Can Bodal chemicals share become multibagger stock

 Can Bodal Chemicals Stock become Multibagger stock

Bodal Chemicals is such a company which is not discussed much in the Indian stock market. There are very few investors who would be aware of the Bodal Chemicals Company stock. A company in the commodity chemical sector that has the potential to deliver multibagger returns. Let us understand how bodal chaincials share can give returns in the coming time.

Bodal chemicals Business Model:

Bodal chemicals is a fastest  growing company in the sector of manufacturing dye stuffs & dye intermediates . Lets understand the different  range of the products of Bodal chemicals  company  is producing  it include Complex Dyes Acid, VS Based Dyes, H Dyes,HE Dyes,M Dyes , Direct Dyes,Acid Miling Dyes,Metal and Bifunctional Dyes etc . Also Company Has Water purification division which is working very good.  Company dyes has demand in the textile sector, Leather sector, Pharma sector, Paper, Plastic,  Water purification etc.

At present,  Company has  total 11 Manufacturing units in operation in different states of India like Ahmedabad, Vadodara,Ankleshwar ,Bay of Kambhat, & Punjab.

Bodal Chemicals  having its presence not  limited to India but across the Globe and serving to 50+ countries with its Innovative products and services.

Fundamental Analysis and recent past Development in Bodal Chemical ltd:

Nearly 2 years  back,  Bodal chemical had  announced its diversifications into benzene- based downstream products &  also did capacity addition of Sulphuric acid and its derivatives.  In the year 2020, company has started this project with the worth of rs360 crore which was expected to complete sept 2022. In this project, Company had invested rs180 crore into Benzene-based products and rest of the amount nearly rs125 had invested into Sulphuric acid derivatives. The revenues potential was expected to be rs 450 crore. Nearly 20% to 30% of the new products contemplated utilized for captive use.

Company was expecting 15% to 19% EBITDA margins after this project. The cost of this project was funded from internal accruals nearly rs100 crore.

Due to this expansion, Company was expecting exceed supply in domestic demand. Company had main focus on Agrochemical as well as on Pharma sector. Aarti Industry is competitor of Bodal Chemicals Company. Aarti Industry had also increased the NCB capacity by 108.000 tonnes.

This expansion was good opportunity for the Bodal chemical company.

Even after this project Bodal chemical company has Debit to equity ratio nearly 0.44X which is not bad.

  Positive Points for Bodal chemical from this recent Development:

•          Demand of company product will increase
•      More demand will rise from Agrochemcial & pharma sector for Benzene based Products.
•        MNC companies will have more focus on Bodal chemical products because after Covid 19 more MNC companies were looking to reduce dependence on china.
•          Indian government had also given some incentive to Commodity chemical sector in the past and it is expected to be continuing in near future too.
•          New CAPEX will play out in FY23 onwards which is very good news for Bodal checmical
•          Dynamics of dyestuffs industry will drive earnings in the interim
•         Company dependence on China will be limited for raw materials like J acids, Tobias, cyanuric chloride

 Valuation of Bodal Chemical Share:

 Before this project Bodal chemical stock was trading at reasonable valuations nearly 7X of FY22 earnings and now we are expecting good growth in FY23 earnings. We are expecting premium valuations in Bodal chemical stock in FY23 due to its integrated business model as well as due to its recent completed CAPEX. Investors having capacity to hold Bodal chemical stock for medium to long term point of view, They should expect very good returns into Bodal chemicals share in the coming months. 

 

Overview of Bodal chemicals:

 Stock name: Bodal Chemicals

Bse Code: 524370

NSE symbol: Bodalchem

CMP: 71.10rs ( Closing Price, Date 31/01/2023)

Sector: Commodity Chemicals

Exchange trade: NSE/ BSE (Both)

Face value:  2

52 weeks High: 121.70rs

52 weeks low: 70rs

Market cap: 890cr

Dividend yield: 1.1%

P/B: 0.85

P/E: 10

Industry P/E: 27.5

Promoters holding:  57.47%

 

 Financial Performance of Bodal Chemicals Stock:

 If we will check past results of Bodal chemicals then company had generated total revenues of 1142cr in the year of 2018 which had increased in the year 2022 and reached at level of 2050cr. Similarly, Company had reports net profit of 98cr in the year of 2022 which bit lower as compared with year 2018 i.e 124cr which not a surprise because we have already discussed that company added capacity in the year 2020. Debit to equity ratio is at 0.55 which also bit higher due to last CAPEX.  In FY22 EPS was 8.79rs. expected EPS in FY23 is around 10 or higher subject to the company coming quarter results.

What is a long term Price target of Bodal chemicals share?

 Bodal chemical stock has potential to become multibagger stock in the coming months or years. Currently, Bodal chemicals share is trading around 71.10rs which is near to its 52 weeks low and the reason behind is that company had done some investment to diversify its business but now company has completed its CAPEX and as per company management, revenues of the company will increase in FY23 and company is expecting very good profit in the coming quarters and annual results. Demand of company product is also high into the Indian market.

If investors want to buy Bodal chemical stock for medium to long term point of view then Price target of Bodel chemicals can be around 140rs+. It is better to start accumulate the stock at current market price of 71.10rs. We are bullish on Bodal chemical stock for medium to long term investment point of view.

 Technical call on Bodal Chemical share:

We know that we have different type of website viewers, some are long term investors and others are short term traders too. So we will give some good technical levels for traders.

 Buy Bodal chemical share:

If Bodal chemical share trade above 75.85rs and gives close above this price levels then short term price target for bodal chemicals will be around 84rs to 86rs+

If bodal chemical stock gives close above 87rs then we may see sharp up move into the stock which can take bodal chemicals stock upto the price level of 100rs to 110rs in very short term.

 Short term Trader should keep stoploss of 60.80rs on closing basis

 Long term investors should use any dip for adding Bodal chemical stock for long term investment point of view. Long term investors can keep stoploss of 51.80rs on closing basis in any worst condition of the market.

Disclaimer:  Please do your own research before making any investment. We are holding this stock into our portfolio.