Should you invest in Himadri Speciality Chemical – HSCL – 2017 ?

Himadri Speciality Chemical makes coal tar by-products like coal tar pitch (CTP), creosote oils, naphthalene, carbon black and advanced carbon materials. It is the largest manufacturer of CTP in India, with a market share of 70%. The main product made out of coal tar is coal tar pitch (CTP) that is used in making aluminum and graphite.

To scale up its value chain, it has started producing value-added products like carbon black (from creosote oil), SNF (sodium naphthalene formaldehyde) from naphthalene and advanced carbon materials from CTP. It is among the leading manufacturers of carbon black in India, with a production capacity of 120,000 tons per annum (TPA). It is focusing on introducing new value-added specialty chemicals with niche applications, such as advanced carbon material, to improve realizations.

Revenues increased 43% year-on-year (y-o-y), from Rs291 crore to Rs415 crore in the March 2017 quarter. Net profit increased 353% y-o-y, from Rs6.71 crore to Rs30.4 crore. The stock is expensive at a price-to-earnings ratio of 30.98, but the March 2017 quarter results were very good and growth may continue.