Equity Analyst, LightStream Research

Chacko Jacob

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

Oriental Carbon & Chemicals / Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/16821" target="_blank" data-smartkarma-citation="entities:16821:1">Oriental Carbon &amp; Chemicals (OTCC IN)</a> is India's sole producer of insoluble sulphur, a key compound used in the vulcanisation of rubber. With 70% of its revenue from exports, the company is also an important player in the global market with ~10% market share. In the last two years, the company has been on an expansion drive to increase capacity by 50% to cater to the growing demand globally. With stable raw material prices and demand, the company's revenue is primarily driven by volume and FX, to an extent. We think OCCL has placed itself well in this oligopolistic market to see steady growth for the next 2-3 years. </p><ul><li>Drive to increase radialisation within the truck and bus tyre segment is bound to increase demand since a higher amount of insoluble sulphur is required for high-performance tyres. </li><li>Brownfield expansion in Mundra offers proximity to ports that will help reduce logistics and fuel and power costs.</li><li>The expansion is in line with the expected demand growth of the commodity. </li></ul><p>Using our FY2019E EPS of INR 94 and FY2019E P/E of 16x we arrive at a TP of INR 1,504 which is a 7% upside in the medium term. </p>

Oriental Carbon &amp; Chemicals (OTCC IN) is India's sole producer of insoluble sulphur, a key compound used in the vulcanisation of rubber. With 70% of its revenue from exports, the company is also an important player in the global market with ~10% market share. In the last two years, the company has been on an expansion drive to increase capacity by 50% to cater to the growing demand globally. With stable raw material prices and demand, the company's revenue is primarily driven by volume and FX, to an extent. We think OCCL has placed itself well in this oligopolistic market to see steady growth for the next 2-3 years. Drive to increase radialisation within the truck and bus tyre segment is bound to increase demand since a higher amount of insoluble sulphur is required for high-performance tyres. Brownfield expansion in Mundra offers proximity to ports that will help reduce logistics and fuel and power costs.The expansion is in line with the expected demand growth of the commodity. Using our FY2019E EPS of INR 94 and FY2019E P/E of 16x we arrive at a TP of INR 1,504 which is a 7% upside in the medium term. 

As 1 of 3 Insoluble Sulphur Companies Globally, OCCL Well Placed to Ride Growth in Tyre Industry

India

Oriental Carbon & Chemicals Limited manufactures insoluble sulfur. The Company markets its products in India and worldwide through a network of dealers. Their product is available in various grades to cater to specific customer needs.

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Oriental Carbon & Chemicals (OTCC IN)

As 1 of 3 Insoluble Sulphur Companies Globally, OCCL Well Placed to Ride Growth in Tyre Industry

Oriental Carbon & Chemicals (OTCC IN) is India's sole producer of insoluble sulphur, a key compound used in the vulcanisation of rubber. With...

Chacko Jacob

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