IOL Chemicals and Pharmaceuticals Ltd was incorporated in 1986 and is today one of the leading API pharmaceutical company and a significant player in the field of speciality chemicals. The company is the largest producer of Ibuprofen and the only company worldwide having a 35% market share. It is the second largest producer of ISO-Butyl benzene with a 30% global market share.
IOL Chemicals and Pharmaceutical is also the largest producer of Ethyl acetate in the country at a single location site. The company also has a certification from the National Institute of Pharmacy and Nutrition, Hungary for 12 APIs. It has also received approval from the Korean FDA for 2 products and 6 products from the Russian Regulatory authorities. It has filed 12 DMFs with the USFDA and 5CEP with EDQM. The company posted good Q2 FY24 financial results with revenue at Rs 552 crores and an EBITDA of Rs 71.21 crores.
The pharmaceutical revenue grew by nearly 10% leading to overall sales growth. The EBITDA margin climbed to 12.9% due to a reduction in raw material cost year-on-year leading to better EBITDA and higher net profit margins. Profit after tax stood at Rs 37.79 crores with a PAT margin of 6.8%. Active Pharmaceutical Ingredients or APIs are a crucial segment of the pharmaceutical industry with India being the third largest producer of APIs accounting for an 8% share of the global API industry.
In the speciality chemical segment, India is expected to account for 12% market share of the global chemicals market by 2040. The sector is projected to grow at around 10% tripling its global market share by 2040 and turning into a net exporter. Major factors contributing to the stupendous growth of the speciality chemicals sector are: India becoming the preferred destination following the China plus strategy, rising demand of bio-friendly products globally, boost in domestic demand post-launch of PLI schemes for pharmaceutical companies, and most importantly, cost advantage benefit in the production of ISO-Butyl benzene compared to other countries such as Germany and China.
Growth has been very good for IOL Chemicals and Pharmaceutical Ltd with the turnover increasing from Rs 983 crores to Rs 2217 crores during the last five years growing at a CAGR of 17.66%. The stock price of IOL Chemicals and Pharmaceutical which is currently quoting at Rs 430 on the bourses is a strong fundamental buy. Analysts are bullish on the scrip and expect it to appreciate by at least 30% over the next one-year time frame.