Oriental Carbon and Chemicals Ltd. has caught the attention of investors with a remarkable rally in its stock price. On Tuesday, July 16, the stock hit its 20% upper circuit at ₹361.05, marking a new 52-week high. This rise extends a winning streak to seven consecutive sessions, during which the stock has soared over 67%. Just the day before, on July 15, the stock had also hit its 20% upper circuit, demonstrating an extraordinary upward momentum.
The recent surge is particularly notable considering that the stock has now increased by 137% from its 52-week low of ₹152.34, which was recorded on June 4, 2024. In July alone, OCCL’s stock has zoomed up by 81%, reflecting strong investor confidence and robust market activity.
This impressive performance follows the release of the company’s annual report, which, despite presenting some challenges, conveyed a positive outlook for the future. The report revealed a 14% decline in standalone revenue for FY24, amounting to ₹397 crore compared to ₹465 crore in FY23. Additionally, the profit after tax saw a slight dip, decreasing by 2% to ₹43 crore from ₹43.7 crore in the previous fiscal year. These figures indicate some struggles, yet the market’s reaction has been overwhelmingly positive.
One of the pivotal factors driving the stock’s recent rally has been the company’s expressed confidence in a rebound as global prices begin to ease. OCCL’s Chairman, Arvind Goenka, has been vocal about the company’s strong outlook.
As soon as the price pressure overhang in the global markets begins to ease, the company’s capacity utilization, realizations, and surplus should rebound, enhancing value for our stakeholders.
Arvind Goenka
This optimistic view resonated well with investors, propelling the stock to new heights.
Another noteworthy development is the company’s strategic moves to strengthen its market position. The annual report mentioned efforts to increase sales to newly acquired customers, including a significant international tire major starting from CY2024. This expansion in the customer base is expected to boost the company’s sales visibility and sectorial realizations, further driving capacity utilization and capital efficiency.
In terms of market activity, HDFC Mutual Fund recently sold approximately 66,000 shares, or 0.66% of its stake in the company, for ₹1.64 crore in bulk deals on Friday. Despite this divestment, the stock has continued its upward trajectory, underscoring strong overall market confidence.
OCCL’s management also highlighted the company’s performance during FY24, operating at around 70% capacity utilization. They noted that no significant capital expenditure is planned in the near future, with all surplus allocated towards maintenance capital expenditure, term loan repayment, and net worth accretion. These steps are aimed at strengthening the company’s fundamentals and preparing it for future growth.
The management expressed optimism about the Indian automotive market, driven by increased disposable incomes, lifestyle aspirations, personal mobility needs, a wider choice of automobile brands, and the emergence of electric vehicles. They believe that the under-penetration of vehicles in India is likely to correct quickly, benefiting companies like OCCL, which holds a strong market share and enjoys consistent customer retention.
Additionally, the company’s strategic directions include moderating costs to remain competitive and expanding its market reach both in India and globally. By targeting a sustainable share of insoluble sulfur purchases, OCCL aims to enhance its market presence and drive long-term growth.
OCCL’s recent stock performance reflects a combination of strategic initiatives, market confidence, and an optimistic outlook for future growth. Despite some financial challenges in FY24, the company’s proactive measures and strong market positioning have fueled a remarkable rally, making it a standout performer in the current market landscape.
