Huge disappointment in results, I think this is going to bring the stock price with good force because as per the investor presentation, the company is getting beaten down on two fronts 1) Realization 2) Utilization (wasn’t expected at all) . And if both of them are coming down, this is going to be a hell of a trouble !!
Also, I don’t think there’s much contribution from ECH which was expected from this quarter. And if realization for chlor alkali take a steep U turn back to 22000-25000 which was there before Covid, god knows what would be the topline since ECH, CPVC are not specialty and are only in derivatives category, so there would be a impact over there as well.
The only positive thing in the PPT was another CPVC capacity expansion which would contribute further to the topline in FY25 given the company would already have the presence in the market and the expedited expansion by the end of FY24 which is a positive thing.
This was the sole reason of not investing in the company as I didn’t want to enter the stock at peak margins and peak utilization. But I still think company should be able to achieve 3000 crores of topline by FY25 and this disappointment will give me a chance to create my position and don’t think there’s any rush here since the realization just started to move down, I think we’ll get almost a full year to create the position. The company is still far from my Margin of Safety and will wait for this to come there.
Interesting to see what company has to say about further utilization (specially ECH realization which is no where mentioned) and realization. Yet to listen to the concall !!
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