PUNJAB CHEMICALS
Innovative CRAMS – active ingredients (similar as API in pharma) – capex funded by clients (partially)
ROCE 30%
Food grade Phosphoric acid goes to Pepsi and Coca cola (clients since 20Y). Bet on CEO Vinod G (IIT Bombay Chemicals )
Rev : 48% India 39% Europe 10% Japan
Metamitron (hemani group is competitor along with best crop science)
Metconazole (Anupam rasayan, Astec lifesciences, meghmani and rallis are competitors)
Major client – UPL (client concentration risk)
What i feel they have good management barring the past acquisitions to enter US and other regulated market. (2003-2009) + Fire impacted in major products plant
We can think that the company came out of all this major liquidity problem. But that should be taken with a pinch of salt.
Debt/Equity has come down from high levels of 18 in FY11 to 0.3 in FY23 – CRAMS impact – innovator or not one needs to judge on its own.
I also think they are not doing innovator molecules (personal view) – one can think of this as a turn around story where a bet is on the management and no hoax narratives like innovators.
Rev breakup
40% – Generic CRAMS
25% – innovative molecules
valuation comfort in agro space imo. Rest cut the narrative floating around. Invest with due diligence and special care on position sizing.
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