I bought astec life considering growth stock having 80% enterprise business and 20% CDMO business.My investment thesis was cdmo business as management guided increasing cdmo business gradually.
=However, since last 2 yrs enterprise business worsened due to
A…Demand-supply mismatch
B…High cost inventories.
=Future growth triggers are
A…Increasing Cdmo business
B…Completion of herbicide plant
C…Diversification into herbicides and development of more triazole molecules in enterprise business.
C…Completion of R and D centre
= R&D Center will catalyze Godrej Group’s ambition to be an application-agnostic partner of choice for innovator companies in the rapidly growing chemical industry in Cdmo business.
D…Management guided huge expansion for CDMO business in 2025(Howeve
r it is still not finally decided)
E…Recovery from enterprising business
=I think, this is best time to buy astec life at p/e ratio of 442(buy cyclicals at high PE)
=Though astec is growth stock, its financials of last 1.5 yrs are like cyclical stock.
=I think, as recovery from enterprise business will take place and cdmo business will grow gradually, its operating margin will become stable with15-20% growth in profit in long run.
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