Chemical stocks portfolio in 2020 for long term

Portfolios > Submitted by munna on 4/18/2020 | Views: 672

Here is going to be my chemical stocks portfolio or basket for 2020. Seeing how China is being cornered indirectly now, there are chances that once Covid cases will ease, a lot of countries will try to avoid China.

Japan has already given huge financial help to its companies to shift their manufacturing location from China to other countries. Seeing skilled and cheap labor combined with population and favorable government, India is bound to do well.

Chemical companies are bound to do well as they will directly get benefited from closure and cornering of China, apart from that these companies are proxy to FMCG, and Pharma companies (Now, USA and other countries are favoring India than China and other countries), these are every green consumption stories. So a long runway are there for Indian pharma and chemical companies.

I have following chemical companies basket for long, my focus is
- zero or low debt company
- with high promoters holding
- promoters with no corporate governance issue
- diversified product range
- available at decent valuations.

Though there are few more good companies but either they are with high debt or question mark on their Corporate governance so I have filtered them.

Please do write your feedback or comments.

Portfolio companies (6)

NamePriceDate
1. ATUL LTD. (Specialty Chemicals) 4246.0000 4/15/2020
Proven company, has already compounded well in last decade and still a lot of room left. Strong balance sheet. Almost zero debt company, diversified products range. Its products are consumed in Aromatic, Bulk Chemical and Intermediates, Colors, Crop Protection bulk and retail, floras, Pharma and Intermediates, Polymers materials and retail. It has around 900 product range available at 19 PE. Very reasonable valuation and still good potentials to become a good compounder for next few decades.
2. Fine Organic Industries Ltd (Specialty Chemicals) 2137.0000 4/15/2020
One of the recently list company with diverse range of products catering to Plastic, Food, Rubber, Cosmetics and Pharma, Paint and Inks, Textiles, Specialty applications. Market cap of 6200 cr and available at 40 PE. As its products caters to various industries and various sectors so I feel this can also be a good compounder.
3. Galaxy Surfactants Ltd (Specialty Chemicals) 1301.0000 4/15/2020
Still a young company available at 4500 cr market cap, listed few years back available at 20 PE. Though it has some debt however the product range and growth drivers are visible. Its chemical (surfactants) are used in Skin care, Hair care, Sun care, Oral care, Baby care, Home care products. Its a proxy to FMCG companies. Good potential to give compounding returns in long term.
4. PI Industries Ltd (Agrochemicals) 1407.0000 4/15/2020
Another proven company with very dynamic management. R&D is a continuous work here. Innovation to the core. Mainly focus on agriculture sectors and are into Insecticides, Fungicides, Herbicides and some specialty products. Though it is not cheap in terms of valuation (39 PE), however the quality comes with the cost. Almost zero debt company.
5. TRANSPEK INDUSTRY LTD.-$ (Commodity Chemicals) 1407.0000 4/15/2020
One of cheaply available great company with market cap of 766 cr, available at 10 PE. D2E is .46, was used for capex and another capex is planned in FY 2020-21. 10 years Long term contract with DuPont USA, so demand side is not a a problem, as per some unconfirmed news DuPont is using its product to manufacture PPE and other Corona related products. Shroff family is know to be chemical leaders and trustworthy promoters. Already a compounder in last decade and a lot of fuel left for next compounding. Diversidfied product ranges, will benefit from China issue too.
6. VINATI ORGANICS LTD.-$ (Commodity Chemicals) 877.0000 4/15/2020
Leadership position in few chemicals that it produce, its quality is better than other companies even outside India. China is not a competitor but importer of its product. Its competition in USA recently closed. Few products are in R&D, once successful will give very good push in its products and productivity. Proven, trustworthy management, zero debt company.
Submitted by munna on Saturday, April 18, 2020

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