OCCL is among the top three players globally (10% market share) and the market leader domestically (60-65% market share) in the production of Insoluble Sulphur (IS). Ithas a marquee customer base and is well positioned to benefit from this oligopolistic market. Margins continue to remain robust and its balance sheet is very strong with low debt and healthy cash surplus. IS demand looks set to increase with growing radialization, growth in tyre industry and reduced imports. OCCL, being the largest manufacturer of IS in India, is set to benefit encashing the increased demand and has already put capacity expansion plans in place. We expect revenues and PAT to grow at a CAGR of 9% and 11% respectively over FY19-21E. We maintain BUY with a target price of Rs. 1343.
OCCL is among the top three players globally and the market leader domestically in the production of Insoluble Sulphur (IS). It is well positioned in an oligopolistic market with marquee customer base, robust margins,strong balance sheet and cash surplus. With reduced tyre imports and growing radialization, the domestic tyre industry is expected to grow which would lead to increased demand for Insoluble Sulphur. We have introduced FY21E numbers and with OCCL encashing the increased demand, we expect revenues and PAT to grow at ~9% and 13% respectively. We maintain BUY with a target price of Rs. 1343.