What does Panama Petrochem do?
According to the website, Panama Petrochem was established in 1982 and has four manufacturing plants across India. It is one of the leading manufacturers and exporters of more than 80 variants of petroleum specialty products. The products are vital for various industries like inks and resins, textiles, rubber, pharmaceuticals, cosmetics, power, cables and other industrial purposes.
Some of these products are Petroleum Jelly, Liquid Paraffin, Transformer Oil, Rubber Process Oil etc. These and other products are exported to different countries like USA, UK, Europe, Middle East, Australia, African Sub-continent and South East Asia etc.
The Company is owned and managed by the Rayani family. Mr. Amirali E. Rayani is the Chairman (Executive). Mr. Amin A. Rayani is the Managing Director & CEO. Mr. Hussein V. Rayani is the Joint Managing Director
The business model of the Company is well explained by the corporate video.
Nigel D’Souza of CNBC TV18 has also explained the fundamentals of the Company in a succinct manner.
The fundamentals of the Company are as follows:
Key Fundamentals
| Parameter | Values | ||
| Market Cap | (Rs cr) | 1,844 | |
| EPS – TTM | (Rs) | [*S] | 29.61 |
| P/E Ratio | (X) | [*S] | 10.30 |
| Face Value | (Rs) | 2 | |
| Latest Dividend | (%) | 300.00 | |
| Latest Dividend Date | 26 Aug 2022 | ||
| Dividend Yield | (%) | 2.62 | |
| Book Value / Share | (Rs) | [*S] | 106.78 |
| P/B Ratio | (Rs) | [*S] | 2.85 |
[*C] Consolidated [*S] Standalone
Financial Results
| Particulars (Rs cr) | Jun 2022 | Jun 2021 | % Chg |
| Net Sales | 551.79 | 551.38 | 0.07 |
| Other Income | 1.22 | 0.95 | 28.42 |
| Total Income | 553.01 | 552.33 | 0.12 |
| Total Expenses | 465.44 | 474.61 | -1.93 |
| Operating Profit | 87.57 | 77.72 | 12.67 |
| Net Profit | 64.58 | 58.07 | 11.21 |
| Equity Capital | 12.1 | 12.1 | – |
(Source: Business Standard)
According to moneycontrol.com, the 3 year CAGR growth of Revenue is 18.9%, Net Profit is 64.4% and Operating Profit is 43.6%. The Company is also debt-free.
Shareholding in Panama Petrochem
The promoters of the Company, namely the Rayani family, hold 70.36%. The public holds the balance of 29.64%. No Mutual Funds hold the stock.
Amongst the public shareholders, Ramesh Damani holds 6,36,379 shares comprising 1.27% of the equity capital. Anil Kumar Goel holds 7,60,000 comprising 1.52% of the equity capital.
Ramesh Damani’s investment in Panama Petro is worth Rs 20 crore while that of Anil Kumar Goel is worth Rs 24 crore.
An investment company known as AVIATOR GLOBAL INVESTMENT FUND holds 11,25,000 shares comprising 2.25% of the equity. The Fund is a self managed Collective Investment Scheme primarily investing in businesses in emerging markets like India. It scheme aims to invest in high growth companies benefiting from demographic and structural trends and will have a process driven stock selection process.
It is notable that Dolly Khanna and Madhukar Sheth were large shareholders of Panama Petrochem. However, both have now divested from the stock.
Research reports
There are no research reports available. According to moneycontrol.com, Panama Petro is a stock with good financial performance alongside good to expensive valuation, but lacks price momentum as suggested by technical indicators.
Investment rationale
Prima facie, it appears that Ramesh Damani and Anil Kumar Goel are impressed by the steady and consistent growth in the fortunes of the company as is evident from the 3 year CAGR growth in Revenue of 18.9%, Net Profit of 64.4% and Operating Profit of 43.6%.
The Company also offers a dividend yield of 2.62% which means that the downside is protected.
The products manufactured by the Company, namey, more than 80 variants of petroleum specialty products such as Petroleum Jelly, Liquid Paraffin, Transformer Oil, Rubber Process Oil etc are vital for various industries like inks and resins, textiles, rubber, pharmaceuticals, cosmetics, power, cables and other industrial purposes and have universal demand in India and abroad.
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