Investment Idea : Narmada Chematur Petro.

NCPL - On the Right Track….
CMP : Rs. 38
Target Price : Rs. 70
Period : 10 - 12Months
Risk : Moderate to Low

Investment Guru recommends investors to invest in Narmada Chematur Petrochemicals Limited with a year’s perspective. The company is all set to deliver excellent performance and the stock price should reflect the same.

What makes NCPL a good buy ?
Narmada Chematur Petrochemicals Limited (NCPL) is an Indo-Swedish Joint Venture Company of Gujarat Narmada Vally Fertilizers Company Limited (GNFC), Chematur Engineering AB, Sweden(CEAB), IBI Chematur, Mumbai (IBIC).
The company has made its mark in the field of Speciality Chemicals. The main products of the company are Aniline and TDI. The company enjoys near monopoly in the filed of TD, not only in India but also in South-east Asia.

Aniline, a specialty chemical has varied uses as a vital raw material in rubber chemicals, dyes & dye intermediates, MDI and pharmaceuticals. Hence the company’s product is a raw material for the Auto industry as well as textile industry, both of which are expected to do well in the coming years, hence good demand for NCPL’s products.

The presence of NCPL in the area of Aniline assumes greater importance, looking at the fact that the demand for Aniline is likely to increase at the rate of 8% per year

The company run on backward integration modeland sources its feedstock from GNFC(promoter company).

The company is currently operating at 140 % of its rated capacity and has expansion plans in place to leverage the growing demand for its products.

The company plans to get into manufacturing many value added products based on its core product, Aniline. NCPL is also starting a Product Application Development Centre to work towards finding newer avenues related to Polyurethane from and other future products.

The company boasts of excellent financials. The turnover has jumped 45% in FY05 as compared to earlier years. The net profit rose by 150%.

At current price of Rs.39 the company is traded at a P/E of 5 times its FY05 EPS. Given the prospects for good growth in the current year, the stock is expected to be an outperformer and give handsome returns to the shareholders.

Happy Investing !

(Disclosure: Investment Guru has a long term position in this stock. Please read the disclaimer clause before investing based on any recommendation on this blog)

17 comments:

Rahul Munjal said...

Thanks for the suggestion. I came across just now and now markets have closed. Monday, i'm sure that i will take plenty of NPCL.

Thanks for the Idea. Hope it works and return a lot !!

Partha said...

Right now this stock is falling. Should i wait for it to stabilize or buy at the current levels.

Anonymous said...

i suppose u r right !

Anonymous said...

EPS April/June is only Rs.0.39.Still you recommend to purchase ? Please reply as i want to pick up in quantity tomorrow.Thanks.How I can register my name on your site?.
M.R.Kale

Rajesh Soni said...

Hi partha,
yes , the stock has fallen few bucks in last two days. However, since the recommendation is for a 12 months perspective, so it does not matter much as to one should wait for few more bucks to fall or not.

Rajesh Soni said...

Hi Mr. Kale,
The Q1 EPS is low due to a shutdowm for a period of 25 days for maintenance.
I am betting on the unique positioning of the company and the growing demand of its products.

This blog do not have any registration formalities. However, I am going to start a newsletter soon and at that time you can register for the newsletter.

Anonymous said...

Dear Mr.Soni,
Thanks for your comments.I visit your site daily.
Regards ,
M R Kale

Rahul Munjal said...

I bought 100 of them

Anonymous said...

Any1 got the refund from Syndicate Bank? Please inform here if u have any idea regarding the refunds.

Regards,
Rahul Munjal
Owner, IPOGuru@yahoogroups.com

Anonymous said...

Hi Rajesh
I regularly visit ur blod for wonderful ideas..I would be so nice of u ..if u can put some comments on coming IPO : HT Media.
Thanks
Sumit

Anonymous said...

Hi,

I have shares of Vijay Textile, there future extension plan is good, but somehow price is going down.

Can you please recomend what to do with this share

Anonymous said...

any1 got refund from syndicate bank?

Anonymous said...

I HAVE BOUGHT 200 AT RS.39.6.
SYNDICATE BANK THOSE YOU HAVE APPLIED ON LINE,HAVE RECEIVED REFUND TODAY.
M.R.KALE

Anonymous said...

NPCL - Added 900 again yesterday.Keep on adding atleast 100 per Rs.2 rise.Reagards
Kale

Anonymous said...

HI RAJESH,
I HAVE BOUGHT 200 SHARES OF NCPL. THANKS FOR THE SUGGESTIONS. ALSO AS SOME ONE SUGGESTED THERE I ALSO HAVE GOT 500 SHARES OF VIJAY TEXTILES LISTENING TO THEIR EXPANSION PLANS. IN THE MEAN WHILE THE SHARES GOT DIVIDED ADN AFTER THAT THE STOCK PRICE STARTED FALLING DAY BY DAY. CAN YOU PLEASE LOOK IN THE FUNDAMENTALS OF THE COMPANY SO THAT I CAN DECIDE WHETHER I SHOLD HOLD THE STOCK OR COME OUT OF IT.

REGARDS,
SATISH

Anonymous said...

next target is rs.45.It has come out of rs.37.5 to 39 level.

Derek Liskey said...

I do not think so.