This smallcap stock has zoomed 104% in 4 months; posts strong Q1 results

In the past 13 trading days, Styrenix Performance surged 39% after the promoter Shiva Performance Materials sold 2.9 million shares representing 16.49% stake on June 27, by way of market sale.

Shares of Styrenix Performance Materials hit a new high of Rs 2,729 as they surged 15 per cent on the BSE in Tuesday’s intra-day trade after the company reported healthy results for the quarter ended June 2024 (Q1FY25).

For Q1FY25, the specialty chemicals company posted a 88.6 per cent year-on-year (YoY) growth in profit after tax at Rs 61.20 crore, against Rs 32.4 crore in the corresponding quarter of the previous fiscal. Sales revenue grew 28.5 per cent YoY at Rs 698.70 crore from Rs 543.80 crore in Q1FY24. Earnings before interest, taxes, depreciation, and amortization (ebitda) margin improved 340 bps (basis points) at 13.1 per cent in Q1FY25 from 9.7 per cent in Q1FY24.

At 09:45 am; Styrenix Performance was trading 12 per cent higher at Rs 2,654, as compared to 0.20 per cent gain in the BSE Sensex. In the past four months, the stock price of this smallcap company has more-than-doubled or zoomed 104 per cent.

Since June 28, in the past 13 trading days, the stock has rallied 39 per cent after the promoter Shiva Performance Materials Private Limited sold 2.9 million shares representing 16.49 per cent of total equity of Styrenix Performance on June 27, by way of market sale. Post transaction, promoter holding in the company declined to 46.24 per cent from 62.73 per cent, the company said. CLICK HERE FOR DETAILS

Nippon Life India Trustee A/c through various schemes of Nippon India Mutual Fund increased their stake in the company via open market. The mutual fund had acquired 250,000 shares or 1.42 per cent stake in Styrenix Performance. Post acquisition, Nippon India Mutual Fund holding in the company increased to 5.44 per cent from 4.02 per cent.

Styrenix Performance Materials (formerly known as INEOS Styrolution India Limited) is the number one producer of Absolac (ABS) and Absolan (SAN) in India.

The management said the government incentives, increase in per capita income and capex by industries the company caters to are few factors which will improve overall demand, including the rural sector. Cost optimization is continuous and focused aim to maximize business value. However, market outlook for the current quarter i.e. July to September looks to be an average industry growth, the company said.

Meanwhile, with a rapidly growing population and an expanding middle class, which is driving the demand for various consumer products and packaging materials, there are significant opportunities for the industry to cater to the increasing demand.

Due to the launch of several infrastructure development initiatives such as "Make in India" and "Smart Cities Mission", which require a wide range of polymer-based products for construction, transportation, and other sectors, it has created a market for polymer manufacturers.

Despite the single use plastic ban, the packaging industry in India is witnessing robust growth due to increasing urbanization, changing lifestyles, and the rise of e-commerce. Polystyrene manufacturers can capitalize on this trend by providing innovative and sustainable packaging solutions.

India's automotive industry is one of the largest in the world and is expected to grow further. The styrenics industry can benefit from this growth by supplying components and materials used in automotive sector. A huge spurt in demand for household appliances like air conditioners and refrigerators is expected and this would offer an interesting opportunity for participation by the company.