We hereby present you our investment idea for Equity Investment i.e “Pick of the Week”. A thorough analysis of company, industry and economy goes behind our stock ideas for you. With the “Pick of the Week”, you may earn superior returns in stock market over a time horizon of 6 – 9 months.

INVESTING RATIONALE

• HSCL is a market leader with 70% market share in coal tar pitch (CTP), 17% share in carbon black and around 40% in Sodium Naphthalene Formaldehyde (SNF) and Naphthalene. These products are widely used in high growth sectors viz., Aluminium, Graphite Electrodes, Tyres, Paints & Pigments, construction Chemical, etc.

• HSCL has manufactured and supplied advanced carbon material which finds its usage as anodes for Lithium Ion batteries which is a sun rise sector given the rising demand of electronic gadgets viz., mobile phones, laptops etc and purportedly marked shift towards EVs from different nations across the globe to protect environmental damage from the usage of fossil fuel driven vehicles.

• The capacity expansion schedule is on track for all the plants with speciality carbon line to go on stream by Mar’19 and 3000 tn capacity of ACM going commercial by last Q4FY19. Both these expansions will propel HSCL into a different league as the value added products will overshadow the commodity business both in terms of margins and contribution to the revenues. Plans are taking shape for building the additional ACM capacity of 20,000 tpa which would go on stream somewhere in FY20.

• We maintain a BUY with a target of Rs. 165.