I have analyzed a small-cap company in the Indian stock market. This is not investment advice, the purpose of this report is only for educational use.

1. 20 MICRONS LTD.
INDUSTRIAL MINERALS AND FUNCTIONAL ADDITIVES
FOR A SUSTAINABLE FUTURE
Date 13/08/2022 | CMP – 105.85 | BSE 533022

2. Introduction:
Many mid- and small-cap companies have advanced in their value chains during the last couple of decades by becoming
specialized manufacturers within their respective industries. These businesses have experience with commoditized
operations and have a low starting point. A business can advance up the value chain by either launching new products or
by either increasing its existing product line.
As Peter Lynch said, “Behind every stock is a company. Find out what it’s doing”.
Businesses that focus on a sizable market with constant demand and create recurring revenue have a lot of potential. It
appears that any given stock is purchased after taking the firm's industry, level of competitive advantage, and prospective
growth of its products into account. And businesses that embrace innovation and technology and have a forward-looking
outlook will be the most valuable in the future.
Our latest recommendation is one such company from the metals and mining sector. 20 microns Ltd is an Indian-based
company, which is engaged in business of industrial micronized minerals and specialty chemicals. Its products include
ground calcium carbonate, dolomite, hydrous kaolin, calcined kaolin etc.
20 Microns Ltd is the pioneer in the field of industrial minerals in India. The company has delved into the world of
specialty minerals, chemicals and performance additives catering to niche segments. Through its innovative & continuous
R&D thrives to add further more products into its basket of products with strong interaction with its domestic and
international customers which has always proven to be their key to success.

3. Company Overview:
Above Data Source: BSE – 13th Aug 2022
Buying Strategy & Target Price (CMP = 105.85)
Buying Strategy = Can add long positions at
current price (105.85)
Price Target = Target 1 - Rs 170, Target 2 -
Rs 190+ in next 12 months, if company
works on their debt, margins and increase
in promoter holdings
Overview: 20 Microns Ltd have a successful track record of operating a robust B2B model, catering to the diverse ultrafine
industrial minerals and specialty chemicals needs of a wide range of companies across vast end application industry. Key raw
material required for the manufacturing of their products are Calcium carbonate, Lime stone, Talc powder, Silica powder, and
Chalk powder. Their key end users industry are in ink, ceramics, paper, cosmetics, rubber, adhesives, agro-chemicals, paint and
coating.
Valuation: The valuation of this company is quite reasonable considering the key developments with their sales and revenue
which will keep this stock in demand for the next couple of months.
Risks: peer competition, high debt, supply chain risks, clean energy and sustainability

4. History:
1987-91 1992-96 1997-01 2002-06 2007-11 2012-16 2017-21
• Incorporation of 20
Microns Ltd, as private
held company.
• Ventured into plastic
and paint markets.
• Expansion of capacity
at Waghodia.
• Formed subsidiary in
Malaysia for Calcium
Carbonate.
• Listed on NSE and BSE.
• R&D centre gets
recognized by DSIR, Govt
of India.
• Greenfield project for Kaolin
at Bhuj.
• Acquired mining rights for
Calcite Mines at Sirohi.
• Introduced concept of Value
Added products.
• New manufacturing
operations at Alwar
• Acquired first mining
rights for Dolomite at
Chota Udepur.
• Formed subsidiary of
Speciality Minerals Pvt Ltd.
• Acquired mining lease of
Kaolin at Bhuj and created
new R&D within the
organisation.
• New manufacturing setup
at Vadodara and Hosur.
• Began New operations in
south at Tirunelveli for
Kaolin and Calcium
Carbonate.
• Ventured into retailing of
mineral based agriculture
additives.
• Formed subsidiary of 20
Microns JSC in Vietnam for
Calcium Carbonate
• Partnered with Dorfner GmbH
Germany for distribution of
Hydrous and Calcined Kaolin in
Europe.
• Ventured into Ayurvedic
medicines in Retail space.
• Ventured into retailing of
waterproofing construction
chemicals

5. Business Overview:
Business
Segments
Products Offered
Industrial
Minerals
Ground Calcium, Carbonate, Dolomite, Hydrous Kaolin, Talc,
Natural Barytes, Silica, Muscovite Mica, Natural Red Oxide,
Bentonite & Attapulgite
Functional
Additives
Micronized Wax, Processing Aids, Antiblocking Additives, Matting
Agents, Calcium Oxide, Desiccant, Quarts Sand, White Pigment,
Opacifer, Synthetic Barium Sulphate
Retail
Products
Tigersil, Nanosil, Cracksil, Metakrete, Micronsil 30C, Minfert-GBR,
Minfert-Geocare, Humicrons, Minfert Reskue
480
529
484
613
682
Mar 2019 Mar 2020 Mar 2021 Mar 2022 TTM
Annual Revenue (in Crores)

6. Company Group Structure:

7. Key End User’s Industry:

8. Locations of operations:
20 Microns Ltd, is India’s largest producer of
micronized industrial minerals with more than
35+ years of industry experience. The
company exports its products to more than 65
countries across 6 different continents. The
company has 9 strategically located
manufacturing facilities and with 5 captive
mines acts as a strategic raw material source.
20 Microns have 9 state of art
warehouse strategically located
facilities located across India. And
the company have set up 2
technologically advanced research
and development unit, with 700+
strong dedicated workforce giving
the company people edge.

9. Building Long-Term Relations:
Key customers of the company
• Quality of the product is cornerstone of the company’s
culture and fundamental to the success of their customers
and business.
• The quality focus aims to maximize customer satisfaction
and loyalty through continuous improvement across the
value chain.
• Their advanced R&D is developing and delivering products
for our clients that not only meet their evolving needs but
also helped them substitute their internationally sourced
raw material.
• Their core marketing strategy is based on quantitative and
qualitative customer segmentation, which helps us in
acquiring a better and deeper understanding of our
existing and potential customers. It also helps us explore
new opportunities with existing clients

10. Investment Rationale:
Company with ore than 3
decades of experience in the
industry.
With a well diversified line of
products to offer.
Long term association with their
clients to ensure smooth and healthy
business operations.
Company with strong sales
and profit growth
Growth in Quarterly Net Profit with
increase in Profit Margin (YoY)

11. Q1 FY23 Update:
Q1 FY23 Q1 FY 22 Y0Y% Q4 FY22 QOQ%
Revenue (INR Cr.) 186.56 118.05 58.03 173.07 7.8
Total Expense 163.03 102.67 58.79 150.38 8.4
Operating Profit (INR Cr.) 23.53 15.38 52.99 22.69 3.7
Operating Profit Margins % 12.61% 13.03% 13.11%
Net Income (INR Cr.) 13.26 5.79 129.02 10.64 24.6
Net Income Margin% 7.11% 4.90% 6.15%
• EBITDA margins has remained stable from past few quarters
despite of Covid – 19 pandemic.
• PAT margins improved to 5.62% in FY22 from 4.73% in FY21.
• This industry is growing at 18-20% which implies that 20 Microns
has prospects to grow more than 20% CAGR for the next 3-5 years,
led by better product mix and underlying demand.
• Increased production capacity, better capacity utilization, positive
demand scenario are expected to steer the company to growth in
the upcoming quarters.

12. Financial type Q1 FY23 Q1 FY 22 Y0Y% Q4 FY22 QOQ%
Total Revenue 186.56 118.05 58.03 173.07 7.8
Total Expense 163.03 102.67 58.79 150.38 8.4
EBITDA 23.53 15.38 52.99 22.69 3.7
EBITDA Margin% 12.61% 13.03% 42 Basis 13.11% 50 Basis
PBT 17.78 7.87 125.92 14.58 21.9
PBT Margin% 9.53% 6.67% 286 Basis 8.42% 111 Basis
Net Income 13.26 5.79 129.02 10.64 24.6
Net Income Margin% 7.11% 4.90% 221 Basis 6.15% 96 Basis
EPS 3.75 1.64 128.66 3.01 24.6
Q1 FY23 Result Update:

13. FY22 Vs FY21:
Financial type FY 2021 FY 2022 YoY%
Total Revenue 486.09 615.37 26.6
Total Expense 425.07 533.84 25.6
EBITDA 61.02 81.53 33.6
EBITDA Margin% 12.55% 13.25% 70 basis
PBT 21.76 47.62 118.8
PBT Margin% 4.48% 7.74% 326 basis
Net Income 22.97 34.58 50.5
Net Income Margin% 4.73% 5.62% 89 basis
EPS 6.51 9.8 3.29

14. Last 5 Years Performance Update:
Financial type FY 2018 FY2019 FY 2020 FY 2021 FY 2022
Total Revenue 429.48 481.6 531.98 486.09 615.37
Total Expense 368.74 410.77 463.39 425.07 533.84
EBITDA 60.74 70.83 68.59 61.02 81.53
EBITDA Margin% 14.14% 14.71% 12.89% 12.55% 13.25%
PBT 28.03 38.46 34.55 21.76 47.62
PBT Margin% 6.53% 7.99% 6.49% 4.48% 7.74%
Net Income 18.83 24.98 24.11 22.97 34.58
Net Income Margin% 4.38% 5.19% 4.53% 4.73% 5.62%
EPS 5.34 7.08 6.83 6.51 9.8

15. Particulars FY18 FY19 FY20 FY21 FY22 Effects
Debtor Days 57 53 57 68 60 Constant
Inventory Days 132 134 128 144 148 Negative
Days Payable 113 106 115 134 113 Positive
Cash Conversion Cycle 77 80 69 78 94 Negative
Working Capital Days 59 60 63 73 76 Negative
ROCE % 19% 21% 19% 15% 19% Constant
Financial Ratios Update : 2018-22:

16. Management Analysis & Shareholding %:
In October 4 1988 the company commenced their commercial operations by
setting an industrial unit at Waghodia Gujarat. The Company which was
promoted by Mr. Bhanubhai B. Patel, Mr. Anant K. Kamdar & Mr. Chandresh
S. Parikh, was a Pioneer in the Mineral Industry and has established itself as
one of the top five Mineral manufacturers in India. The Company has well
equipped Research and Development Center (R&D Center) located at village
Vadadla, to achieve the Company's objective to be globally competitive by way
of product innovation, up-gradation of technology and continuous
improvement in quality of the finished goods.
Promoter Shareholding : Current shareholding of promoters in the company is
74.23% as on Aug 2022.
Shareholder communication: Good.
Pledged Shares: As in Aug 2022, pledge share percentage stands at 0.00%
Promoter Holding Trend: Last 6 months, promoter holdings stayed constant.
Pledged promoter holdings is insignificant.
Institutional Holding Trend: In last 3 months, DIIs and FIIs holding of the
company has almost stayed constant.

17. Technical Analysis:
• The stock price of 20 Microns Ltd had
reached 52 weeks high.
• The stock price is forming higher highs and
higher lows, supported by good volumes.
• The 50 SMA has taken the support of 200
SMA and is moving up to crossover 100
SMA, which signals that the stock is in
bullish trend.
• It is good time to consider, as stock is not in
overbought zone which makes the entry
price is perfect.
As fundamental analysis select stocks to include in your investing and determine whether a stock is overvalued or
undervalued relative to its intrinsic value. Technical analysis helps time the entry and exit of fundamentally sound stock
for the investment. Colin Nicholson, says:
'The two forms of analysis complement each other by adding value to the other. My approach
is to employ the strengths of both'
Above Data Source: Trading View 16th Aug 22

18. Competition:
• The key market participates: KIOCL Ltd, MOIL Ltd, GMDC Ltd,
Maithan Alloys Ltd, NMDC Ltd, Vedanta Ltd.
• The industry is segmented into large, well-established firms and
small, niche players. They compete with both the organized and
unorganized sectors based on the availability, quality, and selection
of products.
• The company is aggressive plans to invest in acquisition of mines
of varied minerals in domestic and global locations. We expect the
impact of this transition to flow into its returns and cash flow in the
long term.

19. Sources of Risks:
Logistical Risk:
The Company has put in place dedicated domestic
and international procurement team. Further, the
Company has entered into strategic contracts with
different delivery partners to ensure timely delivery
of finished products in India and abroad.
Economic uncertainty:
The company focused on safeguarding its business by
building a strong relationship with its existing clients
and also focused on expanding its order book from
the existing clients.
Competition risk:
The company have established a firm foothold in the
key markets and industries, and have also built a
strong and healthy relationship with customers.
Quality risk:
The company has established a dedicated research
and development and quality assurance department
consisting of experienced and qualified personnel to
ensure adherence to strict quality standards

20. Future Outlook:
Immediate Priorities Long Term Priorities
Mid Term Priorities
Shift in portfolio strategy
Stabilise the business Build a sustainable future
Stabilise operations Drive sustainability through
transformation
Build a resilient Company that is
sustainably profitable
• Reigniting an awareness for our
products
• Build a reliable operation
• Driving efficient and safe
production practices, liquidity
• management and cost discipline
• Enhancing cash flows from our
core and non-core business by
enhancing our portfolio and
driving value growth
• With a focus on R&D, we aim to
deliver products and solutions
of the highest quality to
industries around the world
• Continue introducing improved
import-substitute products to
our existing clients
• Transform our revenue mix by
optimizing our portfolio.
• Invest in captive power
generation capabilities to
reduce dependence on grid and
enhance cost savings
• Expand our global presence
with a greater focus on product
quality
• Domestically enhance the
proportion of import substitute
products
• Ensuring prudent balance sheet
management through a
disciplined capital allocation
framework.

21. Statutory Disclosure:
• At this time the analyst has no position in the stock mentioned in the report.
• The analyst has not traded in the recommended stock in past 30 days.
• The research analyst has no material conflict of interest at the time of publication of the
research report.
• The analyst has not received any compensation from the subject company or any merchant
and investment banking or brokerage services nor received any third party compensation in
the past.
• The research analyst has not served as an officer, director, or employee of the subject
company.
• The research analyst or research entity has not been engaged in market making activity for the
subject company.
• This research report is done by Mr. Mayur Malgear for the purpose of internship associated
with 3C Capitals Ltd.
3C Capitals (SEBI Registered RA), http://www.3ccapitals.com/wa/, mail@3ccapitals.com