Hi guyzz,
Chemical industry of India had some bad years till 2013..2014 was the year of huge profits for this industry…There are reasons for this…regulations were passed In china during this time for strict environmental laws…this led to shut down of many chemical companies in China. Indian chemical industry used to face stiff competition from china…a pure demand supply mismatch over a period of time…a cartel was formed among these indian chemical companies like bageria and bodal..to shoot the price up ..chemical selling for 100₹ was selling for 400₹ …so not a big surprise if these companies are doing good…its the industry not the company that has improved…this can be recommended for your own portfolio…but not for your client portfolio…situation can change soon and again china can pump in back…this story is similar to that of cement hike in south India…companies like Deccan cement..ncl industries etc have enjoyed good profitability…
One thing is not sure here is when the industry will change? How far is the threat from china? I guess this is the reason why the PE is not re rated..there is no sustainable growth seen here…
Disc – not invested…
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