Camlin Fine surges 11% in one week after it starts production at Dahej unit

Shares of Camlin Fine Sciences were locked in the 5 per cent upper circuit at Rs 102.35 on the BSE on Friday on the back of heavy volumes. The stock of the speciality chemicals company was trading at its 52-week high level, gaining 11 per cent in the past one week after the company announced the commencement of commercial production at Dahej unit. In comparison, the S&P BSE Sensex was down 4 per cent during the same period

Trading volumes on the counter more-than-doubled with a combined 733,000 equity shares changing hands on the NSE and BSE till the time of writing of this report. There were combined pending buy orders for 180,000 shares at 01:47 pm, exchange data show.

“The commercial production for the manufacture of Hydroquinone and Catechol has been successfully commenced on 21st September 2020 at the company’s newly set up Diphenol manufacturing plant situated at Dahej SEZ, District Bharuch, Gujarat,” Camlin Fine Sciences said in a regulatory filing on Monday.

The company will produce Hydroquinone (HQ) and Catechol (CT), key raw materials for the business, at the lowest cost in the world at the Dahej facility which shall benefit margins to the tune of $1-1.5/kg (300-400bps), according to analysts at Emkay Global Financial Services.

It also plans to gradually add downstream products such as MEHQ and Ethyl Vanillin. Such incremental capacity plans would enhance its addressable market share and expand its footprint globally.

“The commissioning of the Dahej plant would also lead to a structural reduction in inventory days, given that the bulk of HQ will be sourced from the India plant. The company currently imports HQ from Italy, which takes around 49 days to reach India. Dahej remains the key catalyst for margin expansion, while improvement at subsidiaries will maximize the benefits,” the brokerage firm said with ‘overweight’ rating on the stock and target price of Rs 115 per share.