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Oriental Carbon & Chemicals

Discussion in 'Investment Analysis' started by cabarjindersingh, Jan 21, 2020.

  1. cabarjindersingh

    cabarjindersingh New Member

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    Hi Shabbir

    Your thoughts on Oriental Carbon please. Aiming for long term investment >5 years.

    Thanks.

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  2. abhijitupsc

    abhijitupsc Contributor

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    As per my initial assessment, the company has consistent RoE and RoCE,with comfortable level of debt..it deals with insoluble sulphur and sulphuric acid..Insoluble sulphur is used for making tyres, while sulfuric acid is used in dyes and paints..but as around 80% revenue comes from Insoluble sulphur, the performance is heavily dependent upon recovery of automobile cycle..( I havent studied about Replacement market demand)..

    It's the only company producing insoluble sulphur in india..But I would invite your opinion, about whether it's a commodity business ( although the business has significant entry barriers). Having said that, the crude prices affect the business, as crude oil is the raw material..You could check this by seeing crude price movement, with effect on OPM in 2008-09..

    I have only 10 shares just to track this business but hopefully if I get conviction, I would think of adding or else exiting even the tracking position..

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  3. shabbir

    shabbir Administrator Staff Member

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    I am not sure what is the use of the product they manufacture which is Diamond Sulf.

    Can you share the use of the products and how its demand may increase over the course of time.
     
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  4. abhijitupsc

    abhijitupsc Contributor

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    Diamond sulf is used in radial tyres..The future depends upon auto revival..So a proxy play of auto sector. Wont be disrupted by EV revolution..
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  5. shabbir

    shabbir Administrator Staff Member

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    Then I will go with Philips Carbon or Panasonic carbon as second choice instead of Oriental carbon.
     
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  6. cabarjindersingh

    cabarjindersingh New Member

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  7. nirajshah

    nirajshah Champion

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    abhijitupsc and shabbir like this.