Best small-cap chemical stocks

Best small-cap chemical stocks: Chemistry is a field of science that studies the most basic elements of life. atom. These elements form the building blocks of everything we see around us. Research and development in this field has allowed humans to create innovative products that can avoid serious diseases or create reliable products that last a lifetime.

Best small-cap chemical stocks

Today we’ll take a look at some chemical manufacturers that specialize in niche chemicals. We selected small-cap stocks with high growth rates and high returns. We will look at when these companies were founded and what markets they serve. So let’s take a look at the most recent annual earnings and current valuation.

Best Small Cap Chemical Stock #1 – Precision Organic Industries

Fine Organics is a small-scale oleochemical manufacturer based in Mumbai. The company was founded in 1970 by Mr. Ramesh Shah and Mr. Prakash Kamat. Ramesh was an entrepreneur in the chemical trading business and Prakash was a skilled graduate of the Institute of Chemical Technology.

Before we get ahead of ourselves, let me tell you what it is. Oil chemistry am. This branch of science deals with the utilization of oils and fats from plants and animals. The company is a pioneer in this field and has created a portfolio of more than 470 products derived from natural plant-based oils.

Fine Organics is present in more than 80 countries and has a network of more than 180 distributors and more than 850 direct customers. The company’s products are used in food, personal care, animal feed, coatings, specialty products and many other ingredients.

The company earned a profit of Rs. 3087 Cr in FY23, up 62% from Rs. 1909C in FY22. During the same period, net profit also recorded a tremendous growth of 138%. 260 Cr in FY22 to Rs. 618 Cr in FY 2023.

Best Small Cap Chemical Stock #2 – Archean Chemical Industries

Archean Chemicals, an unprecedentedly small business, is India’s largest producer and exporter of bromine and industrial salts. The company is India’s leading specialty chemical manufacturer specializing in bromine, industrial salt and potassium sulphate.

The company’s manufacturing facilities are located near Jakhau Jetty and Mundra Port. The facility has a design capacity of 5 MNTPA and a loading capacity of 28,000 MT. The manufacturing site will also have access to the Rann of Kutch reserves and have closer links to the port.

Archean has a client base of over 55 clients, of which 27 are global clients and 28 are domestic clients. Despite having an almost identical customer base in both markets, 73% of the company’s revenue comes from overseas markets and 27% from India.

The company derives 51% of its revenue from its industrial salt division. The brominated salts division contributes 49% to revenue in FY23. Potassium sulfate is still a fines segment, accounting for just 0.21% of revenue.

During FY23, Archean reported revenue of Rs. 1484 Cr, a 30% increase from Rs. 1,143 Cr in FY22. During the same period, net profit soared from 500 billion won to 100 billion won. 188 Cr in FY22 to Rs. It grew 103% to $38.3 billion in fiscal 2023. The company has little debt on its balance sheet and trades at a P/E ratio of 20x. The company also has ROE and ROCE in the 45%+ range.

Best Small Cap Chemical Stock #3 – Clean Science & Technology

Clean Science is a chemical manufacturing company founded in 2003. The company takes an innovative and sustainable approach to specialty chemical manufacturing. Clean Science is a manufacturer of performance chemicals, pharmaceutical chemicals and FMCG chemicals.

The company is present in 35 countries and has 500 customers worldwide. Clean Science’s largest market to date is China, which accounts for 34% of global revenue. This is followed by India with 28%, followed by the Americas and Europe with 16% each. Clean Science has three manufacturing units and four independent R&D laboratories. The total production capacity of the manufacturing unit is 44,000 MTPA.

We are primarily a performance chemicals manufacturer with 70% of our sales. Pharmaceuticals and agricultural intermediaries account for 19% of the company’s revenue, and finally FMCG chemicals account for 11%. Clean Science had a stellar year in FY23, reporting revenue of Rs. 966 Cr, up 35% from Rs. 715 Cr in FY22. Net profit also grew at a slightly slower pace of 29% at Rs. 228 Cr in FY22 to Rs. FY23 has 295 Cr.

The company has a strong operating margin of 43% and a net profit margin of over 30%. This translates to strong ROE and ROCE ratios of 33% and 45%, respectively. However, due to its good performance, the market values ​​it highly at a PER of 56 times.

Best Small Cap Chemical Stock #4 – TGV SRACC

TGV SRAAC is the flagship company of the TGV Group. The conglomerate has business interests in manufacturing, power, infrastructure, pharmaceuticals, hospitality and education sectors.

TGV SRAAC, previously called Sree Rayalaseema Alkalies and Allied Chemicals, is a leading producer of: Chlor-alkali products. Along with this, the company also produces products. castor derivatives and fatty acid. The company is a pioneer in bipolar membrane cell technology in Uttdenona Spa, Italy.

The company’s business can be divided into two specific segments: First, we caustic soda, find the consumption of aluminum, pulp and paper, textiles and pharmaceuticals. The following list is Hydrogenated castor oil, used as surfactants and special lubricants. This product is used in skin care and other toiletries.

TGV SRAAC reported revenue of Rs. 2332 Cr in FY23, which is 52% higher than Rs. 1,532 Cr in FY22. During this period, the company reported stellar growth with net profit increasing by 170% from Rs. 134 Cr in FY22 to Rs. 362 Cr in FY23. The surge in net profit is the result of lower material, manufacturing and employee costs.

Best Small Cap Chemical Stock #5 – Vishnu Chemicals

Vishnu Chemicals is the largest manufacturer. chrome and barium chemistry In India. The company manufactures the following specialty chemical products: Industrial grade chromium chemicals, barium carbonateand precipitated barium sulfate.

Chromium chemicals are used in pharmaceuticals, electroplating, refractories, wood preservatives, pigments, and paper. Barium chemicals are used in ceramics, building materials, paints, batteries, and special glass.

Vishnu Chemicals has over 30 years of market experience and has built a customer base of over 100+. The company has a 51:49 ratio with most of its sales coming from the Indian market and the rest from overseas markets.

The company’s sales increased 31% to 50 billion won. 1075 Cr in FY22 to Rs. 1406Cr in FY23. During the same period, net profit increased by 68% to 50 billion won. 82 Cr in FY22 to Rs. 137 Cr in FY 2023.

The promoters of Vishnu Chemicals have pledged 36.07% stake in the company as of FY23. Nevertheless, as of the first half of 2024, the collateral share is only 3.84%.

We believe the company is trading undervalued at a PE of 19x, expanding earnings at a CAGR of 54% since FY19. The company also maintains high levels of ROE and ROCE of 40% and 31%, respectively.

List of Best Small Cap Chemical Stocks

The list below compiles the 10 best small-cap chemical stocks.

conclusion

We have worked to build an excellent chemical inventory that includes everything from chemical salt manufacturers to specialty chemical manufacturers. The chemical industry is a very lucrative opportunity, but it is currently struggling to maintain margins due to geopolitical issues and dumping of cheap imports from China.

Nonetheless, the stocks on our list maintain high returns on equity, averaging over 30%, and have performed very well since last year. So what do you like? Do you want to invest your money in high-growth small-cap stocks or medium-growth mid-cap stocks? Let us know in the comments below.

Written by Nasir Hussein

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