I have been working on this company for last few months. It looks pretty interesting. I was earlier quite surprised with the excellent financials the co was having and I was a bit skeptical on sustainability. However as I read more about the journey, products and the management interviews etc, I get a feeling that they have been doing good work…they are manufacturing products that are old and low value but it seems that they have become the leaders in those (perhaps due to some chemistries) and there is very less competition (just 2-3 players at max). Add to it the company is very aggressive on growth and is doing continuous expansions and are confident about 20-25% growth for next few years…this growth is as of now coming from the brownfield expansions at the existing plant and then they had filed for EC for new plant which got approved recently.
I think in FY23 they will comfortably cross 1000 Cr revenue! Interestingly the IPO came at 300 and stock traded at 330-350 levels for a long times. At that time they were at 700 Cr revenue base. Now the price is 240-250 and PE ratio has moderated to 18-20 vs 30 at the time of IPO. Promoters have also been regularly buying from market.
Given that this company is from my city, I must say that they have been pretty low profile despite the scale up and excellent profitability the company has been having.
It’s not easy to come across cos with such good operating margins, high ROCEs and low fixed asset requirement. Given the turnover base they have reached, if they can deliver on what they are saying…i.e… 20-25% growth for next few years which maintaining margins of more than 25%, I think there can be lot of value creation.
It would be great to know views of others esp negatives if any.
Ayush
Disc: Invested in family acs and client acs
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