From 1 lakh to Rs 5 crore in 10 years: This sector produced over 55 multi-baggers

Hopes of strong demand along with China+1 tailwinds, opportunity in contract research and manufacturing services (CRAMS) and import replacement prospects may continue to support the chemical sector which has produced over 55 multi-baggers in the past 10 years.

With a rally of 53,684 per cent, Jyoti Resins & Adhesives emerged as the top gainer in the list. Shares of the company have advanced to Rs 4,383.40 on September 6, 2022, from Rs 8.15 on September 6, 2022. This means an investment of Rs 1 lakh in Jyoti Resins in 2012 would have turned to over Rs 5 crore at present.

It was followed by Sadhana Nitro Chem (up 25,826 per cent), Paushak (up 17,505 per cent), Fineotex Chemical (up 13,731 per cent), Alkyl Amines Chemicals (up 13,257 per cent) and Deepak Nitrite (up 12,019 per cent).

Elara Securities is bullish on India’s chemical sector due to strong CRAMS and fluorine chemicals prospects and huge import replacement opportunities. The brokerage recently initiates coverage on Aarti Industries with a target price of Rs 1,088, indicating an upside of 29 per cent from the current market price of Rs 843.25.

It is also positive on SRF (Target price: Rs 3,085), Gujarat Fluorochemicals (Rs 3,809), Navin Fluorine (Rs 4,821) and Atul (Rs 10,614). Elara Securities believe that these five chemicals firms in this sector to post a revenue CAGR of 20 per cent over FY22-25E with an average EBITDA margin of 26 per cent.

Among the other major gainers, Balaji Amines, Navin Fluorine International, Dharamsi Morarji Chemical, Nikhil Adhesives, Aarti Industries, Vishnu Chemicals, Vinati Organics, Tanfac Industries, Mangalam Organics, Tinna Rubber And Infrastructure, Indokem, Atul, Alufluoride, Thirumalai Chemicals, Privi Speciality Chemicals, Lords Chloro Alkali and Amal also soared between 2,000 per cent and 5,000 per cent since September 2012.

Market watchers believe that fluorine molecules are gaining traction on the increased biological activity of agrochemicals and pharmaceuticals and new high-growth applications (solar PV, batteries, fuel cells and electrolyzers). SRF, Gujarat Fluorochem and Navin Fluorine are major fluorine firms. The global fluorine chemicals market is projected to be at around $8 billion over FY22-27. It comprises around $1 billion in fluorocarbons, $5 billion in fluorine demand in pharmaceuticals and agrochemicals and $2 billion in fluoropolymers. On the other hand, CRAMS opportunity to generate $58 billion in demand globally in the next five years.

Data further highlighted that as many as other 33 stocks on the list soared between 500 per cent and 2,000 per cent in the past 10 years. Some of the stocks in the list include Nocil, Punjab Alkalies & Chemicals, Diamines & Chemicals, Oriental Aromatics, Ganesh Benzoplast, Indo Borax & Chemicals, Oriental Carbon & Chemicals and Lime Chemicals.

Prabhudas Lilladher also initiated coverage on Jubilant Ingrevia (Target price: Rs 830), pivoting around acetyls and radically shifting to speciality. “Jubilant Ingrevia and Laxmi Organic Industries have large common business interests as both generate more than 50 per cent revenue from acetyls (ethyl acetate, acetic anhydride etc.) and fuel-grade ethanol. They also plan to scale their presence in speciality chemicals (diketene derivatives, fluorochemicals and others),” the brokerage said.