**IOL Chem** – Q1 FY21 (Unaudited – Cons.)
CMP: 780

Total income from operations 460.1 Cr
492.8 Cr (-6.51%) YoY | 441.5 Cr (4.32%) QoQ

Year ending revenue: 1,894 Cr Vs. 1,685 Cr (12.40%)

Net Profit of 127.5 Cr
85.3 Cr (49.41%) YoY 90.2 Cr (41.13%) QoQ

Year ending Net profit: 361.2 Cr Vs. 237 Cr (52.31%)

EPS (in Rs.) 22.30
15.00 YoY | 15.74 QoQ

Year ending EPS: 63.38 Vs. 41.61

View: Result is overall good. YoY revenue declined but bottom line improved and EBITDA also improved in this quarter.

**Business Updates & Highlights**:

Q1FY21 EBITDA is around INR 157.9 Cr Vs. 147.9 Cr in Q1FY20 therefore up by 7% in YoY. EBITDA margin in Q1FY21 was 34.3% Vs. 30.1% in Q1FY20.

Segment wise business performance chemical business contributed in topline in Q1FY21 was 32.8% and topline declined by 21.3% and bottom line up by 11% in YoY. Drugs business contributed in topline was 66.3% and topline up by marginally around 1.7% and bottom line for this segment was up by 4.6% in YoY.

The Company has successfully set up a new Unit-VII to manufacture Metformin with an installed capacity of 7,200 MT per annum. The Metformin is primarily used for the treatment of diabetes.

The Company already has manufacturing facilities of Metformin (Unit-IV) with an existing installed capacity of 4,000 MT per annum. With the installation of Unit VII, the total manufacturing capacity of Metformin has now increased by about 3 folds at 11,200 MT per annum as compared to existing capacity.

The new manufacturing Unit-VII has been set up with the capex of about Rs 28 Crore, which has been funded fully through internal accruals only.

**Financial**
ROE and ROCE is around 69% and 55% respectively and book value per share is around INR 138 and share is currently trading at 5.7x of its book value. Company is currently trading at annualized PE of around 10 which is fair as per Industry benchmark. Promoter holding in the company is around 43.7% which is strong and stable and increased by more than 1.8% in this quarter. FIIs hold around 6.5% in its increased by more than 3.8% in this quarter. The good thing is company is virtually debt free now and within two years company was able to achieved this milestone.

Position: Share strong support price is INR 595. Long term investors should continue with the company with possible target of INR 1000.

**Share View**: Share price high 830 (52 week) and now 780. IOL chemical is one of the leading APIs/ bulk drugs Company and is significant player in the specialty chemicals space with world class facilities. IOLCP has wide presence across major therapeutic categories like, Pain Management, anti-convulsants, anti-diabetes, anti- cholesterol and anti-platelets. IOLCP’s product portfolio includes APIs; Ibuprofen, Metformin, Fenofibrate, Clopidogrel, Lamotrigine, Pantoprazole and specialty chemicals such as Ethyl Acetate, Iso Butyl Benzene, Mono Chloro Acetic Acid and Acetyl Chloride.

**Opportunities**

Company is World’s largest producer of the Ibuprofen with an installed capacity of 12,000 TPA and having backward integrated manufacturing facility. The Company has DSIR approved R&D which is fully equipped to validate existing processes. IOLCP’s overseas customers are spread out across several countries; products are sold primarily to Branded Generic formulators both in India & Overseas. Share has given strong breakout and given their robust financial share has delivered around 360% return in last 4 months and reached their all-time high. With reasonable PE and valuation and strong business model the more has also to be come. As per the recent report The government is also considering increasing the import duty on APIs to 20-25% from the current 10% to help boost local manufacturing of the bulk drugs which will give direct benefit to IOL chemical which is significant player in this field.

**Risk**
Subdued topline growth and even negative growth in YoY and marginally up as compare to QoQ. IOL chem heavily concentrated on few APIs.

Disclaimer: Views are shared based on market research and study and personal in nature. Others can take the different view and opinions. Please do the thoroughly study before enter or exit the shares.
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