IOL Chemicals hits 17-month high, zooms 19% on heavy volumes

Till 01:49 PM, a combined 9.3 million equity shares, representing 15.85 per cent of total equity of IOL Chemicals, had changed hands on the NSE and BSE

Shares of IOL Chemicals & Pharmaceuticals (IOLCP) hit a 17-month high of Rs 520.70 as they zoomed 19 per cent on the BSE in Wednesday's intra-day trade amid heavy volumes. The stock of the pharmaceutical company was quoting at its highest level since April 2022.

At 01:49 PM, IOLCP was quoting 18 per cent higher at Rs 513.95, as compared to 0.35 per cent gain in the S&P BSE Sensex. The average trading volume on the counter jumped over three-fold today with a combined 9.3 million equity shares, representing 15.85 per cent of total equity of IOL Chemicals, having changed hands on the NSE and BSE.

IOLCP is involved in manufacturing of Chemicals (Ethyl acetate, acetyl chloride, iso-butyl benzene etc.) and Active Pharmaceutical Ingredients (Ibuprofen, metformin, paracetamol etc.) The company is the largest producer of Ibuprofen with ~35 per cent Global share, and the only company worldwide being backward integrated for all Intermediates and Key Starting Material of Ibuprofen having a capacity of 12000+ MT.

For the June quarter (Q1-FY24), IOLCP posted 32.4 per cent year-on-year (YoY) growth in its profit after tax (PAT) of Rs 46.21 crore. Earnings before interest, taxes, depreciation, and amortisation (Ebitda) margin improved 330 bps to 14.0 per cent. Total income remained flat at Rs 570 crore.

"With the Government of India encouraging manufacturing of API domestically to lower the dependence on Chinese imports, the industry is witnessing increased interest from the Indian manufacturers who are focused on improving operational efficiency as well as spending the capacities to fulfill the incremental demand," IOLCP said in its FY23 annual report.

For the specialty chemical sectors, the growth in Chinese economy is putting pressure on the margin as the company’s realisation has reduced compared to the last quarter of FY23. The correction in the realisation has impacted the topline growth also, though the lower input cost will have some advantage in the upcoming quarters, the company added.

Meanwhile, CARE Ratings believes that the competitive advantage of IOLCP in manufacturing of Ibuprofen is expected to sustain in the medium term as the company is one of the major global players who is backward integrated in terms of raw material required for manufacturing of Ibuprofen. The ratings further take cognizance of sustained scale of operations along with slight moderation in the profitability margins on account of volatility in the raw material prices in chemical segment, the rating agency said in rationale.