The company is losing its pricing power due to intense completion from China however I believe this would be temporary. Sunil Chordia has said that they have seen Chinese competition and come and go in last 25 years. I believe domestic Chinese economy is not doing well and hence the Chinese companies are dumping in international markets. Not just Rajratan but specialty chemical companies are also facing intense competition from China. Some time in the future, the Chinese players will start supplying more locally once their economy picks up which will open up opportunity and reduce competition in international markets. I also believe US and Europe are lagging in demand due to higher interest rates. Interest rates are likely to lower as US elections are nearing and these high interest cannot be sustainable for a long time. Customers in these regions rely heavily on borrowing so with easing interest rates, demand from them is bound to increase. Domestic demand is also likely to increase looking at the expansion plans of tyre companies. With demand increasing in near term domestically as well as internationally, I believe demand will outpace supply and pricing power will be regained. However, this will take some time and I don’t see this happening at least for a year minimum. I could be wrong but this is how I think the scenario will play out. Market is currently reacting as if the company is going bankrupt.
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