Ace Investor Ramesh Damani Picks Fresh Stake in this Petroproducts Company

In the last few trading session, shares of Panama Petrochem has seen an upward rally. The price has surged from Rs 250 to Rs 328, up 31%.

In the recent year, the stock has also delivered multibagger returns to investors. This smallcap has gained 218% in the last year.

Shares of Panama Petrochem hit a record high of Rs 328.4 after rallying 15% on the BSE in today's intra-day trade in an otherwise weak market. This came on the back of heavy volumes.

But why the company is gaining momentum in the market today?

As per the latest shareholding data, renowned investor Ramesh Damani made a fresh entry into Panama Petrochem on Wednesday.

According to the December shareholding pattern of the Panama Petrochem, the ace investor Ramesh Damani, who is known for high-quality value picks, picked 1.26% stake, which aggregates to 616,379 equity shares.

In the previous quarter, Mr. Damani did not have any stake in the petroleum lubricating oil and grease manufacturing company.

In a clarification with reference to movement in its share volumes, the company said,

• We would like to clarify that the company has been regularly sharing all information/announcements that may have a bearing on the operation/performance of the company including all price sensitive information with the stock exchange.
  
  Increase in volume in company's shares is purely as per investors' perceptions based on information already disseminated to the stock exchanges.

Besides Damani, another renowned investor Anil Kumar Goel has also picked additional 0.1% stake in the company, during December quarter.

In total, he holds 7.8 lakh equity shares, which comprises of 1.6% stake, as per the shareholding pattern available on the BSE.

A word about Ramesh Damani

Ramesh Damani is a member of the Bombay Stock Exchange and is a well-known face among the stock broking community in India. He has been a broker for over 16 years.

Mr. Damani holds a Bachelor's Degree in Commerce from HR College in Mumbai and has a Master's Degree in Business Administration from California State University, Northridge, US.

He was the well-known host of the TV show 'Wizards of Dalal Street' on CNBC TV18 and is frequently invited to comment on financial issues on business channels.

Ramesh Damani follows the Warren Buffett model of investing, which favors companies with strong management credentials and processes.

Why did Ramesh Damani Invest in Panama Petrochem?

To be honest, the exact reason is unknown. However, based on the information available, we can make some assumptions and attempt to understand this move.

• Leading manufacturers and exporter

  It's a renowned manufacturer and supplier of over 80 types of petroleum specialty goods.

  The products are vital for various industries like inks and resins, textiles, rubber, pharmaceuticals, cosmetics, power, cables and other industrial purposes.

  The company has four plants all situated in western part of India. The plants are in Bharuch and Ankleshwar in Gujarat, Taloja in Mumbai and in Daman.

• Unique advantage

  The company caters to the Gulf Cooperation Council (GCC) and Middle East and North Africa (MENA) regions and enjoys a logistic advantage as it is situated on the port and has direct dedicated pipeline arrangements.

• Improving fundamental

  On a consolidated basis, net profit of Panama Petrochem rose 235.6% year on year to Rs 619.2 m in September 2022 quarter. This was due to a 73.17% rise in net sales to Rs 5.6 bn.

  The smallcap refineries and petroproducts player has delivered good profit growth of 40% compound annual growth rate (CAGR) over last 5 years.

  The company is almost debt free. It has reduced its debt levels from Rs 4.9 m to Rs 1.5 m over the period of last one year.

  Over the last 5 years, market share increased from 1.9% to 2.9%.

• Consistently paying dividends

  Panama Petrochem has declared 21 dividends since 2002. In the past 12 months, Panama Petrochem has declared an equity dividend amounting to Rs 4 per share.

  At the current share price of Rs 320, this translates to a 1.4% dividend yield.

  For more details, check out Panama Petro dividend yield and payout ratio.

• Future outlook

  In its 2021 annual report, the company stated that the aggregate demand of all main segments in the petrochemical industry is likely to regain a sharp positive trajectory, with key players aiming to ramp up scale.

  The firm has stated that it intends to expand its activities. By relying on bulk purchasing and cost-cutting initiatives, Panama Petrochem hopes to mitigate the negative impacts of price changes in the petroleum industry.

Ramesh Damani's portfolio

As of 31 December 2021, Damani owns only 2 listed stocks - Panama Petro and Goldiam International.

Mr. Damani holds over 343,468 Goldiam International shares which lead to him claiming over 1.6% of the company's ownership.

Goldiam International is a company located in Mumbai, in India's premier jewellery manufacturing zone that was created by the government of India to encourage Indian industrialists to increase high-quality jewellery manufacturing for exports.

How the stock markets reacted to Panama Petrochem

Shares of Panama Petrochem opened the day at Rs 294 on the BSE and Rs 290 on the NSE.

Its share price closed at Rs 317 (up 10.5%) on the BSE and Rs 316.5 (up 10.4%) on the NSE.

At its current price, it is trading at a P/E of 8.21.

The share touched its 52-week high of Rs 328.4 and 52-week low of Rs 92.1 on 6 January 2022 and 18 January 2021, respectively.

Over the last 30 days, the Panama Petrochem share price is up 26%. Over the last one year, the company's share price is up 202%.

About Panama Petrochem

Incorporated in 1982 as a private limited company Panama Petrochem was converted into a public limited company in December 1993.

The company was promoted by the Rayanis with trading experience of over three decades in the industry.

The firm manufactures petroleum specialty products like agricultural spray oil, dewatering fluid, white oil, transformer oil and liquid paraffin (LP). Its products are marketed under the Panama brand name.

It provides specialty petroleum products for diverse user industries like printing, textiles, rubber, pharmaceuticals, cosmetics, power and other industrial oil.

For more details about the company, you can have a look at Panama Petrochem's factsheet and quarterly results on our website.

You can also compare Panama Petrochem with its peers.

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To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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