Oriental Carbon and Chemicals shares hit 20% upper circuit; here's why?

The sharp rise in the share price of Oriental Carbon has come on the heels of HDFC Mutual Fund selling around 66,000 shares, or 0.66%, of stake in the company for ₹1.64 crore in bulk deals on Friday.

Previously, HDFC MF had exited 1.33 lakh shares for a total of ₹2.94 crore on July 2, 2024, a day after the demerger scheme of Oriental Carbon and Chemicals Ltd became operational from July 1.

Meanwhile, Oriental Carbon and Chemicals Ltd's management in the company’s annual report has exuded confidence that the company will rebound as global prices start to ease.

“As soon as the price pressure overhang in the global markets begins to ease, the company’s capacity utilisation, realisations and surplus should rebound, enhancing value in the hands of stakeholders associated with our company,” OCCL chairman Arvind Goenka has stated.

The company is facing lower realisations and increased supply in the insoluble sulphur market due to increased capacity addition by manufacturers.

The company reported a 14% decline in standalone revenue in FY24 to ₹397 crore compared to ₹465 crore in FY23. Profit after tax also declined 2% to ₹43 crore in FY24 against ₹43.7 crore in FY23.

The management in the annual report stressed that it is taking steps to strengthen its strategic directions.

“The company will seek to increase sales to the extent possible; its supplies to newly acquired customers, including an international tyre major that commenced from CY2024,” Goenka said.

He stated that the company also aims to moderate costs to remain lean and competitive during the challenging end of the downcycle to gain an effective edge against competing companies possessing larger manufacturing capacities.