Multibagger stock Himadri Speciality corrects 20% from recent peak. Right time to buy? | Stock Market News

Multibagger stock: Shares of Himadri Speciality Chemical have come under heavy selling pressure recently, as investors seem to be locking in profits following an extended rally without any significant pullbacks.

Currently, the stock is trading at ₹547 apiece, 20.5% below its all-time high of ₹688 per share, which it reached in late September. Despite this pullback, the stock has still delivered an impressive 77% gain in 2024. Between March 2023 and September 2024, the stock achieved an extraordinary return of 700%, recording gains in all but three months during this period.

Market experts view the recent downturn as a temporary blip, given the company’s strong growth prospects. In its latest report, domestic brokerage ICICI Securities initiated coverage on the stock with an ‘ADD’ rating and set a target price of ₹600 per share.

Expanding wings into tyres and battery chemicals

According to ICICI Securities, the company holds a dominant position in India’s coal-tar value chain, commanding a 60–70% market share in Coal Tar Pitch (CTP) and other derivatives such as naphthalene and coal oils.

It has forward integrated into carbon black production (using carbon black oils as input), with a focus on speciality black, which finds applications in plastics, fibres, conductive black, coatings, and inks.

The brokerage said the company has established strong coal-tar crude sourcing relationships with steel producers, supported by purpose-built infrastructure that serves as a significant competitive advantage. It also highlights the company’s entry into the tyre segment through the acquisition of Birla Tyres via the NCLT process, in partnership with the resolution applicant, Dalmia Bharat Refractories (DBRL), for ₹3.06 billion

Additionally, the company has announced its foray into lithium-ion battery materials, with plans to produce cathode active material—lithium iron phosphate (LFP). It aims to set up a pilot plant with a capacity of 400 TPA for LFP by FY26, focusing on supplying samples and enhancing product quality. This initiative is expected to reduce the timeline for commissioning its commercial-scale plant, said ICICI.

ICICI highlighted that China’s aggressive stance in the coal chemicals value chain has softened, as coal tar availability has stabilised, while demand from aluminum and battery applications continues to grow.

It said India’s global position in coal chemical supplies is strengthening, driven by increasing exports of coal tar pitch (CTP) and carbon black. Data from India’s Commerce Ministry shows a spike in CTP export volumes, with prices remaining healthy at approximately ₹65 (compared to a long-term median of ₹42).

Himadri is expanding its presence in export markets such as South Africa, the Middle East, and Australia for CTP. According to the brokerage, greater export contributions provide Himadri with two significant benefits: improved capacity utilization, which leads to increased production of co-products, and enhanced profitability, as exports command a premium pricing of 10–15%. 

The company is also planning to expand its coal tar distillation capacity from 500 KTPA to 600 KTPA by FY26, focusing on the growing export market. The brokerage believes that Himadri’s expansion into markets like South Africa, the Middle East, and Australia will improve its coal distillation utilization and boost profitability.

The demand for CTP has been steady due to its use in aluminum production, which is inelastic and stable regardless of economic cycles, as it is not feasible to alter the capacity utilization of aluminum smelters.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.