Shares of this multibagger chemical stock escalated 11 percent after nearly two percent equity after Europe-based financial Services group Societe Generale picked a stake in it. The stock reached an intraday high of ₹ 71.00 apiece against its previous closing price of ₹ 63.97. At 01:00 PM, its shares were trading at ₹ 67.74, 5.89 percent higher.
Societe Generale picked nearly a 2 percent stake in Primo Chemicals, formerly known as Punjab Alkalies & Chemicals. According to the bulk deals data published by the exchanges, it bought 47.97 lakh equity shares or a 1.98 percent stake in the company via open market transactions on Jul 12. It bought these shares at an average price of ₹ 60.1 per share, taking the transaction value to ₹ 28.83 crore.
Primo Chemicals, as the name suggests is a chemicals company that manufactures products like caustic soda lye, hydrochloric acid, hydrogen gas, and so on. Its caustic soda products are used in the manufacture of paper pulp and soap. In addition, they are used in industries like textiles, aluminium, and in water demineralization.
With a market capitalization of ₹ 1,550 crores, Primo Chemicals is a small-cap company. It has a very high return on equity of 39.90 percent and an ideal debt-to-equity ratio of 0.35. Its shares were trading at a price-to-earnings ratio (P/E) of 11.19, which is lower than the industry P/E of 16.24, indicating that the stock might be undervalued as compared to its peers.
The company’s share price gained 308 percent in the past two years to deliver multibagger returns. Therefore, if an investor had invested in the company’s shares two years ago, the value of their holdings would have been ₹ 4.08 lakhs today! However, in the past year, its share price has decreased by 15 percent.
The shareholding pattern of the company shows that Retail investors hold a 66.73 percent stake in it, followed by promoters with 31.35 percent, mutual funds with 1.90 percent and other domestic institutions with 0.02 percent.
Written by Simran Bafna
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