Top Petrochemical Stocks in India: Petrochemicals are a part of our daily lives, even if we may not realize it. Pharmaceuticals, cosmetics, fertilizers, and even the clothes that we wear have petrochemicals in one form or the other.
Petrochemicals are chemical substances obtained from petroleum or natural gas. Many industries like agriculture, automotive, packaging, personal care, construction, and plastic use them. Even though India is vigorously searching for alternatives, the need for petrochemicals is still around.
In this article, we shall take a look at the top petrochemical stocks in India. We shall take a look at their business, revenue, and profits. Further, we shall go through key metrics and do a two-minute analysis of these stocks.
Industry Overview
The chemical and petrochemical (CPC) industry in India has a long and interesting history. The first effort to manufacture chemicals indigenously in India was in 1901. However, India entered the petrochemicals arena much later, in the 1950s.
The petrochemical industry grew by leaps and bounds in the 1970s with the help of strategic Five-Year plans led by expert committees.
Come 2021, India ranks sixth globally and fourth in Asia in terms of the global sale of chemicals. In fact, it manufactures more than 80,000 varieties of chemicals and petrochemicals and the industry employs more than two million people.
According to a report by PWC India, the CPC industry accounted for around 9% of India’s manufacturing gross value added (GVA) and 1.3% of its national GVA in FY20. Chemical manufacturing accounted for 1.4% of the total FDI equity inflows in FY21. Further, experts expect the industry to grow at a CAGR of 6.4% by FY25 to reach USD 254 billion.
This seems to be achievable, considering Government initiatives and the growth in the consumer base, changes in lifestyle, increase in disposable incomes, and focus on healthcare and hygiene.
5 Top Petrochemical Stocks in India
There are several petrochemical stocks listed on NSE and BSE. Here are the 5 top petrochemicals stocks in India to add to your watchlist.
Top Petrochemical Stocks in India #1 – Reliance Industries
| Particulars | Values | Particulars | Values |
|---|---|---|---|
| Face Value (₹) | 10 | ROE (%) | 7.78 |
| Market Cap (Cr) | 1,651,898 | Net Profit Margin | 9.65 |
| EPS (₹) | 98.09 | Current Ratio | 1.12 |
| Stock P/E (TTM) | 24.89 | Debt to Equity | 0.34 |
| Dividend Yield (%) | 0.33 | Promoter’s Holdings (%) | 50.62 |
Mukesh Ambani-led Reliance Industries is the largest producer of petrochemicals in India and is among the top ten in the world. It produces a variety of polymers, elastomers, polyesters, aromatics, and more. In fact, its oil-to-chemicals segment accounts for more than 50% of its revenue.
It is a Fortune 500 company and is one of the largest conglomerates in India. The company has evolved from being a textiles and polyester company to an integrated player across energy, materials, retail, entertainment, and digital services. Its products and services touch almost all Indians on a daily basis, across economic and social spectrums.
Financials
Reliance Industries is a large-cap company and one of the largest companies in India in terms of market capitalization. Its shares were trading at a price-to-equity ratio of 24.89 which is almost at par with the sector PE of 22.22. Therefore, the stock might not be undervalued or overvalued.
Its revenue and profit show an increasing trend. Its revenue grew at a 3-year CAGR of 10.89% and its profit at 30.40%. However, the company does not have impressive return ratios. Its return on equity is 7.78% and its return on capital employed is 8.02%, which is below the ideal level.
On the bright side, the company has a high promoter holding of 50.62% and there is no pledge against it. Further, it has an ideal current ratio of 1.12 and an ideal debt-to-equity ratio of 0.34
Top Petrochemical Stocks in India #2 – Indian Oil Corporation
| Particulars | Values | Particulars | Values |
|---|---|---|---|
| Face Value (₹) | 10 | ROE (%) | 20.46 |
| Market Cap (Cr) | 95,883 | Net Profit Margin | 4.15 |
| EPS (₹) | 13.48 | Current Ratio | 0.76 |
| Stock P/E (TTM) | 5.04 | Debt to Equity | 0.93 |
| Dividend Yield (%) | 12.37 | Promoter’s Holdings (%) | 51.50 |
Indian Oil Corporation Ltd (IOC)is a Maharatna Company. Its business interests straddle the entire hydrocarbon chain value. This includes exploration and production, refining, pipeline transportation, marketing of petroleum products and its petrochemicals business.
IOC focuses on increasing its presence in the domestic petrochemicals sector in order to enhance its downstream integration. In fact, it is envisaging an investment of Rs 30,000 crore in the petrochemicals business in the next few years.
The company has plants in Gujarat and Panipat. Further, it has a separate Strategic Business Unit (SBU) for the marketing of petrochemicals. This SBU has established a presence in India and is exporting products to 76 countries.
Financials
IOC’s revenue as well as profits show an increasing trend. Its sales grew at a poor 3-year CAGR of 5.63%. However, its net profit grew at a 3-year CAGR of 24.15%.
It has an ideal return on equity of 20.46%. Further, it has a return on capital employed of 17.61% which is close to the ideal requirement. It has a poor current ratio of 0.76 and an ideal debt-to-equity ratio of 0.93. On the bright side, its promoters hold a 51.50% stake in the company and there is no pledge against their stake. Further, it has an excellent dividend yield of 12.37%.
The company’s shares are trading at a price-to-equity ratio (PE) of 5.04, which is below the industry PE of 6.41. Therefore, the stock might be undervalued and its price might increase in the future. The company is a large-cap company with a market capitalization of ₹ 95,883 crores.
Top Petrochemical Stocks in India #3 – GAIL
| Particulars | Values | Particulars | Values |
|---|---|---|---|
| Face Value (₹) | 10 | ROE (%) | 19.11 |
| Market Cap (Cr) | 56,907 | Net Profit Margin | 11.36 |
| EPS (₹) | 20.34 | Current Ratio | 1.08 |
| Stock P/E (TTM) | 4.26 | Debt to Equity | 0.12 |
| Dividend Yield (%) | 11.55 | Promoter’s Holdings (%) | 51.89 |
GAIL India Ltd, an integrated natural gas company, is a Government of India undertaking. It has diversified interests across the natural gas value chain. This includes trading, transmission, LPG production & transmission, LNG re-gasification, petrochemicals, city gas, E&P, and so on.
The company owns over 11,500 km of natural gas pipelines, over 2300 km of LPG pipelines, six LPG gas-processing units, and a petrochemical facility. Petrochemicals contribute about 7.5% to its revenue.
Financials
GAIL’s revenue as well as profits show an increasing trend. Its sales grew at a 3-year CAGR of 10.35% and its net profit at a good 3-year CAGR of 35.07%.
It has an ideal return on equity of 19.11%. Further, it has a return on capital employed of 17.06% which is close to the ideal requirement. It has an ideal current ratio of 1.08 and an ideal debt-to-equity ratio of 0.12.
On the bright side, its promoters hold a 51.89% stake in the company and there is no pledge against their stake. Further, it has an excellent dividend yield of 11.55%.
The company’s shares are trading at a price-to-equity ratio (PE) of 4.26, which is significantly below the industry PE of 16.17. Hence, the stock might be undervalued and its price might increase in the future. The company is a large-cap company with a market capitalization of ₹ 56,907 crores.
Top Petrochemical Stocks in India #4 – MRPL
| Particulars | Values | Particulars | Values |
|---|---|---|---|
| Face Value (₹) | 10 | ROE (%) | 51.64 |
| Market Cap (Cr) | 9,998 | Net Profit Margin | 4.23 |
| EPS (₹) | 33.69 | Current Ratio | 0.86 |
| Stock P/E (TTM) | 1.69 | Debt to Equity | 2.96 |
| Dividend Yield (%) | 2.49 | Promoter’s Holdings (%) | 88.58 |
Mangalore Refinery & Petrochemicals Limited (MRPL) is a subsidiary of Oil & Natural Gas Corporation(ONGC) and a Category 1 schedule ‘A’ Miniratna CPSE. The company refines crude oil, trades aviation fuels and distributes petroleum products. In addition, it manufactures and sells petrochemicals like polypropylene under the brand name ‘Mangpol’.
It operates an Aromatic Complex, a petrochemical unit capable of producing 0.905 MMTPA of Para Xylene and 0.273 MMTPA of Benzene. This complex is situated in the Mangalore Special Economic Zone (MSEZ) and is fully integrated with MRPL.
Financials
MRPL’s revenue as well as profits show an increasing trend. However, the company suffered losses in 2020 and 2021 because its crude throughput had been adversely impacted on account of a reduction in demand arising out of the Covid situation.
Its sales grew at a poor 3-year CAGR of 5.00%. However, its 3-year CAGR net profit grew at a 3-year CAGR of 189.94% due to a rebound after pandemic-related woes.
MRPL has an excellent return on equity of 51.64%. Further, it has a return on capital employed of 17.82% which is close to the ideal requirement. It has a poor current ratio of 0.86 and a high debt-to-equity ratio of 2.96.
On the bright side, its promoters hold an 88.58% stake in the company and there is no pledge against their stake. Further, it has a good dividend yield of 2.49%.
The company’s shares are trading at a price-to-equity ratio (PE) of 1.69, which is significantly below the industry PE of 6.41. This indicates that the stock might be undervalued and its price might increase in the future. The company is a small-cap company with a market capitalization of ₹ 9998 crores.
Top Petrochemical Stocks in India #5 – Manali Petrochemicals
| Particulars | Values | Particulars | Values |
|---|---|---|---|
| Face Value (₹) | 5 | ROE (%) | 36.98 |
| Market Cap (Cr) | 1,578 | Net Profit Margin | 22.79 |
| EPS (₹) | 19.63 | Current Ratio | 4.92 |
| Stock P/E (TTM) | 4.67 | Debt to Equity | 0.02 |
| Dividend Yield (%) | 2.72 | Promoter’s Holdings (%) | 44.86 |
Manali Petrochemicals Limited (MPL) is a petrochemical company that manufactures and supplies innovative polyurethane raw materials and blended systems for a variety of industries. The company is the only integrated polyol manufacturer in India. Moreover, it is the first and largest Indian manufacturer of Propylene Oxide.
Financials
Manali Petrochemicals’ revenue as well as profits show an increasing trend. Its sales grew at an excellent 3-year CAGR of 43.65%. Further, its net profit grew at a 3-year CAGR of a whopping 123.06%.
The company has an excellent return on equity of 36.98%. In addition, it has an excellent return on capital employed of 47.62%. It has a very good current ratio of 4.92 and an ideal debt-to-equity ratio of 0.02 Further, its promoters hold a 44.86% stake in the company and there is no pledge against their stake. Moreover, it has a good dividend yield of 2.72%.
The company’s shares are trading at a price-to-equity ratio (PE) of 4.67, which is significantly below the sector PE of 14.52. This indicates that the stock might be undervalued and its price might increase in the future. Manali Petrochemicals is a small-cap company with a market capitalization of ₹ 1,578 crores.
Similar Stocks
| Company | Market Capitalization (Rs in Crores) | P/E | Debt to Equity |
|---|---|---|---|
| Adani Total Gas Ltd | 395972 | 785.5 | 0.43 |
| Bharat Petroleum Corporation Ltd | 65956 | 22.57 | 1.24 |
| Petronet LNG Ltd | 30832 | 9.02 | 0.26 |
| Hindustan Petroleum Corporation Ltd | 30350 | 4.88 | 1.17 |
| Indraprastha Gas Ltd | 29960 | 19.88 | 0.01 |
| Gujarat State Petronet Ltd | 12751 | 7.93 | 0.09 |
| Mahanagar Gas Ltd | 8521 | 14.74 | 0.03 |
| Supreme Petrochem Ltd | 7052 | 11.05 | 0.02 |
| Chennai Petroleum Corporation Ltd | 3108 | 0.86 | 1.45 |
| Savita Oil Technologies Ltd | 2082 | 8.01 | 0 |
| Bhansali Engineering Polymers Ltd | 1813 | 7.65 | 0 |
| DCW Ltd | 1772 | 12.36 | 0.7 |
| Panama Petrochem Ltd | 1702 | 7.18 | 0.04 |
| INEOS Styrolution India Ltd | 1490 | 4.62 | 0.06 |
| Deep Industries Ltd | 964 | 12.88 | 0.03 |
In Closing
In this article, we took a look at the 5 top petrochemical stocks in India. We took a look at the industry that they are a part of and its growth potential, going forward. Then we briefly went through the business segments of these companies. Further, we did a quick two-minute analysis of its financials. Finally we took a look at similar stocks.
That’s all for this article, folks. If you’re considering an investment in any of these stocks, be sure to do a thorough fundamental analysis. Happy investing, until next time!
You can now get the latest updates in the stock market on Trade Brains News and you can even use our Trade Brains Portal for fundamental analysis of your favorite stocks.
The post Top Petrochemical Stocks in India – Overview, Financials & Much More appeared first on Trade Brains.
Viahttps://ift.tt/pgOwI8C
