If you’re looking for the best specialty chemical companies, here are four to consider. These companies are Atul, Johnson Matthey, Vinati Organics, and Alkyl Amines Chemicals. They are ranked according to their financial performance. In addition, they have moderate debt levels. So which one is right for you? Read on to find out. We’ve also included the companies’ RoCE, which measures their profitability.
Atul
Atul Ltd is a Gujarat-based integrated chemical company that manufactures and distributes 900 products and 400 formulations. It has a diverse range of products that serve industries across 90 countries. It has subsidiaries in China, Brazil, and the UAE, and serves nearly four thousand customers from around the world. The company’s products are sold through a global distribution network, with its top 10 customers contributing 11% of its total revenue in FY21.
However, there are a few things to consider before investing in Atul Ltd stock. The company’s divisions are relatively underperforming, including its date palm division, which has a long gestation period and a high product concentration risk. Atul’s profitability is also sensitive to fluctuations in the price of international crude oil, but this has been proven to be stable over time. Despite these challenges, investors should not be discouraged from investing in Atul, as there are many other high-quality companies on the market.
Vinati Organics
Vinati Organics Ltd. is a leading Indian manufacturer of specialty chemicals. Its range of products includes aromatics, monomers, polymers, and specialty products. With its technological know-how from its association with the Institut Francais du Petrole (IFP) and Saipem, it has been able to develop innovative products. Vinati Organics is a globally recognized company, with products exported to over 35 countries.
The specialty chemical sector has been a multibagger since 2020, and investors should look for stocks that are preparing for macro-favorables in a long-term fashion. To be a leader in this industry, Indian companies should focus on building multi-product offerings, pursuing M&A, and developing organizational capabilities. Some of the best companies to invest in include Vinati Organics and Aarti Industries.
The company’s earnings growth is accelerating as it continues to expand into new markets. It is confident that its product portfolio will increase by 20% and double by FY2021. The company also has strong export exposure for ATBS, which is used in paint emulsions, paper coatings, and detergents. Analysts expect revenue growth to reach more than 20% in FY22. It has sold out its capacity through May 2021, so the future outlook is bright.
Alkyl Amines Chemicals
The company ranks among the top 10 specialty chemical companies in India. The company’s top-line growth has exceeded expectations, while its operating margins have improved significantly. Its products are used in a variety of industries, including agro-chemicals, specialty chemicals, and amines. Its strong traction in these markets has resulted in a large jump in the stock’s P/E multiple, which has climbed to more than 30 times forward earnings.
Other specialty chemical companies include Deepak Nitrite, Aarti Industries, Vinati Organics, and Balaji Amines. These stocks have experienced huge gains over the past decade. Over the past eight years, their shares have risen more than 1,000%. While these companies are largely capital-intensive, they have modest debt levels and moderate revenue growth. If you are able to hold onto these stocks, you’ll be rewarded with a large return on your investment.
Johnson Matthey
Having more than 205 years of experience in the chemicals sector, Johnson Matthey has a lot to offer investors. The company’s origins date back to 1817 and its products range from precious metals to fine chemicals and process technology. It has three major business divisions: Environmental Technologies, Precious Metal Products, and Process Technology. These divisions serve the oil and gas industry, the automotive industry, and the environmental sector.
This investment by Jefferies is expected to increase the scrutiny placed on Johnson Matthey CEO Liam Condon. Condon, who took over the role of chief executive in March, is currently reviewing the company’s strategy and is scheduled to provide an update to investors on 26 May. Condon has said that he intends to focus on decarbonisation, hydrogen technologies, and circularity in his role as chief executive. He has also said that the company will focus on selling specialty chemicals to pharmaceutical companies.
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