National Peroxide Ltd. is the largest manufacturer of hydrogen peroxide in India with 40-42% market share. It has a strong brand image
and diverse clientele. The company was established in 1954 and has a manufacturing facility is at Kalyan in Maharashtra. Other
products manufactured by the company include hydrogen gas and sodium perborate. To meet the increasing demand the company
expanded capacity of hydrogen peroxide from 68,000 MT to 84,000 MT per annum. Hydrogen Peroxide is widely used in various
industries for bleaching, chemical synthesis, environmental control, effluent treatment, sterilization etc. End user industries are mainly
Paper, Textiles etc. These industries are doing well and the company expects strong demand in the quarters to come.
NPL also has hidden assets in the form of investments in-group companies like Bombay Dyeing & Manufacturing Company Limited and
Bombay Burmah Trading Corporation Limited in its own books and in the books of its subsidiaries. The total market value of these
investments is ~Rs. 72 cr, which provides an additional layer of comfort.
NPL is an operationally and financially efficient commodity player. At the current market price of Rs. 506.35, NPL is available at 6.9x
and 5.9x its FY13 (E) and FY14 (E) EPS of Rs. 73.7 and Rs. 82.5 respectively. We feel investors could buy the stock at the CMP and add on dips to the Rs. 433-454 (5.25-5.5x FY14 (E) EPS) band for a target of Rs. 577 (7x FY14 (E) EPS).
