ROTO PUMPS

Pumping solutions across the board

Noida (Uttar Pradesh)-headquartered Roto Pumps, a small cap player in the compressor and pumps sector, is a globally renowned manufacturer of positive displacement pumps. With its state-of-the-art manufacturing unit based at Greater Noida and ultra-modern R&D centre at Noida, the company has a presence across five continents. With a rich legacy of over half a century, it is a pioneer of progressive cavity pumps in India and is renowned for provid ing efficient and reliable pumping solutions to a diverse range of indus tries, including waste water, sugar, paper, paints, oil & gas, chemicals & process, ceramics, foods & beverages, renewable energy & power, mining & explosives, and marine & defence.

Besides being popular at home, the company is doing quite well on the export front. Today, it exports to more than 50 countries.

The company has had steady growth on the financial front. During the last 12 years, its sales turnover has ex panded more than three times from Rs 89 crore in fiscal 2013 to Rs 274 crore in fiscal 2024, with operating profit rising more than four times from Rs 16 crore to Rs 66 crore and the profit at net level shooting up almost five times from Rs 8 crore to Rs 39 crore. What is more, its future prospects are all the more promising. Consider:

PRICING POWER

• Unlike water pumps which are simple to design, industrial pumps manufactured by Roto are designed to handle viscose liquids and are more complex. There is a large degree of customisation in every pump sold, which enhances pricing power too. This is visible in the best-in class gross margins enjoyed by the company.
• Roto Pumps is a leading manufacturer of pump spare parts. This business provides huge stability to overall revenues. Roto manufactures spare parts for its own pumps as well as for other brands, and this business accounts for almost 55 per cent of total revenues. A pump has a useful life of around 10 years and the need for spare parts arises from the end of the 3rd year of installation. This is generally a recession-proof demand and lends immense stability to the company’s revenues. The margins in this segment are also high.
• Though the plant set up by Roto Pumps at incep tion has adequate capacity, it purchased land in the Noida SEZ. But as the SEZ was delayed, the company started its new plant after five years. This delay helped the company manufacture large pumps and enabled it to partici pate in large pumps’ tenders.
• The company is ambi tiously working towards expansion by strengthening strategic global partnerships and establishing new branches and subsidiaries across continents. It aims to be among the top five positive displacement pump manufacturers in the world with a presence in 100+ countries.

SUBMERSIVE PUMPS

• The company’s subsidiary, Roto Energy Systems, recently launched solar submersible pumping systems un der the brand name ‘Roto Rudra’. And soon thereafter, it received orders for 400 units — 100 units each from Aus tralia, South Africa, Chhatisgarh (India) and Maharashtra (India). These pumping systems support agriculture, irriga tion, drinking water, and renewable energy initiatives.
• The company’s balance sheet is robust. Its financial position is very sound, with reserves at the end of March 2024 standing at Rs 1,889 crore — over 31 times its tiny equity capital of Rs 6 crore. Its debt is negligible as it has historically main tained debt-to-equity below 0.7X, while its ROCEs have been in excess of 20 per cent, indicating sound balance sheet manage ment. Roto’s technologically intensive nature allows it to gener ate high returns on deployed capital. The company’s shares with a face value of Re 1 were bid up to Rs 375 but due to the recent bearish phase, pro longed by the crash on account of US President Trump’s tariffs, the price has come down to Rs 216. If the bearish phase continues, the price may drop a little further. But once the bearish phase is over, the price will resume its upward journey and discern ing investors will be able to reap a rich harvest in the medium- to long term.

PERFORMANCE INDICATORS (Rs. in crore)

ORIENT AROMATICS

Riding $ 17 bn global fragrance market

Mumbai-headquartered Orient Aromatics is a leading global integrated company that specialises in flavours, fragrances and aroma chemicals as well as camphor. Formerly known as Camphor and Allied Products Ltd, the company has three manu facturing facilities located at Ambarnath in Maharashtra, Bareilly in Uttar Pradesh and Vadodara in Gujarat. Its wide array of products includes synthetic camphor, terpineols, pine oils, astromisk, other speciality aroma chemicals, flavours and fra grances. Set up by the Jayant Dalal group, the company is now owned and managed by the Bodani group.

Orient Aromatics is doing well on the financial front. During the last eight years, its sales turnover has almost doubled from Rs 458 crore in fiscal 2012, when the Bodani group ac quired Camphor and Allied Products, to Rs 842 crore in fiscal 2024 and fur ther to Rs 892 crore in the first half of fiscal 2025, with operating profit inch ing up from Rs 57 crore to Rs 94 crore and the profit at net level moving up from Rs 28 crore to Rs 43 crore. What is more, prospects for the company going ahead are all the more en couraging. Consider:

FRAGRANCE FACTOR

• The demand outlook for the company’s products is highly encouraging. According to a research report for fiscals 2024 to 2029, prepared by Research and Markets.com, the fragrance ingredient market was around $ 17.11 billion in 2024 and is projected to reach $ 21.94 billion by 2029 at a CAGR of 5.1 per cent. Fragrant ingredients are crucial for providing desirable qualities to products widely used across the industry, and users include large-scale cosmetics, well established personal care brands, emerging food and bever ages companies, and household goods producers and con sumers. The market growth is driven by factors such as inno vation in scent profiles, increase in disposable income and advances in technology and extraction process.
• Synthetic ingredients are becoming more and more popular in the fragrance ingredients market across the globe, due to cost effectiveness and the fact that it is easy to maintain quality across production. Perfumes crafted from synthetic ingredients offer remarkable consistency as controlled manu facturing conditions ensure that each batch smells identical and maintain quality across production. This augurs well for Orient Aromatics, whose products will be in greater demand.

CAMPHOR DEMAND

• Orient is a leading manu facturer of synthetic camphor, valued at $ 395.1 million in 2021 and pro jected to hit the $ 700 million mark by 2031, growing at a CAGR of 6 per cent. The demand for synthetic cam phor is on the rise. Synthetic camphor contains a variety of biological prop erties, including insecticidal, anti-bac terial, anti-viral, anticocial, anti-noci ceptive, anti-cancer and anti-fulsive, in addition to its applica tion as a skin operation enhancer, and treating diseases such as joint discomfort, muscle pain, nerve pain, toothaches, pain and itching, fungal infections of the toes, warts, cold sores, etc. Again, synthetic camphor has extensive applications across plastic appliances, pharmaceuticals, paints and coat ings, and the medical industry. Synthetic camphor is also used as a softener in the production of celluloid and PVC plastics. Such applications of synthetic camphor will create numerous opportunities in the market, further contributing to synthetic camphor’s market growth.

RESERVES CUSHION

• The company’s financial position is very strong, with reserves at the end of March 2024 standing at Rs 640 crore almost 37 times its equity capital of Rs 17 crore. The share price of the company with a face value of Rs 5 was bid up to Rs 656 on widespread demand, but heavy offloading during the current bearish phase has brought down the price to Rs 309. The price may go down further to some extent if the bearish phase contin ues for some time. But long-term pros pects for Orient Aromatics are highly promising. Discerning investors should pick up these stocks at every decline from now with a medium-term investment perspective.

PERFORMANCE INDICATORS (Rs. in crore)