PANAMA PETROCHEM LTD - BUY

Panama Petrochem is an Ankleshwar based manufacturer of specialty oil products promoted by Rayani family.Company having five manufacturing units in India located at Ankleshwar, Daman, Dahej,Marol and Taloja .Its total capacity is 105000 MTPA  for more than 80 products together.Recently company started a subsidiary in UAE - Panol Industries RMC FZE. Petroleum Jelly,Liquid Paraffins,Rubber Processing oil,Transformer oil,Cable Jelly,Knitting oil ..etc are companies major products.These products are widely used in industries like Cosmetics,Pharmaceuticals,Electrical,Cable Manufacturing,Textiles..etc.  Company selling various branded products for these industries.Panama Petrochem tied up with Germany based Lubcon Lubricant Consultants for developing new oil based products.Crude derivatives are the main raw materials for the company and the current  stability in crude price will help the company to protect its margins.Even at the time of higher crude prices,company successfully hiked its product prices to protect its margins to a certain extent.Now, many countries are exploring  opportunities to start/increase shale gas/oil production.This efforts may act as a check for sharp spike in crude prices going forward.

                                                      For the FY 2012 company reported a Sales of Rs.583 Cr and a net profit of Rs.31 Cr .On a small equity of Rs.8 Cr FY 12 EPS was Rs.39/- . Company is very liberal in dividend distribution too which paid 50 % each in past three years. It is almost a debt free company with a book value around Rs.260 .After hitting a 52 week high of Rs.250, now this stock is trading around at  its  52 week low price. Considering promoters’ experience in this industry ,expansion plans ,stability in raw material prices ..etc  recommending a  BUY @ CMP Rs.135/-

Link to company website HERE

Link to latest Annual Report  HERE