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Indo Borax and Chemicals

October 19, 2007

Indo Borax and Chemicals Ltd. (IBCL), is in the business of manufacturing inorganic chemicals like boric acid, borax and 2 new value-added products – eco borax and glaze bore.

Falling prices of its main raw material – imported boron ore – due to the appreciating Rupee and new mines opening up in East European countries could help IBCL boost its EBIDTA margins. IBCL caters to diversified fast growing user industries like glass, ceramics, pharmaceutical, electroplating, leather, etc, each of which is on a high growth path. IBCL has raised prices of all its products by 15-25% since Oct 01, 2007. This could push its revenues and margins significantly from 2HFY08 onwards.

IBCL has strong in-house technology development skills, this has also enabled them to come up with 2 new high margin value added products – Eco Borax and Glaze Bore. IBCL is one out of 6 manufacturers across the world to be manufacturing Boric Acid.

At the current price of Rs. 173.75, IBCL is available at 6.64 times its FY08 (E) EPS and 5.78 times its FY09 (E) EPS. We expect IBCL to record 32% and 21% growth in sales in FY08 and FY09 aided by volume and realisation growth. IBCL could quote at 8 times its FY09 EPS in 9 months time – at a price of Rs 250.

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