like Ethyl Acetate for industrial use in pharma, ink, paint, adhesive, resin, flexi packaging, perfumery and many other industries.

Shri. Manilal H.Kadakia, the patriarch, freedom fighter, fondly called ‘Papaji’, was the founder Chairman having several decades of business experience in Cotton Trade and various other Chemical Companies.

The manufacturing facility was set up at Mahad MIDC, Maharashtra which is 170 kms from Mumbai and offers excellent logistics facility being very close to JNPT port terminal. The plant is spread over a land area of about 28000 sq.mts. Apart from this, the Company also has a residential plot ad-measuring 2438 sq.mts and buildings for residential quarters for its employees.

The Company’s plant is one of the leading alcohol based facility currently having installed capacity to produce 13,000 MTs of Glacial Acetic Acid, 30,000 MTs of Ethyl Acetate and 10,500 MTs of Acetaldehyde per annum.

Apart from the manufacture of Chemicals, the Company also commenced trading in some mineral products mainly for exports from the year 2009 which has given a substantial boost to the top line figures and a ramp-up in revenues as well as profitability.

Market Cap 72 cr
PE 4.71
CMP 157
Book Value 97

TTM Sales 356 cr
OPM is 6.70% (rising)
Equity 4.60 cr
Short term Loan 0
Reserves 28.7 cr

52 weeks low Rs 92.

Listed only in BSE.

Technical Chart
https://www.google.com/finance?chdn...q=BOM:524594&ntsp=0&ei=RsruVoGIJ8nauwSEn6SQDA

 

good pick guruji
pe 5 -less debt -chemical business

 

Sales is very higher than Market Cap itself. Dividend shows they have real cash.

 

Oops !! Sales of Ashok Alco Chemical Ltd is falling in every quarter. Stock price has tumbled 15% today after poor results.

Whats going on?

Nothing, they have stopped trading business and focusing on their own manufacturing. Stock will be available at dirt cheap price now. TTM EPS is likely to become 8-9 in coming quarters. Which means it might trade at around Rs 50 but that will be a great price to enter.

Don't forget this one.

CMP 110

 

HI Guru Sir,

I have invested heavily in this counter @ avg price of 124.

Pls let us know ur vies on this.Still can i average it or exit.

ur views help me a lot.

Thanks,
GKJ

 

why stopping trading division?

 

Dear GKJ,

You see, annual EPS is definitely going to decline to Rs 8 (approx). So if we consider the PE of 6 the Price will be around Rs 40 - 42. But since they are now more focused on self manufactured products, the core business will continue to grow.

Personally I am just waiting for the price of Rs 50 within 2 quarters and that will be a good chance to enter the stock. Why Rs 50 as a buy price ? Because I am also expecting NIFTY to cross its all time high by the end of this calendar year which will be followed by a super bull run. That will make the markets mad and valuations go crazy. That will be a turnaround phase for Ashok Alco-Chem.

Technically, the stock is oversold and may bounce back above Rs 100 which will be followed by another dip deeper than 86.

I hope I have answered your question.

CMP 88 (26 Aug 2016)

 

@GKJ Bounced back, should move beyond Rs 100 soon. You can sell then.

 

@Guru Vachaal : What's your opinion now on Ashok Alco? Now as Nifty has touched it's all time high, would you still recommend to wait for price of 50?