Transpek Industry Limited 506687 : Buy at price of Rs 415-420 one year target price Rs 520

About Company : TRANSPEK Industries has grown to become one of the leading manufacturers and exporters of a range of chemicals servicing the requirements of customers from a diverse range of industries - Textiles, Pharmaceuticals, Agrochemicals, Polymers, etc..

Over a decade of presence in the international market, Transpek has earned for itself a name for being a quality supplier. TRANSPEK with its expertise in Sulphur & Chlorine chemistry and ability to undertake projects, involving Sulphonation, Acid Chloride Reaction, Friedel-Crafts and Esterification, is open to the option of custom synthesis & toll manufacturing.

TRANSPEK produces a broad innovative range of intermediates and fine chemicals in a multi-purpose plant at Vadodra.

. The company is pioneer into Thionyl Chloride Chemistry and currently largest producer of Thionyl Chloride & Acid Chlorides in Asia, outside Europe.

Financials:

	2016	2015	2014	2013	2012
Revenue	283.71	259.35	240.94	210.79	156.27
Other Income	3.87	3.47	7.35	3.44	4.45
Total Income	287.58	262.82	248.29	214.23	160.72
Expenditure	-236.96	-226.82	-217.68	-185.19	-156.14
Interest	-10.64	-11.66	-11.52	-11.4	-10.09
PBDT	39.98	24.34	19.09	17.64	-5.51
Depreciation	-8.3	-8.58	-7.22	-6.65	-6.97
PBT	31.68	15.76	11.87	10.99	-12.48
Tax	-10.4	-4.71	-4.67	-0.76	2.17
Net Profit	21.28	11.05	7.2	10.23	-10.31
Equity	5.87	5.87	5.87	5.87	5.87
EPS	36.24	18.82	12.26	17.43	-17.57
CEPS	50.39	33.44	24.57	28.76	-5.69
OPM %	17.84	13.88	12.7	13.78	2.93
NPM %	7.5	4.26	2.99	4.85	-6.6
Dividend-Rs	7.5	5	2.5	3	0

Fundamentals:

Book Value-Rs	155
Price /Book	2.72
P/E	11.5
M.Cap(19-8-2016)	247 crores

Investment positives:

 1. Consistent profit making and dividend paying company in commodity chemicals.

2. Company has delivered EPS of Rs 12 for Q-1-2016-17 mainly due to one  receipt of dividend  income of Rs 5.36 crores.

2. Promoters have recently increased there stake from 47.8% to 52.5%  in quarter ending June-2016.Also a buy back of share is also approved at max price of Rs 475 from open market which could increase promoter’s holding further by 5%to 6%.

3. Increasing  promoter holding is positive indicator for improvement in company’s future financial performance.

4. Share is available at a PE multiple of 11. 5 which is at attractive levels .EPS of company is expected to rise (though in Q-1 revenue growth was -10%) at conservative estimate  EPS of 40 in FY-16-17 with a PE multiple of 13 stock could touch new high of Rs 520.

Long term investor may invest in this stock on dips for decent returns.